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Posts tagged “United States

Analisa Emas


Kekhawatiran pasar terhadap hasil FOMC dinihari nanti (Kamis 30/10 pukul 1.00 pagi) membuat pasar keluar dari pasar dan memegang aset dollar sehingga dollar AS menguat dan harga emas tertekan.

Harga berhasil turun di bawah support 1343 semalam yang membuat tren pergerakan harga emas untuk sementara tertekan. Selama di bawah resisten 1354 harga masih berpotensi tertekan dengan potensi target mendekati area 1330.

Sementara peluang penguatan kembali, menunggu konfirmasi penembusan level resisten 1360 dengan potensi target ke area 1375.

Market mover hari ini selain hasil keputusan rapat FOMC, sebelumnya akan dirilis data non-farm payrolls AS yang disurvei pihak swasta ADP dan data indeks harga konsumen (CPI) AS. Dua data ini bisa menjadi market mover menjelang FOMC. Data tenaga kerja yang bagus dan CPI yang di atas prediksi pasar biasanya bisa menekan harga emas.


Analisa Emas


Harga emas terdorong naik pada pembukaan pagi ini terdorong oleh kekhawatiran pasar mengenai rencanabailout Siprus yang akan memajaki deposito yang terdapat pada perbankannya untuk mendapatkan dana segar. Harga emas sempat menembus level 1600 ke 1608. Namun di sisi lain, kekhawatiran pasar juga membuat dollar AS menguat dan mengakibatkan emas kembali tertekan di bawah 1600.

Indikator teknikal masih mengindikasikan tekanan naik pada grafik 4 jam. Namun trader harus mewaspadai level support terdekat di kisaran 1594 yang terbentuk pagi ini. Penembusan ke bawah support itu berpotensi melanjutkan pelemahan ke area 1587 (area fibonacci retracement 61,8% dari 1576.5-1608.55). Sementara penembusan area resisten 1600, akan kembali membuka jalan penguatan ke area 1609.

Pekan ini, selain gonjang-ganjing mengenai Siprus, rapat kebijakan moneter Bank Sentral AS (the Fed)pada hari Kamis dinihari juga akan menjadi penggerak harga emas. Meskipun Fed diperkirakan akan tetap mempertahankan stimulusnya, namun para pelaku pasar akan mewaspadai perubahan kebijakan atau rencana penghentian stimulus lebih cepat dari seharusnya. Penarikan stimulus akan berimbas pada penurunan harga emas.


Market Outlook Today


The Hang Seng Headquarters, located in Central...

The Hang Seng Headquarters, located in Central, Hong Kong. (Photo credit: Wikipedia)

EMAS

Komoditi Emas pada perdagangan kemarin bergerak melemah, melememahnya komoditi ini setelah harapan investor mengenai pemberian stimulus belum terjawab. Semalam pimpinan The Fed Ben Bernanke membuat testimoni di hadapan Senat AS tidak memberikan sinyal bahwa stimulus akan diberikan dalam waktu dekat ini, Bernanke hanya menyatakan bahwa The Fed akan tetap mengobservasi apabila timbul kebutuhan untuk meluncurkan stimulus.

EUR/USD

IMF memperingatkan kekacauan ekonomi di Eropa telah menyeret pertumbuhan ekonomi di emerging market, outlook pertumbuhan ekonomi global bisa makin meredup jika para pembuat kebijkan di zona Eropa tidak bertindak cepat dan tegas untuk mengatasi krisis utang mereka. Sementara itu Eropa tetap di bawah tekanan dengan yield obligasi pemerintah Spanyol dan Italia mendekati rekor tertinggi di kedua negara tersebut sampai mereka mendirikan ESM sendiri, itu hanya bisa terjadi setelah keputusan Mahkamah Konstitusi Federal Jerman pada 12 September mendatang. Mata uang tunggal Eropa terpaksa harus kembali melemah menuju level 1.2190 paska Pidato  The Fed Bernanke, meskipun The Fed Bernanke memberikan outlook pertumbuhan ekonomi yang suram akibat masalah utang Eropa dan jurang fiskal AS namun para pelaku pasar sepertinya lebih tertarik dengan seberapa cepat The Fed akan meluncurkan Quantitative Easing III, sepertinya  Bernanke yang enggan mengucapkan QE III maka pasar sepertinya harus menunggu lebih lama untuk mendapatkan stimulus moneter tambahan dari bank sentral AS.

HANGSENG

Bursa saham Hong Kong bergerak melemah tergerus oleh kekecewaan yang dialami para investor terhadap testimoni Ben Bernanke ke Senat semalam, Bernanke tidak memberikan sinyal untuk meluncurkan stimulus dalam waktu dekat sehingga pasar kembali dilanda kekhawatiran. Ada beberapa saham yang bergerak melemah diantaranya adalah Cheung Kong, HSBC, Hang Seng Bank, dan Hutchinson.


Market Review


Market Review

EUR/USD closing 1.2918, high 1.2957, low 1.2903, XAUUSD C:1579.95, H:1594.90, L:1573.25, CO-LS C: 95.57, H: 97.20 L: 95.56. Dow C: 12788, H: 12883, L:12723.

Euro diperdagangkan cenderung flat terhadap dollar pada hari Jumat namun terhampar dekat level rendah 3-1/2-bulan seiring ketidakpastian politik di Yunani dan kerugian besar oleh bank AS JPMorgan Chase membuat investor cemas mengambil posisi bullish pada euro. Harga emas turun seiring investor mencari peralihan pada dollar, sementara harga minyak memangkas penurunan dan berada dekat level flat setelah data sentimen konsumen AS yang kuat. Wall Street ditutup mix, dengan indeks utama mencetak penurunan mingguan kedua, tertekan oleh berita kerugian oleh JPMorgan dan di tengah kecemasan mengenai zona Eropa. Data ekonomi hari ini adalah home loans dari Australia, PPI dari Swiss, industrial production dari zona Eropa, pidato dari SNB Jordan.


Market Oulook Today


EMAS

Komoditi Emas menguat sebesar 1% pada perdagangan kemarin ke level tertinggi 6 minggu dipicu oleh penguatan mata uang tunggal Eropa menjelang akhir dari pertemuan zona Euro yang membahas masalah restrukturisasi utang Yunani. Melemahnya US dolar telah memicu menguatnya Komoditi Emas dan juga Minyak setelah Jerman dan Perancis mendesak untuk segera dicapainya kesepakatan antara Yunani dan kreditor swasta untuk memangkas utang Yunani guna mencegah default. Rendahnya suku bunga akan menopang minat beli investor pada komoditi ini, sebuah jajak pendapat Reuters menunjukkan The Fed nampaknya akan memberikan indikasi bahwa suku bunga baru akan dinaikkan pada semester pertama 2014 mendatang.

GBP/USD

Sterling menguat hingga ke titik tertinggi 2 minggu terhadap US dollar pada perdagangan kemarin, terutama ditopang oleh pembelian lembaga kliring Inggris serta ekspektasi bahwa bank sentral AS akan mempertahankan suku bunga di level rendah untuk periode yang lebih panjang. Sentimen di bursa juga dipengaruhi oleh negosiasi yang tengah berjalan antara pemerintah Yunani dengan kreditur swasta untuk merestrukturisasi utang Yunani. Para kreditur mengatakan di hari Senin bahwa mereka akan menyerahkan keputusan batas kerugian yang akan mereka tanggung atas obligasi Yunani pada pengadilan tinggi Uni Eropa serta IMF. Persepsi pasar menyikapi perkembangan ini masih positif meskipun masa depan Yunani sebenarnya masih belum pasti.

NIKKEI

Bursa saham Jepang menguat terbatas dipicu oleh kenaikan harga logam dan Emas, dan perdagangan di hari Selasa pagi ini cenderung positif meskipun beberapa bursa saham di Asia masih libur merayakan Imlek. Harapan para investor mengenai kelanjutan positif dari pembicaraan utang Yunani juga masih menjadi motor kenaikan di bursa saham Jepang ini. Ada beberapa saham bergerak cukup bervariasi pagi ini diantaranya adalah Toyota dan Olympus bergerak menguat, sementara itu Sony bergerak melemah.  Di perkirakan Indeks Berjangka Nikkei pada perdagangan hari ini berpotensi bergerak melemah tapi cenderung terbatas.


Market Outlook Today


EMAS

Komoditi Emas ditutup menguat pada perdagangan kemarin seiring menyusul tingginya ekspektasi bahwa The Fed akan meluncurkan stimulus lanjutan guna mendukung pemulihan ekonomi Amerika. Pandangan tersebut bersamaan dengan pemangkasan peringkat kredit Italia oleh lembaga pemeringkat S&P kemarin turut menopang minat investor pada aset safe haven. Saat ini pelaku pasar cenderung bersikap wait and see sebagai antisipasi berbagai kemungkinan langkah yang akan diambil oleh The Fed dalam pertemuan ini. Meskipun saat ini kemungkinan The Fed akan kembali meluncurkan stimulus keuangan guna menanggulangi perlambatan ekonomi Amerika. Akan tetapi jika berlaku sebaliknya ternyata langkah yang diambil The Fed tidak sesuai dengan ekspektasi, atau bahkan mengulur waktu sembari membiarkan ekonomi Amerika pulih berangsur ‐ angsur dengan sendirinya maka kondisi tersebut jika terjadi maka justru berpotensi melemahkan logam mulia ini.

EUR/USD

Pimpinan Uni Eropa tengah berjuang untuk mencegah penularan krisis utang ke negara yang lebih besar sejak Yunani terima bailout pertamanya pada tahun lalu. Survei Barclays Capital menunjukkan sebesar 25% investor memprediksi  Uni Eropa diperkirakan akan bubar, ECB sejak awal bulan lalu telah membeli obligasi pemerintah Spanyol dan Italia demi mencegah lonjakan yield dan sejauh ini upaya tersebut berhasil menurunkan biaya pinjaman obligasi Spanyol yang bertenor 10 tahun sebanyak 70 bps menjadi 5,34%. Tindakan bank sentral dilakukan untuk mencegah kejatuhan harga obligasi yang tidak masuk akal, dengan pertimbangkan situasi di masing-masing negara.

HANGSENG

Bursa saham Hongkong mengalami pelemahan hal ini berlawanan dengan pergerakan sebagian bursa saham di Asia pada hari ini, bursa saham Hongkong mengalami penurunan karena sebagian besar saham berkapitalisasi besar di bursa mengalami penurunan di mana sektor keuangan dan energy menjadi pendorong utama penurunan hari ini. Adapun saham – saham yang mengalami pergerakan penurunan diantaranya adalah saham HSBC, saham Henderson Land, dan saham Cheung Kong. Di perkirakan Indeks Berjangka Hangseng pada perdagangan hari ini berpotensi melemah tapi cenderung terbatas.

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More of the Same Panic and Fear; Gold Rallies to Yet Another Record High


By Joel Kruger, Technical Strategist

11 August 2011 02:54 GMT

Markets are once again back under pressure after Tuesday’s equity market gains were entirely wiped out (9th worst point drop on record for Dow). Fear and panic remain firmly in control, and gold prices continue to soar to record highs beyond $1800. The US Dollar has been a major beneficiary of the safe haven liquidation, while the Franc and Yen are also incredibly well bid. Meanwhile, the higher yielding commodity bloc has been decimated, and the Australian Dollar has led the declines. A weaker batch of employment data out of Australia has not helped the antipodean’s cause, with the unemployment rate rising to 5.1% and coming in well above the 4.9% expectation.

Elsewhere, contagion fears in Europe have picked up, with market participants seriously worrying about the ability for the Eurozone economy to recover from what appears to be a very deep and messy crisis. The attention has shifted to Italy, with the country’s banking sector falling apart, while France’s credit worthiness is also in the spotlight following the S&P downgrade of US ratings. Any additional deterioration in the Eurozone could seriously compromise the credibility of the EFSF. Looking ahead, the economic calendar for the remainder of the day is mostly second tier, and markets should continue to trade off of the broader global macro themes and developments.

ECONOMIC CALENDAR

Opening_Comment_body_Picture_5.png, More of the Same Panic and Fear; Gold Rallies to Yet Another Record High

TECHNICAL OUTLOOK

Opening_Comment_body_eur.png, More of the Same Panic and Fear; Gold Rallies to Yet Another Record High

EUR/USD: The market continues to adhere to a bearish sequence of lower tops since May, with a fresh lower top now in place by 1.4535 ahead of the next downside extension back towards and eventually below 1.4000. In the interim, look for any intraday rallies to be well capped ahead of 1.4400, while only back above 1.4500 delays.

Opening_Comment_body_yen.png, More of the Same Panic and Fear; Gold Rallies to Yet Another Record High

USD/JPY: Setbacks have stalled out just ahead of the 76.25 record lows from March, with the market dropping to 76.30 ahead of the latest reversal. Given that we are seeing the rate by record lows, we would not at all be surprised to see the formation of a material base in favor of significant upside back towards the 82.00 area over the coming sessions. However, the overall structure still remains bearish and it will take a break back above 80.00 to officially alleviate downside pressures and confirm reversal prospects. Below 76.25 negates.

Opening_Comment_body_gbp.png, More of the Same Panic and Fear; Gold Rallies to Yet Another Record High

GBP/USD: The market remains locked in a broader downtrend off of the April highs, and a fresh lower top is now sought out somewhere ahead of 1.6550 in favor of the next downside extension back towards the recent range lows at 1.5780. Ultimately, only a break back above 1.6550 would delay bearish outlook and give reason for pause, while back under the 200-Day SMA at 1.6085 should accelerate declines.

Opening_Comment_body_chf.png, More of the Same Panic and Fear; Gold Rallies to Yet Another Record High

USD/CHF: Despite the intense downtrend resulting in recently established fresh record lows by 0.7000, short/medium/longer-term technical studies are violently stretched, and we continue to like the idea of taking shots at buying in anticipation of a major base. Still, at this point, fading this trend will require some upside confirmation and we would look for a break and close back above 0.7350 at a minimum to open the door for these reversal prospects and alleviate immediate downside pressures.

Written by Joel Kruger, Technical Currency Strategist


Gold & Silver – Daily Outlook August 8


Guest Commentary: Gold & Silver Daily Outlook 08.08.2011

The level of volatility in the financial markets is very high over the weekend news of Standard and Poor’s downgrading the US credit rating ; ECB signaled yesterday it will purchase Italian and Spanish bonds in an attempt to cool down the markets. Today, the Chinese inflation rate for July will be published.

Let’s examine the precious metals market for today, August 8 th :

Gold fell again on Friday by 0.43% and reached $1,651. Silver sharply declined by 3.09% to $38.21.

During August, gold price increased by 1.3% and silver fell by 4.7%.

The chart below shows the normalized gold and silver (July 12 th 2011=100). As seen below, gold and silver rose very rapidly during the first few days in August, but then they have changed direction and declined in the last couple of days.

Guest_Commentary_Gold_Silver_Daily_Outlook_08.08.2011_body_Gold_prices_forecast__silver_price_outlook_2011_August_8.png, Guest Commentary: Gold & Silver - Daily Outlook 08.08.2011

S&P Downgrade Ramifications

The rumors of Standard and Poor’s downgrading the US credit rating from AAA to +AA eventually came true as S&P announced it over the weekend. The rumors that floated during last week are probably among the reasons for the sharp falls in Major Stock Markets during the second half of last week. This suggests that there will likely to be a negative reaction to the markets. Gold and silver will probably play the safe heaven card and the demand for them will rise resulting in price hikes during the day.

S&P also kept a “negative” outlook on US credit rating, and claimed it may further downgrade it again within the next couple of years.

The US Treasury Department already attacked the S&P decision to downgrade and pointed out to the mistake S&P made in its projected US government debt of $2 trillion over 10 years; this means the US public debt projection is more stabile than S&P had initially calculated.

Italian and Spanish Bond Problems

The debt crisis in Europe continues to spread and recently it came to Italy’s doorstep. Yesterday, the European Central Bank‘s President Jean- Claude Trichet signaled he is willing to purchase Italian and Spanish bonds in an attempt to curb the market instability, after they had failed to sell its bonds. In return, Berlusconi pledged to make drastic cuts to the Italian government budget. The Euro to US dollar already started the market trading on a rise . This news might have curbed some of the gains in gold and silver prices had it not reacted so dramatically to the news of the S&P downgrade.

USD/ Gold & Silver– August Update

The Euro/ USD exchange rate sharply inclined on Friday by 1.34%; the USD also depreciated against other currencies including the YEN. If the USD will continue to depreciate during the day, this might continue to affect the recent rally of gold and silver. During August there has been a strong correlation between bullion prices and Euro/ USD , USD/CAD and USD/YEN. These correlations however should be taken with a grain of salts as they are not significant (due to very few samples).

Guest_Commentary_Gold_Silver_Daily_Outlook_08.08.2011_body_Correlation_Gold__Silver_Prices__major_currencies_Euro_to_US_dollar_August_2011.png, Guest Commentary: Gold & Silver - Daily Outlook 08.08.2011

Gold and Silver Outlook:

Gold and silver started the week with very sharp gains after they had declined in the past couple of business days. The news of the US downgrade will probably push traders from US Treasury bills towards gold and silver; the Federal Reserve meeting tomorrow will also be among the factors that could raise the level of anxiety in the markets that will benefit gold and silver traders; this trend however is likely to dissipate very in the next few days and then gold and silver prices will stabilize and resume their slower upward trend.

For further reading: Gold and silver prices outlook for August 2011

Lior Cohen , M.A. commodities analyst and blogger at Trading NRG.

By: Lior Cohen, Energy Analyst for Trading NRG


Market Review Eropa


Market Review Eropa

Euro, Aussie dollar serta mata uang berisiko anjlok ditengah pengalihan resiko akibat ketidakpastian global dihantui downgrade S&P pada rating kredit AS sehingga memicu arus modal ke mata uang Swiss Franc dan Yen Jepang. Sementara bursa saham Eropa bertahan di teritori negatif, Emas meroket sejalan dengan sentimen negatif para investor dibebani downgrade rating kredit AS meskipun ECB mengaktifkan pembelian obligasi Italia & Spanyol.

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New High of Gold


EMAS

Komoditi Emas naik mencapai rekor US$1.672.60/ troy ounce di tengah isyarat melemahnya perekonomian Amerika Serikat yang mendorong permintaan logam mulia sebagai alternatif investasi. Moody’s Investors Service menyebutkan peringkar kredit AS mungkin menurun dan kemarin menempatkan negara itu dalam outlook negatif setelah Presiden Barack Obama menandatangani UU untuk menaikkan batas utang utang negara dan memangkas anggaran. Harga emas di zona euro juga mencapai rekor dipicu kekhawatiran melemahnya pertumbuhan akan menghambat upaya Spanyol dan Italia untuk mengurangi utang.

MINYAK

Komoditi Minyak mentah naik dari posisi terendah dalam 5 minggu di New York sebagai spekulasi bahwa Federal Reserve akan memulai lagi program stimulus sehingga mementahkan tanda-tanda pelambatan ekonomi di negara terbesar di dunia itu. Kontrak minyak naik sebanyak 0,7% yang merupakan pertama kali dalam lima hari. Ekuitas AS rebound setelah Wall Street Journal melaporkan tiga mantan pejabat The Fed mengatakan bahwa bank sentral harus mempertimbangkan putaran baru pembelian efek untuk meningkatkan pertumbuhan ekonomi. Minyak tergelincir kemarin setelah laporan menunjukkan bahwa industri jasa AS diperluas pada bulan Juli  dan stok minyak mentah naik pada minggu kedua.

GBP/USD

Sterling menguat terhadap dollar AS dan mencapai level tertingginya dalam dua bulannya pada perdagangan di hari Rabu kemarin setelah data menunjukkan aktivitas yang tidak di ekspektasi pada pertumbuhan jasa Inggris yang tumbuh lebih cepat dalam empat bulannya. Tetapi kenaikan dapat tertekan dari permasalahan mengenai kerapuhan dari recovery ekonomi Inggris, khususnya setelah data pada awalnya minggu ini menunjukkan aktivitas manufaktur mengalami kontraksi.


Dollar on Edge with Deficit Deadline, ISM Report Stokes Volatility


Dollar on Edge with Deficit Deadline, ISM Report Stokes Volatility

By John Kicklighter, Currency Strategist

02 August 2011 03:23 GMT
  • Dollar on Edge with Deficit Deadline, ISM Report Stokes Volatility
  • Euro Drawn Between Dollar Volatility, EU Trouble, Upcoming ECB Decision
  • Australian Dollar Readies for RBA Decision as Risk Trends Pick Up
  • British Pound Tumbles with Risk, Helped Along by Manufacturing Contraction
  • Japanese Yen Looking at More Volatility as Intervention Rhetoric Heats Up
  • Swiss Franc Solidifies Gains After Economics Minister Says Strength to Stay
  • Gold Ramps up the Volatility as Market Debates US Financial Rescue Effort

Dollar on Edge with Deficit Deadline, ISM Report Stokes Volatility

Given the volatility the FX and capital markets demonstrated through the close on Friday and the running countdown for the US to surpass the legal limit on its deficit; excitement was guaranteed through for the opening day of the new trading week. Volatility on the dollar-based majors and broader capital markets stepped it up yet again – though direction is still as lacking as ever. Through Monday’s open, the greenback was once again under pressure as risk appetite started off strong. In fact, S&P 500 futures gapped up 1.2 percent on the Asian open from Friday’s close. In contrast, the dollar didn’t produce such a dramatic jump; but it did lose ground through much of the Asian and early European sessions as news that Congressional leaders reached a compromise on the budget deficit that could offer quick relief to tense financial and credit markets. Though, the fact that the Dow Jones FXCM Dollar Index (ticker = USDollar) slipped as a viable debt solution seemed to be in the works should reflect on the skepticism that is still prevalent in the markets.

This cynicism that a debt deal would be pushed through or that it would offer the dollar an immediate boost could have weighed the greenback indefinitely had a wave of risk aversion not leveraged the currency’s battered safe haven appeal. As the day wore on, data from China, Australia, Japan, the Euro Zone and the United Kingdom reflected a slowing in factory activity that seems to be reflecting a downshift in global growth. The concern was nagging; but fear that a serious economic slump could be in the works didn’t really set in until the US ISM manufacturing activity survey for July crossed the wires. The 50.9 reading was a substantial miss (below even the lowest economist forecast from Bloomberg) and threatened the primary source of growth the US economy has drawn from since the recovery was established back in 2009. In turn, the S&P 500 Index would turn a remarkable bullish gap on the open into an eventual 2.5 percent retracement through the first half of the day.

The ISM indicator, along with the other manufacturing readings from the around the world, are an important reminder that economic activity is cooling. The feeble health of the developed world’s consumer is finally meeting the global shift towards austerity (China, Euro Zone, UK). That leaves the US in a unique position: either join the stimulus withdrawal and suffer the economic slowdown; or pursue financial responsibility and potentially turn a slowdown into a double dip recession. This is another layer of complication to the deficit debate at hand. According to the original timeline; the window is supposed to close by the coming session. That said, it seems that the revised two-stage program that has garnered support from Congressional leaders and already passed the House looks to have a good chance of making it all the way through. Yet, it is still under heavy debate as to whether the planned cuts would be enough to prevent a downgrade by the major credit rating agencies. Such an outcome would surely be dollar negative. Though if this effort tips the global economy, there could be a redeeming value to the greenback.

Related:Discuss the Dollar in the DailyFX Forum, John’s Picks: Controlling Risk is Tantamount as Volatility Prevails and Direction Absent

Euro Drawn Between Dollar Volatility, EU Trouble, Upcoming ECB Decision

Fortunately for the euro, headlines about the US deficit debate are still crowding out many of the updates surrounding the Euro Zone’s own troubles. Notable for the day was the fact that the Italian 10 year government bond yield closed at a record high 6.00 percent while the Spanish equivalent advanced to 6.20 percent. Remember, Greece, Ireland and Portugal required bailouts not long after breaching the 7.00 percent level. In the meantime, volatility in risk trends contributed to dramatic losses for European benchmark equity indexes. It will be interesting to see how this combination of funding troubles and the economic slowdown influences the ECB’s decision later this week. Can then keep ignoring it?

Australian Dollar Readies for RBA Decision as Risk Trends Pick Up

We are quickly approaching the RBA rate decision; and rate expectations are somewhat mixed. Looking at overnight index swaps; we see that there is a 16 percent probability of a 25 bps rate cut yet the 12 month forecast is pricing in 27 bps of easing. If we recall the last meeting, Governor Stevens leveraged the importance of CPI; and the 2Q figures a two-and-a-half year high 3.6 percent. Is that enough to make a call?

British Pound Tumbles with Risk, Helped Along by Manufacturing Contraction

It seems much of the world is on the same path of austerity and economic slowdown that the UK pioneered with its self-imposed deficit efforts. Under these circumstances, it isn’t good to be first; because it is exponentially harder to recovery from a slowdown that was ahead of the global curve. We were reminded of this Monday when the UK factory activity reading turned negative for the first time since September 2009.

Japanese Yen Looking at More Volatility as Intervention Rhetoric Heats Up

Talk of Japanese intervention is picking up amongst policy officials, economists and traders. According to Nikkei news group, the central bank is preparing for FX intervention; and an independent move could be quickly followed by a coordinated effort. Should we take these warnings seriously? The short-term impact can certainly generate volatility; but fighting larger trends (like dollar selling) is always a losing game.

Swiss Franc Solidifies Gains After Economic Minister Says Strength to Stay

There are many examples of failed efforts of intervention; but some of the worst results have to fall to the Swiss National Bank which has come under significant scrutiny due to the losses on its reserves fighting the market tide. The futility of this effort seems to be setting in, however, as we had the nation’s Economic Minister warned the high exchange rate is here to stay and it means “extremely tough years” for exporters ahead.

Gold Ramps up the Volatility as Market Debates US Financial Rescue Effort

Like the US dollar and Treasuries, gold put in for an exceptionally volatile session through Monday. Through that same comparison, though, the metal was just as lacking for direction. To stoke capital flows into the metal once again (or away from it should there be palatable deficit resolution); we need an unmistakable view of the United States’ fiscal position: destined for downgrade or slow return to prudence.

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

ECONOMIC DATA

Next 24 Hours

GMT Currency Release Survey Previous Comments
1:30 AUD House Price Index (YoY) (Q2) -3.0% -0.2% Lower expected house index may suggest softening real estate sector
1:30 AUD House Price Index (QoQ) (Q2) -1.0% -1.7%
1:30 AUD Building Approvals (MoM) (JUN) 3.0% -7.9% A mild recovery in building recoveries despite prices fall points to future recovery
1:30 AUD Building Approvals (YoY) (JUN) -10.3% -14.4%
1:30 JPY Labor Cash Earnings (YoY) (JUN) 0.4% 1.0% Japanese labor market still soft
4:30 AUD Reserve Bank of Australia Rate Decision 4.75% 4.75% Major event of the day: Q2 CPI came in higher than expected despite record-high AUD; RBA may change their commentary on rate hikes
6:30 AUD RBA Commodity Price Index (JUL) 109.4 Commodities price index may hit new high on record strength of metals
6:30 AUD RBA Commodity Index SDR (YoY) (JUL) 28.2%
7:15 CHF Retail Sales (Real) (YoY) (JUN) -4.1% Previous was lowest since March 2009
7:30 CHF SVME-Purchasing Managers Index (JUL) 52.5 53.4 PMI expected to be hurt by strong franc
8:30 GBP Purchasing Manager Index Construction (JUL) 53.1 53.6 Index may fall due to government cuts
9:00 EUR Euro-Zone Producer Price Index (MoM) (JUN) 0.1% -0.2% Index correlated with consumer prices expected to weaken on a long-term basis on slower recovery, demand
9:00 EUR Euro-Zone Producer Price Index (YoY) (JUN) 5.9% 6.2%
12:30 USD Personal Income (JUN) 0.2% 0.3% Consumption driver of the US economy expected to stay relatively flat as overall economy still weak, uncertain
12:30 USD Personal Spending (JUN) 0.2% 0.0%
12:30 USD Personal Consumption Exp Deflator (YoY) (JUN) 2.5%
12:30 USD Personal Consumption Exp Core (MoM) (JUN) 0.2% 0.3%
12:30 USD Personal Consumption Exp Core (YoY) (JUN) 1.4% 1.2%
21:00 USD Total Vehicle Sales (JUL) 11.85M 11.41M A small pick-up in vehicle sales may be due to beginning of 2nd half purchasing by institutions
21:00 USD Domestic Vehicle Sales (JUL) 9.25M 8.95M
23:01 GBP BRC Shop Price Index (YoY) (JUL) 2.9% Retail sales index may indicate CPI
23:30 AUD AiG Performance of Service Index (JUL) 48.5 Service sector at post-recession levels
GBP Halifax Plc House Prices s.a. (MoM) (JUL) 0.0% 1.2% House prices watched by BoE may support further lax policies to support economic recovery
GBP Halifax House Price (3MoY) (JUL) -2.8% -3.5%
GMT Currency Upcoming Events & Speeches
12:30 USD Annual Revisions: Personal Income and Spending

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE – 18:00 GMT

Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist 2 1.5160 1.6600 86.00 0.8900 1.0275 1.1800 0.9020 118.00 146.05
Resist 1 1.5000 1.6475 81.50 0.8550 1.0000 1.1000 0.8750 113.50 140.00
Spot 1.4268 1.6297 77.08 0.7817 0.9561 1.0964 0.8762 109.98 125.62
Support 1 1.4000 1.5935 77.00 0.7800 0.9425 1.0400 0.7745 109.00 125.00
Support 2 1.3700 1.5750 76.25 0.7600 0.9055 1.0200 0.6850 106.00 119.00

CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency USD/MXN USD/TRY USD/ZAR USD/HKD USD/SGD Currency USD/SEK USD/DKK USD/NOK
Resist 2 13.8500 1.8235 7.4025 7.8165 1.3650 Resist 2 7.5800 5.6625 6.1150
Resist 1 12.5000 1.7425 7.3500 7.8075 1.3250 Resist 1 6.5175 5.3100 5.7075
Spot 11.7277 1.6911 6.7309 7.7906 1.2018 Spot 6.3245 5.2217 5.3789
Support 1 11.5200 1.6500 6.5575 7.7490 1.2000 Support 1 6.0800 5.1050 5.3040
Support 2 11.4400 1.5725 6.4295 7.7450 1.1800 Support 2 5.8085 4.9115 4.9410

INTRA-DAY PIVOT POINTS 18:00 GMT

Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist 2 1.4571 1.6575 78.89 0.8056 0.9667 1.1127 0.8889 113.85 130.45
Resist 1 1.4420 1.6436 77.99 0.7936 0.9614 1.1045 0.8826 111.92 128.03
Pivot 1.4302 1.6337 77.14 0.7834 0.9553 1.0984 0.8779 110.31 126.12
Support 1 1.4151 1.6198 76.24 0.7714 0.9500 1.0902 0.8716 108.38 123.70
Support 2 1.4033 1.6099 75.39 0.7612 0.9439 1.0841 0.8669 106.77 121.79

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist. 3 1.4462 1.6454 77.97 0.7926 0.9657 1.1106 0.8882 111.61 127.17
Resist. 2 1.4414 1.6415 77.74 0.7899 0.9633 1.1071 0.8852 111.21 126.79
Resist. 1 1.4365 1.6376 77.52 0.7872 0.9609 1.1035 0.8822 110.80 126.40
Spot 1.4268 1.6297 77.08 0.7817 0.9561 1.0964 0.8762 109.98 125.62
Support 1 1.4171 1.6218 76.64 0.7762 0.9513 1.0893 0.8702 109.16 124.84
Support 2 1.4122 1.6179 76.42 0.7735 0.9489 1.0857 0.8672 108.75 124.45
Support 3 1.4074 1.6140 76.19 0.7708 0.9465 1.0822 0.8642 108.35 124.07

v

Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com


US Dollar Looking More Contructive Across the Board into Tuesday


US Dollar Looking More Contructive Across the Board into Tuesday

By Joel Kruger, Technical Strategist

02 August 2011 04:18 GMT
  • US Dollar Index bounces by yearly lows; more upside potential
  • RBA leaves rates on hold as was widely expected at 4.75%
  • Yen and Swissie find offers after trading to record highs
  • US debt ceiling developments still being digested
  • Eurozone structural concerns resurface
  • Aussie and Kiwi finally showing weakness

The US Dollar has been well bid overall in the early week, with the price action resulting in a favorable close off of the yearly lows in the US Dollar Index. The only other currencies that have shown better bid in recent trade have been the other safe haven currencies in the Swiss Franc and Yen, which both trade just off recently established record highs against the Greenback. Still, even the Yen and Swissie showed some relative weakness in the latter portion of Monday trade, and with both of these markets looking extremely stretched, the risks from here seem to favor USD appreciation going forward.

Markets had initially been well bid on Monday on the news of a resolution to the US debt ceiling talks, with risk correlated assets rallying impressively, before finally reversing quite sharply into North American trade. A combination of concern over the type of resolution achieved by the US government, softer US ISM data, and widening Eurozone peripheral bond spreads, all contributed to the risk off trade, with US equities getting hit rather hard. We also started to finally see some relative weakness in the antipodean currencies, with both Aussie and Kiwi rolling over from post-float record high levels and putting in bearish closes against the Greenback.

The RBA has now come out early Tuesday leaving rates on hold at 4.75% as was widely expected, with the accompanying central bank statement maintaining its newly adopted less hawkish outlook. The central bank continues to express concern over broader global macro threats and some worrying deteriorative local fundamentals, and as such, even with the attractive yield differentials, we would continue to look to be fading any strength in the currency as we contend that the best is now behind the currency down under.

On the data front, the key release in Asian trade was a weaker than expected Aussie building approvals print. Looking ahead, economic releases in the European session are few, but at the same time should not go unnoticed with Swiss retails sales, UK construction PMI, and Eurozone producer prices all very capable of moving markets. US equity futures and oil prices are consolidating their latest declines, while gold is once again looking toppish by record highs following Monday’s bearish close.

ECONOMIC CALENDAR

US_Dollar_Looking_More_Contructive_Across_the_Board_into_Tuesday_body_Picture_5.png, US Dollar Looking More Contructive Across the Board into Tuesday

TECHNICAL OUTLOOK

US_Dollar_Looking_More_Contructive_Across_the_Board_into_Tuesday_body_eur.png, US Dollar Looking More Contructive Across the Board into Tuesday

EUR/USD: The market continues to adhere to a bearish sequence of lower tops since May, with a fresh lower top now likely in place by 1.4535 ahead of the next downside extension back towards and eventually below 1.4000. In the interim, look for any intraday rallies to be well capped ahead of 1.4400, with a break and close back below 1.4200 on Tuesday to accelerate declines. Ultimately, only back above 1.4535 would negate outlook and give reason for pause.

US_Dollar_Looking_More_Contructive_Across_the_Board_into_Tuesday_body_jpy2.png, US Dollar Looking More Contructive Across the Board into Tuesday

USD/JPY: Setbacks have stalled out for now just ahead of the 76.25 record lows from March, with the market dropping to 76.30 ahead of the latest minor bounce. However, the bounce is somewhat significant on a short-term basis, with the market putting in a bullish outside day formation on Monday to suggest that the price could once again be very well supported in favor of a major upside reversal over the coming days. Look for a break and close back above 78.05 to confirm bullish reversal prospects and accelerate gains towards 80.00, while back below 86.25 negates and opens the door for fresh record lows.

US_Dollar_Looking_More_Contructive_Across_the_Board_into_Tuesday_body_gbp2.png, US Dollar Looking More Contructive Across the Board into Tuesday

GBP/USD: Despite the latest rally back above 1.6400, the market still remains locked in a broader downtrend off of the April highs, and a fresh lower top is now sought out somewhere ahead of 1.6550 in favor of the next downside extension back towards the recent range lows at 1.5780. Monday’s strong bearish outside formation could very well set up the next lower top by 1.6475, and we look for a break and close back below 1.6200 to confirm and accelerate declines. Ultimately, only a break back above 1.6550 would delay bearish outlook and give reason for pause.

US_Dollar_Looking_More_Contructive_Across_the_Board_into_Tuesday_body_swiss1.png, US Dollar Looking More Contructive Across the Board into Tuesday

USD/CHF: Despite the intense downtrend resulting in recently established fresh record lows below 0.7800, short/medium/longer-term technical studies are looking quite stretched to us, and we continue to like the idea of taking shots at buying in anticipation of a major base. Monday’s fresh record lows by 0.7730 seem to have been very well supported, and we would be on the lookout for a break and close back above 0.7950 on Tuesday to encourage short-term reversal prospects and accelerate gains. Back below 0.7730 negates.

Written by Joel Kruger, Technical Currency Strategist


Crude Dip Offers Bullish Opportunity


By Jamie Saettele,

26 July 2011 15:15 GMT

300 Minute Bars

eliottWaves_oil_2_body_crude.png, Crude Dip Offers Bullish Opportunity

Prepared by Jamie Saettele, CMT

The rally from the 2009 low is in 3 waves (which is corrective) and the 2 bull legs of the move are roughly equal. The decline however from this year’s high is also corrective and crude broken to a new high for the month. Focus is now on the 100% extension at 103.30. Look higher as long as price is above 93.52.


Japanese Yen Direction Contingent on U.S. Debt Ceiling Talks


By Christopher Vecchio, Junior Currency Analyst

22 July 2011 22:59 GMT
The Japanese Yen¥USD/JPY • NY Spot Close 78.477
Japanese_Yen_Direction_Contingent_on_U.S._Debt_Ceiling_Talks_body_usdjpy_risk.png, Japanese Yen Direction Contingent on U.S. Debt Ceiling TalksJapanese Yen Direction Contingent on U.S. DebtCeiling TalksFundamental Forecast for Japanese Yen: Neutral

The Yen slumped slightly this past week, falling 0.75 percent its American counterpart, while remaining in the middle of the pack against a basket of the other major currencies. While risk-appetite found some footing, with the Australian Dollar and New Zealand Dollar leading the major currencies, the safe haven currencies – the Japanese Yen, the Swiss Franc and the U.S. Dollar – were relatively even across the board. This is a result of remaining uncertainty concerning the state of the two major financial pillars of the global economy, the Euro-zone and the United States. Thus, while there was some resolution in the near-term in regards to the European sovereign debt crisis, there is remaining uncertainty as to what is happening with the United States’ debt ceiling.

With not much significant data released over the past week, the Yen’s place, as has been for the past few weeks, was primarily that of a store of save haven, as, despite the country’s economic woes, the currency remains one of the most liquid assets in the world. There were two notable bright spots that highlighted the week for the Pacific Rim nation that are worth mentioning. First, on Wednesday, the merchandise trade balance figure for June was released, blowing through expectations. While the trade balance was -¥855.8 billion in May, the ¥70.7 billion reading easily beat the -¥149.0 billion estimate, a strong indication that the Japanese economy is starting to get on stronger footing following the earthquake. To this end, the all industry activity index expanded by 2.0 percent in May, after gaining by 1.4 percent in June; this further supports the notion that the Japanese economy is recovering.

Next week will be particularly interesting, considering that among a week fully saturated of significant events out of Japan, it broke late Friday that the debt negotiations broke off between Democrats and Republicans on resolving the debt ceiling issue. In terms of data due, the significant data begins to trickle in starting on Wednesday, with the bulk of the data being released on Thursday.

Retail sales data leads the block of data releases, with trade expected to have gained at a 1.5 percent rate in June, slightly down from the 2.4 percent rate in May. On the contrary, large retailers’ sales are forecasted to have fallen by a slight 0.4 percent over the same period. On Thursday, two more data release could further support the Yen. First, the consumer price index is expected to show a slight uptick to 0.2 percent, marking the third month in which price pressures have increased, a welcomed trend by the Japanese economy. Later, industrial production data is due, which, while forecasted to have decreased on a year-over-year basis, production is expected to have rebounded on a monthly basis, by 4.5 percent in June. it is unlikely that these data will have much of an impact on the Yen, though, as the currency is currently considered a store of safe haven in times of crisis, so amid the debt problems ramping up in the United States, which they now have, the Yen will be bid higher on poor news. -CV


Euro trades Sharply Higher on Greek Deal – What’s Next?


By David Rodriguez, Quantitative Strategist

22 July 2011 23:59 GMT

euro_trades_higher_greek_deal_forecast_body_Picture_5.png, Euro trades Sharply Higher on Greek Deal – What’s Next?

Euro trades Sharply Higher on Greek Deal – What’s Next?

Fundamental Forecast for the Euro: Neutral

The Euro rallied sharply against the US Dollar on a breakthrough agreement on further aid for Greece, closing a great deal of uncertainty surrounding the at-risk country and for the broader euro zone. Officials released details of a far-reaching agreement and offered concrete details on further fiscal aid for periphery nations. A pronounced rally across European bond markets and the euro itself underlined that plans were well-received, but a key week for European economic data could ultimately decide euro price action in the days ahead.

Euro zone periphery debt crises are far from over, but the recent agreement ostensibly puts market focus back on economic fundamentals and not on government solvency. Key German Unemployment Change, Consumer Price Index, and Retail Sales figures could subsequently force sharp moves across euro pairs.

The euro had strengthened significantly against the US Dollar and other major counterparts as markets predicted the European Central Bank would be among the most aggressive to raise interest rates from record-lows. Indeed, the ECB has since hiked target rates by 0.50 percent, and Overnight Index Swaps have priced in another 33bps through the coming 12 months. The US Federal Reserve, by comparison, has left interest rates at record lows and traders predict a mere 17bps in interest rate increases through the same stretch. Interest rate differentials favor further EURUSD strength, but it will be important to see momentum remain in favor of further euro gains—especially on key data.

Expectations call for German and broader European Consumer Price Index inflation remained above the ECB’s official target of 2.0 percent through July, and central bank president Jean Claude Trichet has been resolute in calling for fairly aggressive monetary policy measures on elevated price pressures. It will be important to watch for surprises in CPI results as well as employment figures, as both are likely to figure into future ECB moves.

Ultimately, the euro’s direction against key counterparts should depend on traditional fundamentals—not ongoing struggles with periphery nation debt. There remain details that need to be sorted out with the new deal on Greek debt, and individual parliaments must ratify the deal. Yet the long-term nature of the deal suggests troubles with Greece are less relevant to day-to-day price action. Spanish and Italian bond yield surges remain a concern, but stability at or around current levels would decrease fears of further debt stresses.

The Euro/US Dollar has traded to key resistance at a falling trendline from May lows, and whether or not the pair can move above $1.44 could set the tone for the coming months of trade. We will watch European data with great interest, while ongoing developments surrounding US debt ceiling concerns could likewise affect USD pairs. – DR


US Dollar Traders Have to Monitor Debt Talks, Euro Market, Risk Trends


US Dollar Traders Have to Monitor Debt Talks, Euro Market, Risk Trends

By John Kicklighter, Currency Strategist

22 July 2011 21:54 GMT

The US Dollar $USD IndexNY Spot Close 9457.56
US_Dollar_Traders_Have_to_Monitor_Debt_Talks_Euro_Market_Risk_Trends_body_USDOLLAR_risk.png, US Dollar Traders Have to Monitor Debt Talks, Euro Market, Risk Trends

US Dollar Traders Have to Monitor Debt Talks, Euro Market, Risk Trends

Fundamental Forecast for the US Dollar: Neutral

The countdown for the US is getting serious. We have concluded another weak where the US government has failed to come to a compromise on its deficit troubles. Further creating troubles for the greenback, we have seen the European funding market (a source of liquidity costs that plays to the dollar’s safe haven status) come into at least a temporary period of relief with a massive bailout effort by the EU; while risk appetite trends have taken a considerable jump to defer that long-threatened collapse. That said, all of these headwinds will do more to anchor the currency than necessarily generate a meaningful trend over the next week.

Heading into the new trading week, the deficit debate carries the greatest potential sway over the dollar. Depending on how this situation evolves; it could have a sweeping effect over the single currency and even the broader financial markets. Yet, it is prudent to work within reasonable probabilities to interpret how this matter will influence the dollar. If our outlook were for two weeks, it would be a virtual guarantee that the greenback is in for significant volatility and even a significant trend. However, our outlook is just for the upcoming week. That being the case, the outlook is far more fluid. Considering the deficit ceiling will be officially breached on August 2nd, there is time for political maneuvering as Democrats and Republicans gain points for sticking to their guns. It is a severely low probability that this situation ends in a technical default and the likelihood of a solution before next weekend is high.

How the deficit solution impacts the dollar and capital markets is a function of what is agreed to. If the limit is simply lifted to avoid the pain of a default event, it could offer temporary relief to capital markets and the greenback in equal parts. That said, the follow through would likely be limited as ratings agencies have warned the reasoning for a downgrade runs beyond just the quick fix and to the lack of long-term fiscal plan. Alternatively, should there be proposal that targets significant deficit reduction over a reasonable timeframe through a revenue (taxes) focus, an expenditure (spending) focus or a mix of both; it could be seen as an effort to pump the break on the economy and withdraw the very stimulus that has driven confidence and capital markets since the Great Recession – which would weigh on risk appetite which adds a safe haven appeal to the dollar as it garners attention for improved outlook for stability. If we end the week without a clear solution; expect volatility to grow increasingly unstable as rumors and headlines spur fear and speculation.

Another major driver for the dollar that fits within the ‘theme’ category is the blowback the greenback bears from the perception of the Euro Zone’s credit health. This past week, officials announced sweeping policy agendas to smother the sense of crisis contagion in the sovereign and private lending markets. There were major efforts adopted; but there are also significant shortfalls. Ultimately it comes down to market sentiment. If the steps taken don’t boost confidence or if risk aversion is an engrained and global driver, the euro will continue its slide and thereby boost its most liquid counterpart: the dollar.

When it comes down to it, these more pervasive and vague problems will determine the dollar’s activity level and general direction. However, there are a few scheduled events that can stir short-term volatility and perhaps even contribute or detract from existing trends. We have consumer confidence and housing sector data; but the real market-mover is the first reading of 2Q GDP. Depending on how risk trends are behaving, the outcome for the dollar can follow risk trends or speculation for additional stimulus. – JK


Growth, Inflation Data and a Rate Decision Make for a Volatile Week


By Christopher Vecchio, Junior Currency Analyst

22 July 2011 20:55 GMT

With the last full week of July ahead, there is significantly more event risk on the docket than the third week in July. Now, as the markets have begun to digest the results of the new bailout of Greece, price action will largely be dictated by key events on the docket, including American and British growth figures, Australian and German consumer price indexes, and a rate decision from the most southern antipodean nation. Still, the markets will continue to listen to jabbering between Democrats and Republicans, as the debt ceiling debacle has still yet to find resolution ahead of the ‘hard’ August 2 deadline.

United Kingdom Gross Domestic Product (YoY) (2Q A): July 26 – 08:30 GMT

The British economy has experienced growth of at least 1.5 percentin each of the past four quarters, on a year-over-year basis, going back to the second quarter of 2010. Surveys indicate that the GDP growth figure released on July 26 will come in at 0.8 percent, well below last quarter’s 1.6 percent pace, on a yearly-basis. Growth forecasts have been revised downwards as the economy has failed to pick up momentum in recent weeks and months, as most recently noted by the Bank of England minutes, released this past week.

Contributing to the downturn has been the persistent Euro-zone debt crisis, which has curtailed investment overseas and demand for British goods. Inflation continues to be stubbornly high at 4.5 percent, more than double the inflation target rate as set by the Bank of England. Although a decline in output should deter further inflation, the priority remains to accelerate economic growth, which is why the central bank has held rates at 0.50 percent for twenty-nice consecutive months.

United States Durable Goods Orders (JUN): July 27 – 12:30 GMT

U.S. Durable Goods Orders are expected to have risen only 0.3 percent after increasing a promising 2.1 percent in May, already revised up from the 1.9 percent initial reading. The increase is still welcomed following a 2.7 percent drop in orders in April. The recent upswing in the closely watched economic indicator is rooted mainly in easing disruptions to factory production in the United States, as supply chain disruptions as a result of the aftermath of the Japanese natural disasters and ensuing earthquake weakened demand. In the fragile U.S. economy, manufacturing has been one of the key areas of strength since the recession abated.

A weaker domestic currency has boosted exports and encouraged manufacturers to continue to make long-term investments. The durable goods orders report is a leading indicator of economic health, and will thus be closely watched to gauge manufacturers’ sentiment and investment activity as the debt ceiling debate looms in the U.S.

Reserve Bank of New Zealand Rate Decision (JUL 28): July 27 – 21:00 GMT

At its last meeting on June 8, the Reserve Bank of New Zealand decided to maintain its key benchmark interest rate at 2.50 percent, on the outlook that the economy is steadily improving following the earthquakes over the past few months. The central bank has determined that the most southern antipodean nation is still in need of stimulus to promote further strengthening. It is widely expected that the key rate will be kept at 2.50 percent at the next monetary policy meeting on July 28, with the Credit Suisse Overnight Index Swaps showing a mere 6.0 percent chance of a 25.0-basis point rate hike. Still, despite such weak expectations, the number of basis points priced into the Kiwi over the next 12-months, 94.0, has boosted the New Zealand Dollar since mid-March.

In spite of such a strong domestic currency, recent data releases indicate that the economy is undergoing robust growth and inflation has risen faster than expected. GDP growth figures released on July 13 came in at 1.4 percent, blowing past a forecast of 0.5 percent growth, while recent inflationary data showed inflation increasing to 5.3 percent, topping expectations of 5.1 percent, on a year-over-year basis. These two important economic indicators will play a major role in determining future the central bank’s cash rate decisions. If the recent growth continues, there is a high probability that there will be a rate hike in September to contain inflationary pressures.

German Consumer Price Index (YoY) (JUL P): July 28 – 04:00 GMT

The German consumer price index has remained steady for the last six months and no change is expected in this figure at the next release next Thursday. According to a Bloomberg News survey, the initial forecast calls for a print of 2.3 percent on a year-over-year basis, matching the number of the previous month. This number is slightly higher than the European Central Bank’s target inflation of “below but close to 2 percent,” but the recent rate hikes enacted by the central bank are expected to help suppress further jumps in inflationary pressures: changes in interest rates take anywhere from two- to six-months to be felt by an economy.

Higher energy prices have been the primary driver keeping inflation above the 2.0 percent mark but “lower food and seasonal food prices can be in part held responsible for the benign pan-German reading.” Since Germany is the Euro-zone’s strongest and largest economy, this reading is closely watched by the European Central Bank as a determinant of their monetary policy decisions.

United States Gross Domestic Product (Annualized) (2Q A): July 29 – 12:30 GMT

The U.S. economy is expected to have experienced very slow economic growth in the second quarter of 2011. The GDP data that will be released on July 29 is an indication that output is increasing at a decreasing rate, albeit at a decreasing rate. Forecasts call for a 1.7 percent growth in output versus a 1.9 percent growth experienced in the first quarter, according to a Bloomberg News survey. Two significant factors contributing to the slow recovery include high food and energy prices and supply chain disruptions following the Japan earthquake.

The ongoing debt ceiling debate has reduced consumer confidence as investors concerns grow about the possibility of a U.S. default. The lowered confidence levels have translated into reduced spending impacting the output produced by the world’s largest economy. At the most recent Federal Reserve monetary policy meeting, the FOMC revised GDP and unemployment forecasts downwards from their April projections. The change in growth forecasts for 2011 and 2012 have been revised from 3.3 percent to 2.9 percent and from 4.2 percent to 3.7 percent, respectively.

Written by Christopher Vecchio, Currency Analyst


Emas Bertengger Dekat Rekor Tinggi


Sabtu, 23 Juli 2011 – 03:01 WIB

Emas naik untuk ditutup di atas $1,601 per ons hari Jumat, mendekati rekor tinggi pekan ini seiring rencana bailout untuk Yunani yang masih tertutup dan kecemasan mengenai debat untuk menaikkan batas hutang AS memicu aksi beli safe-haven emas. Ledakan di norwegia yang menelan korban 2 orang juga menambah ketidakpastian.

Di Amerika Serikat, juru bicara House of Representatives John Boehner mengatakan bahwa partai Republik masih belum ada kesepakatan untuk menghindari default hutang, namun diskusi tentang masalah itu terus berlanjut. Sementara itu, Presiden Barack Obama menguratakan keyakinannya bahwa Kongres akan mencapai kesepakatan. Investor terus memantau perkembangan situasi hutang di AS dan Eropa, namun ketidakpastian yang menyelimuti keduanya terus membuat emas diminati investor.


Dollar Ignores Budget Headway, Earnings and Suffers for Risk Rally


Dollar Ignores Budget Headway, Earnings and Suffers for Risk Rally

Dollar Ignores Budget Headway, Earnings and Suffers for Risk Rally

By John Kicklighter, Currency Strategist

20 July 2011 05:07 GMT
  • Dollar Ignores Budget Headway, Earnings and Suffers for Risk Rally
  • Euro Surprisingly Steady Despite Portugal Surprise Gap, Rising Greece Uncertainty
  • British Pound: Will the BoE Minutes Stir Volatility Like the Last Statement?
  • Canadian Dollar Rallies after BoC Rouses Interest Rate Hikes
  • Australian Dollar Torn Between a Rally in Capital Markets, Dovish Turn from RBA
  • Swiss Franc Marks a Sharp Correction but was it Risk or the Euro’s Doing?
  • Gold Rally Ends with Record Highs but Not Record Consistency

Dollar Ignores Budget Headway, Earnings and Suffers for Risk Rally

Looking at the mix of performance against its most prominent counterparts, it was clear that the currency was following its traditional risk appetite lines. This in itself is rather remarkable because we have seen this particular driver drop off as an immediate catalyst in recent days because of the uncertainties surrounding the countdown for the US to surpass its legal budget ceiling. Gauging the convictions behind investor sentiment Tuesday, we can defer to the benchmark S&P 500 Index which rallied a remarkable 1.7 percent – the biggest single-day rally since March 3rd and a sound rejection of a major boundary to bearish progression (the 1,300 level). We can assess this particular catalysts’ influence over the greenback by the severity of the Australian, New Zealand and Canadian dollar’s rallies against the common benchmark. Offering further confirmation of just how pervasive risk trends were, we would further see the greenback actually gain traction against the Japanese yen and Swiss franc – a more convincing funding currency and safe haven respectively.

This rally in risk appetite is somewhat suspicious given the fundamentals that were on tap through Tuesday; but it makes more sense when we reflect on the underlying market conditions we are dealing with. Volatility is a stubborn hold over from the previous two weeks when headlines were stirring capital turnover; but the masses are still refusing to generate a consistent direction (bullish or bearish) due to the big-ticket threats that are loom just over the horizon. The investor sentiment influence is certainly showing through in the Dow Jones FXCM Dollar Index’s (ticker = USDollar) bearings; but EURUSD is a better guide for the currency’s views beyond the volatility of risk appetite. The benchmark pair gained on the day; but ultimately it is deeply mired in congestion. For this cross specifically we isolate two major, conflicting fundamental drivers. On the euro’s side, the uncertainty surrounding the sovereign debt crisis is providing consistent pressure (more on that below). That is directly contrasted by the fear that we will reach August 2nd without a fix for the US debt ceiling. Through this past session, President Obama voiced support for the ‘Gang of Six’ proposal that would reduce the deficit by $3.7 billion. And, though Speaker of the House Boehner remarked that it didn’t go far enough, it seems that the government is working towards an agreeable compromise.

The other important driver for the day (the housing data offered little in the way of lasting influence over the dollar) was the round of 2Q earnings. At the top of our watch list were the bank reports: Bank of America, Goldman Sachs, Wells Fargo and Bank of New York Mellon. The health of these financial sector giants represents a strong driver for investor optimism, offer a valuable reflection to the health of the financial sector and presents its own reflection of underlying growth. The BoA $9.1 billion loss is a good reflection of the troubles with the mortgage market as well as the increased regulation; while the $0.33 earnings-per-share speaks to the leveraged use of accounting to maintain fragile market confidence.

Euro Surprisingly Steady Despite Portugal Surprise Gap, Rising Greece Uncertainty

While we haven’t seen another critical step towards the total spread of the Euro Zone sovereign debt crisis; the headlines continue to undermine any positive arguments that are made in support for the euro. The heavy headline flows from the region Tuesday were topped by Portugal Prime Minister Coelho’s announcement that a previously unreported 2 billion euro budget gap was uncovered. Perhaps just as notable though, Spain and Greece auctioned off debt to dubious yields and bidders; ECB member Nowotny seemed to open the door to allowing a temporary default for Greece; and German Chancellor Angela Merkel attempted to curb expectations of a solution for the crisis by the close of Thursday’s summit.

British Pound: Will the BoE Minutes Stir Volatility Like the Last Statement?

The Bank of England rate decision has been a non-event for the sterling for a number of months now. On the other hand, the minutes that reflect the policy authority’s discussions, reasoning for their hold and forecast for the future can certainly catch the markets off guard. Considering inflation and economic activity futures have eased while European financial stability is under pressure, a bearish shift is possible.

Canadian Dollar Rallies after BoC Rouses Interest Rate Hikes

No change was expected from the Bank of Canada’s rate decision this past trading session; and indeed, the central bank wouldn’t disappoint. That said, the statement that followed the decision offered a little more illumination than was expected. The market focused on the missing word ‘eventually’ in reference to when rates would rise. With a forecast for the economy to hit full potential by mid-2012, this is a good hawkish mix.

Australian Dollar Torn Between a Rally in Capital Markets, Dovish Turn from RBA

Like its monetary policy regime, the Australian dollar is not untouchable. After the RBA minutes reported that it could hold on rates for an extended period of time to assess the financial market feedback from Europe’s troubles and inflation pressures, the currency started to pullback. It is difficult to see exactly how much influence this has on a pair like AUDUSD; but AUDCAD offers a better contrast to policy expectations.

Swiss Franc Marks a Sharp Correction but was it Risk or the Euro’s Doing?

Monday’s pullback could have been written off as volatility; but the stumble from the franc Tuesday cannot be brushed off so quickly. The tumble against high-yielding currencies like the Aussie and kiwi dollar’s can be attributed to the risk appetite run; but USDCHF and EURCHF reversals are more intrinsic to the franc’s fundamentals. The currency comes under the magnifying glass when the market doesn’t blindly sell euros.

Gold Rally Ends with Record Highs but Not Record Consistency

We were so close to hitting that unprecedented 12-day run; but ultimately, gold wouldn’t make it. After 11 consecutive days of advance; the precious metal would finally fall back on suggestions that the US president and Congress were coming closer to a palatable compromise on the ever-problematic debt fears. That said, issues in the US and Europe are far from resolved; so don’t build a large short just yet.

ECONOMIC DATA

Next 24 Hours

GMT Currency Release Survey Previous Comments
0:30 AUD Westpac Leading Index (MoM) (MAY) 0.2% Leading index growth declined since April
1:00 AUD Consumer Inflation Expectation (JUL) 3.3% Expectations may point to actual CPI
5:00 JPY Coincident Index (MAY F) 106 Japanese economic measures have recovered after March, though still not at pre-quake levels
5:00 JPY Leading Index (MAY F) 99.8
6:00 EUR German Producer Prices (MoM) (JUN) 0.0% 0.0% An expected fall in long term price change may result in dovish ECB decisions
6:00 EUR German Producer Prices (YoY) (JUN) 5.5% 6.1%
7:00 JPY Convenience Store Sales (YoY) (JUN) 5.7% Broader tracking of Japanese retail
8:00 EUR Italian Industrial Orders s.a. (MoM) (MAY) 2.3% -6.4% Italian orders expected to increase, led by exports though not likely to have major effects on country’s own debt problems
8:00 EUR Italian Industrial Orders n.s.a. (YoY) (MAY) 10.2% 5.8%
8:00 EUR Italian Industrial Sales s.a. (MoM) (MAY) 1.5%
8:00 EUR Italian Industrial Sales n.s.a. (YoY) (MAY) 14.2%
9:00 EUR Italian Current Account (euros) (MAY) -5604M Payments balance recovered last month
11:00 USD MBA Mortgage Applications (JUL 15) -5.1% Could improve on housing starts
12:30 CAD Wholesale Sales (MoM) (MAY) 0.1% -0.1% Same level sales could have some push behind future rate hikes
14:00 EUR Euro-Zone Consumer Confidence (JUL A) -10.2 -9.8 Advance data shows softer confidence
14:00 USD Existing Home Sales (MoM) (JUN) 1.9% -3.8% Sales expected to recover following today’s better home starts
14:00 USD Existing Home Sales (JUN) 4.90M 4.81M
14:30 USD DOE U.S. Crude Oil Inventories (JUL 15) -1500K -3124K Reduction in crude inventories again could mean pickup in demand, though moderately weaker than previous
14:30 USD DOE U.S. Distillate Inventory (JUL 15) 1500K 2967K
14:30 USD DOE Cushing OK Crude Inventory (JUL 15) 615K
14:30 USD DOE U.S. Gasoline Inventories (JUL 15) -100K -840K
14:30 USD DOE U.S. Refinery Utilization (JUL 15) 0.0% -0.4%
22:45 NZD Net Migration s.a. (JUN) -360 Further outmigration could point to weaker domestic economy
23:01 GBP UK Nationwide Consumer Confidence (JUN) 49 55 EU troubles expected to drag
23:50 JPY Adjusted Merchandise Trade Balance (Yen) (JUN) -¥250.4B -¥474.6B Trade balance expected to moderately recover as large manufacturing industries and companies recover after earthquake
23:50 JPY Merchandise Trade Exports (YoY) (JUN) -4.1 -10.3
23:50 JPY Merchandise Trade Imports (YoY) (JUN) 11 12.3
23:50 JPY Merchandise Trade Balance Total (Yen) (JUN) -¥149.0B -¥855.8B
GMT Currency Upcoming Events & Speeches
1:30 JPY BOJ Deputy Governor Yamaguchi to Speak in Matsumoto City
2:00 CNY Conference Board China July Leading Economic Index
8:30 GBP Bank of England Minutes
14:30 CAD Monetary Policy Report
22:15 USD Fed’s Sack to Speak to Money Marketeers in New York

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE – 18:00 GMT

Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist 2 1.5160 1.6600 86.00 0.8900 1.0275 1.1800 0.8620 118.00 146.05
Resist 1 1.5000 1.6300 81.50 0.8550 1.0000 1.1000 0.8520 113.50 140.00
Spot 1.4133 1.6121 79.19 0.8248 0.9500 1.0731 0.8557 111.92 127.67
Support 1 1.4000 1.5935 78.50 0.8075 0.9500 1.0400 0.7745 109.00 125.00
Support 2 1.3700 1.5750 76.25 0.7900 0.9055 1.0200 0.6850 106.00 119.00

CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency USD/MXN USD/TRY USD/ZAR USD/HKD USD/SGD Currency USD/SEK USD/DKK USD/NOK
Resist 2 13.8500 1.7425 7.4025 7.8165 1.3650 Resist 2 7.5800 5.6625 6.1150
Resist 1 12.5000 1.6730 7.3500 7.8075 1.3250 Resist 1 6.5175 5.3100 5.7075
Spot 11.6639 1.6586 6.9301 7.7950 1.2154 Spot 6.5124 5.2758 5.5280
Support 1 11.5200 1.5725 6.5575 7.7490 1.2145 Support 1 6.0800 5.1050 5.3040
Support 2 11.4400 1.5040 6.4295 7.7450 1.2000 Support 2 5.8085 4.9115 4.9410

INTRA-DAY PIVOT POINTS 18:00 GMT

Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist 2 1.4288 1.6250 79.50 0.8315 0.9647 1.0833 0.8660 112.95 128.28
Resist 1 1.4210 1.6186 79.35 0.8281 0.9574 1.0782 0.8609 112.43 127.98
Pivot 1.4140 1.6113 79.08 0.8217 0.9528 1.0690 0.8521 111.81 127.40
Support 1 1.4062 1.6049 78.93 0.8183 0.9455 1.0639 0.8470 111.29 127.09
Support 2 1.3992 1.5976 78.66 0.8119 0.9409 1.0547 0.8382 110.67 126.51

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD EUR/JPY GBP/JPY
Resist. 3 1.4334 1.6280 80.02 0.8356 0.9591 1.0873 0.8676 113.65 129.34
Resist. 2 1.4284 1.6240 79.81 0.8329 0.9568 1.0838 0.8646 113.22 128.92
Resist. 1 1.4234 1.6200 79.60 0.8302 0.9546 1.0802 0.8616 112.78 128.50
Spot 1.4133 1.6121 79.19 0.8248 0.9500 1.0731 0.8557 111.92 127.67
Support 1 1.4032 1.6042 78.78 0.8194 0.9454 1.0660 0.8498 111.06 126.84
Support 2 1.3982 1.6002 78.57 0.8167 0.9432 1.0624 0.8468 110.62 126.42
Support 3 1.3932 1.5962 78.36 0.8140 0.9409 1.0589 0.8438 110.19 126.00

v

Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com


Guest Commentary: Gold & Silver – Daily Outlook 07.18.2011


Gold & Silver - Daily Outlook July 18

By Lior Cohen, 
18 July 2011 15:02 GMT

Gold & Silver – Daily Outlook July 18

Gold and silver kept on rising during last week, and they continue to do so this week. Today, the US TIC long term purchases report will be published; the Australian bank will make its decision on the overnight rate.

Let’s examine the news of the day related to the precious metals market for today July 18th:

Gold and Silver–July

Gold price ended last week on a positive note as it rose by 0.05% to $1,590 – its highest price level in 2011 on Friday, July 15th.

Gold rose for ninth consecutive days.

Silver also inclined by 0.97% to $39.07 – the highest price level since May 4th.

During July, gold increased by 5.5%, and silver inclined by 9.5%.

The chart below shows the normalized gold and silver (June 30th 2011=100). It shows that silver has been outperforming gold since the middle of last week; it also shows that up until gold price has inclined by nearly 6% from the beginning of the month, and silver price added 12% to its value in July.

Guest_Commentary_Gold_and_Silver_Outlook_07.18.2011_body_Gold_prices_forecast__silver_price_outlook_2011_JULY_18.png, Guest Commentary: Gold & Silver - Daily Outlook 07.18.2011

Euro Debt – Trichet says Europe to Show Determination

The debt concerns in Europe continue to affect traders as the Euro continues to depreciate against major other currencies. The European Central Bank President said that the concerns over the European debt will continue until Europe will act determinedly to overcome this matter.

He also said that ECB won’t accept government bonds as collateral in case a country will reach default:

“If a country defaults, we can no longer accept as normal eligible collateral defaulted bonds issued by the government of that country. Because, in the eyes of the Governing Council, this would impair our ability to be an anchor of confidence and stability.”

US Debt Ceiling Concerns

The US government will need to decide on raising the debt ceiling by the beginning of August; it’s mostly likely to be passed in the next couple of weeks, but in the mean time the internet continues to explore this issue. Moody’s rating agency even went one step further and suggested the United States to eliminate its statutory limit on government debt in order to reduce uncertainty among bond holders.

US TIC Report for May 2011

The Treasury International Capital presents the main changes in the purchases and sales of US long term treasuries during May 2011. In the April report, the net foreign purchases reached $30.6 billion; the increase in purchases was mainly driven by China. In the upcoming report there might continue to be a rise in purchases. If this will be the case, it might bring some confidence and reassurance to the US dollar.

Euro, US Dollar / Gold & Silver– July Update

The Euro/USD exchange rate fell during July by 2.4%, and on Friday it rose by 0.11%. If today the USD will depreciate against major currencies including Australian dollar and Canadian dollar, this might further push gold and silver up.

Gold and Silver Outlook:

Gold and silver continue to rise as they did during last week. For gold the longest streak it had in rising was back in April as it rose for eight consecutive business days (between April 13th and April 25th), which makes the current streak the longest one in 2011 so far. The concerns over the US debt ceiling on the one hand and the European debt on the other are probably among the reasons for this recent rally in bullion metals. Therefore I think that gold and silver will moderate change today, but will likely to continue their upward trend in the following days.

For further reading:

Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.

By: Lior Cohen, Energy Analyst forTrading NRG


Fed Chair Significantly Downplays Prospects for Additional Easing


Fed Chair Significantly Downplays Prospects for Additional Easing

Fed Chair Significantly Downplays Prospects for Additional Easing

By Joel Kruger, Technical Strategist

15 July 2011 04:44 GMT
  • Thursday price action fails to inspire any real directional bias
  • USD recovers after Bernanke dismisses possibility for QE3
  • S&P jumps into mix and also warns of potential US ratings downgrade
  • Eurozone trade balance only key release in European session

All things considered, Thursday’s session of trade was relatively uneventful from a price action standpoint, with markets in the end, closing near their daily opening levels. The Greenback had initially been weighed down across the board on concerns over a potential downgrade to US credit ratings, but managed to fight its way back in the latter half of the day, with US economic data coming in as expected and more importantly, Fed Chair Bernanke throwing cold water on any real hopes for further accommodation from the Fed.

When asked if the Fed would consider additional accommodation, the Fed Chair said that the central bank was not considering this as an option at the present time. The US dollar was very well bid as a result with market participants also retracing some of their moves from the previous day’s testimony when it seemed as the door was open for potential QE3 measures. However, ongoing concern over the US debt ceiling also would not completely go away, with S&P joining into the mix and also warning of some form of a downgrade to US ratings over the coming days even in a situation where the ceiling were raised. Specifically, the S&P analyst said that the chances for a sovereign rating downgrade in the next 90 days had risen considerably

Looking ahead, the European economic calendar is extremely quiet, with the only key release coming in the form of the Eurozone trade balance. But as was the case on Thursday, the quiet economic calendar for the session should be a welcome development as broader global macro forces are at play. US equity futures and oil prices consolidate their latest declines, while gold sits on the opposite end of the spectrum and consolidates gains by record highs.

ECONOMIC CALENDAR

Fed_Chair_Significantly_Downplays_Prospects_for_Additional_Easing_body_Picture_5.png, Fed Chair Significantly Downplays Prospects for Additional Easing

TECHNICAL OUTLOOK

Fed_Chair_Significantly_Downplays_Prospects_for_Additional_Easing_body_eur.png, Fed Chair Significantly Downplays Prospects for Additional Easing

EUR/USD: Overall, price action remains quite bearish and we continue to like the idea of selling into rallies in anticipation of a more sizeable pullback below the 200-Day SMA. The longer-term moving average resides by the 1.3900 figure and a clear break below will open the door for a test of next key support in the 1.3750. In the interim, look for the formation of a fresh lower top somewhere ahead of 1.4400. Thursday’s topside failure by a convergence of moving averages just under 1.4300 could very well offer itself as a strong candidate for this next lower top.

Fed_Chair_Significantly_Downplays_Prospects_for_Additional_Easing_body_jpy2.png, Fed Chair Significantly Downplays Prospects for Additional Easing

USD/JPY: The latest daily close below 79.50 certainly compromises our constructive outlook with the market breaking down below some solid multi-day range support in the 80.00 area and dropping into the 78.00’s thus far. This now puts the pressure back on the downside and opens the door for a retest and potential break below the record lows from March by 76.30. At this point, a daily close back above 80.00 would be required at minimum to relieve downside pressures.

Fed_Chair_Significantly_Downplays_Prospects_for_Additional_Easing_body_gbp2.png, Fed Chair Significantly Downplays Prospects for Additional Easing

GBP/USD: We classify the latest price action as some consolidation ahead of the next major downside extension with the market now looking to establish back below the 200-Day SMA and extend declines through next key support at 1.5750 further down. In the interim, look for any rallies to be well capped ahead below 1.6250 on a daily close basis. Back under 1.6000 helps to confirm and should accelerate.

Fed_Chair_Significantly_Downplays_Prospects_for_Additional_Easing_body_swiss1.png, Fed Chair Significantly Downplays Prospects for Additional Easing

USD/CHF: Despite the intense downtrend resulting in recently established fresh record lows below 0.8100, short/medium/longer-term technical studies are looking quite stretched to us, and we continue to like the idea of taking shots at buying in anticipation of a major base. Aggressive bulls may want to look to establish fresh long positions ahead of 0.8000, while conservative counter-trenders will want to wait for a daily close back above 0.8200 at a minimum.

Written by Joel Kruger, Technical Currency Strategist


Gold and Currencies Correlations at Record on US Dollar Risk


Gold and Currencies Correlations at Record on US Dollar Risk

By David Liu, 15 July 2011 02:36 GMT

The following table includes the correlation between gold and the most popular currency pairs over various timeframes. A value close to +1 indicates a strong positive relationship between gold and the pair, while a value close to -1 indicates a strong negative relationship. Colored values indicate week-to-week changes of over 30%.

———————————————————————————————————————————

Gold USD/CAD AUD/USD NZD/USD EUR/USD GBP/USD USD/JPY USD/CHF
3 Day 15 Min -0.94 0.91 0.90 0.91 0.94 -0.85 -0.91
1 Week 60 Min -0.46 0.18 0.44 -0.07 0.62 -0.92 -0.94
2 Week 60 Min -0.36 0.12 0.24 0.05 -0.24 -0.41 0.44
1 Month Daily -0.26 0.18 0.32 -0.66 0.12 0.50 -0.52

Weekly Commentary: Short term correlations with gold and dollar pairs rose to the highest in recent history as Moody’s threatened to downgrade US government treasury pending the ongoing debt scuffle in the House of Representatives. The fear that the safest asset in the world may lose its status hurt the dollar on all sides as investors flocked to both foreign currencies and precious metals.

For more about the debt ceiling and what it means for the dollar, please refer to this analysis.

On a longer term outlook, the Japanese yen and Swiss franc gained in tandem with the yellow metal, showing increased safe haven demand. Fundamental problems this week ranging from a possible contagion of the European debt crisis to Italy to the possible US debt downgrade induced further flights to safety. Despite the record flows, markets are looking forward to second quarter earnings next week and a possible conclusion to the debt fight.

Gold-Forex_Correlations_07152011_body_Picture_1.png, Gold and Currencies Correlations at Record on US Dollar RiskGold-Forex_Correlations_07152011_body_Picture_2.png, Gold and Currencies Correlations at Record on US Dollar RiskPlease note: Chart uses franc rate as CHFUSD to show safety correlation with gold.

Gold-Forex_Correlations_07152011_body_Picture_3.png, Gold and Currencies Correlations at Record on US Dollar RiskGold-Forex_Correlations_07152011_body_Picture_4.png, Gold and Currencies Correlations at Record on US Dollar RiskWritten by David Liu, DailyFX Research


6 Month Euro Forecast: Looking for the EURUSD at 1.25


6 Month Euro Forecast: Looking for the EURUSD at 1.25

By David Rodriguez, Quantitative Strategist

13 July 2011 06:00 GMT

The Euro has done well through the first half of 2011, rallying to fresh multi-year highs against the US Dollar and strengthening against almost all G10 counterparts. There remain clear fundamental risks for the single currency in the second half of 2011, and we look for the Euro to fall. The major concern is whether several at-risk countries can remain stable despite clear debt crises. The European Central Bank’s next actions may prove pivotal—especially as the Euro has strengthened on robust interest rate forecasts and is at risk of losses on any significant downgrades. The number of risks to the Euro arguably outweighs those to the US Dollar, leaving us watching for further EURUSD declines. We look for the EUR/USD to end 2011 below 1.25.

European Sovereign Debt Crisis – Where Did We Start and Where Do We Stand?

The euro zone financial debt crisis continues to threaten EUR stability and remains a key risk through the second half of the year. At the forefront of traders’ minds is Greece—can the southern European state withstand market pressures and remain solvent?

Despite a €110 billion three year bailout agreement with the European Union and International Monetary Fund, Greece has yet to see the light at the end of the tunnel. The difficulty lies in the structure of the bailout deal. When the International Monetary Fund agreed to loans, it required that the Greek government return to the debt markets for its borrowing needs as soon as 2012. At the time, this request seemed reasonable. With backstops from the EU and IMF, international investors would be more likely to buy Greek debt. Yet the continuing sell-off in Greek bonds underline that few are willing to hold existing Greek debt—much less buy any newly-issued debt.

The cost to insure against a Greek debt default has recently hit record-highs as seen through Credit Default Swaps, and current sovereign debt ratings imply a 50 percent chance of a Greek default within the coming five years.

A further bailout seems increasingly necessary and likely, but uncertainty over Greece’s ability to repay debts could likewise spread to other at-risk government treasuries.

Spain and Portugal Outlook Uncertain on Funding Needs

The key risk with periphery debt crises has and will always be contagion—will Greece’s troubles affect other periphery nations and even spill into the core through higher bond yields? In absolute terms, bailouts for Greece, Portugal, and Ireland have cost relatively little. Together, the three economies comprise approximately 5 percent of total euro zone Gross Domestic Product. If EMU titans Spain (8.9 percent of GDP) and Italy (12.8 percent of GDP) fall into trouble, however, European coffers may not be able to cope with the required fiscal aid.

The spread between benchmark Spanish and German government bond yields has recently widened to its largest since the inception of the euro—implying that Spain’s relative debt risk is worsening. And though a 10-year Spanish government bond yield of approximately 5.5 percent is low by historical standards, the widening gulf could further exacerbate government deficits. Much the same can be said for Italy. A key question is whether bond troubles in periphery nations can spread to the core, truly threatening the stability of the single currency zone.

Of course, there have been plenty of reasons that the euro has strengthened despite these readily apparent sovereign debt crises.

European Central Bank – Can They Continue to Hike Rates?

Expectations that the European Central Bank will be among the most aggressive central banks in raising interest rates has driven speculative interest in the euro, pushing the price up in the first half of this year. A key question will be whether the ECB will follow through on lofty forecasts and continue to raise interest rates, further supporting the currency.

Robust interest rate forecasts have driven the euro higher against the US Dollar and Japanese Yen—currencies that hold the dubious honor of the two lowest-yielding among the industrialized world.

Overnight Index Swaps, a tool used by major financial institutions to bet on and hedge against interest rate moves, show that traders expect the ECB could raise rates three times through the second half of 2012 in order to head off inflation in the Euro Zone. This compares to forecasts that the US Federal Reserve will leave interest rates roughly unchanged through the same stretch. The Bank of Japan is similarly forecast to leave monetary policy effectively unchanged and to keep Japanese short-term interest rates near zero.

Yet in markets nothing is guaranteed, and indeed we might argue that the euro has seen about all of the yield-linked support it will enjoy. That is to say, it would likely take a material improvement in ECB forecasts (and subsequent rate hikes) to continue driving EUR gains.

Can the European Central Bank continue to set hawkish monetary policy despite clear economic and fiscal struggles in periphery nations? ECB President Jean Claude Trichet has continued to emphasize that the central bank sets policy for the whole of the monetary union and cannot ignore mounting inflationary pressures. Yet with fiscal austerity packages guaranteed across the euro zone, demand-driven inflation could quickly abate and lessen the need for tightened policy.

All else remaining equal, the euro would almost certainly fall on a sharp downgrade in ECB interest rate expectations. Of course, nothing ever remains equal in financial markets and there are a number of mitigating factors that could strongly affect the single currency.

Financial Markets Continue to Drive Currencies

The euro remains a currency closely linked to equities markets, with the EUR/USD tending to rise with stocks, and tending to fall when stocks fall. Further market turmoil could almost certainly derail the recent EUR strength. The correlation between the Euro/US Dollar currency pair and the US Dow Jones Industrial Average has recently been trading near record levels; Dow variation has theoretically explained up to 45 percent of Euro movements. Part of this relationship is the US Dollar’s appeal as the currency of many popular “safe” investments—most notably US Treasury Bonds. On the other side of it, the euro is arguably among the most at-risk assets in financial market upheaval as debt market difficulties could further exacerbate the current European sovereign debt crises.

The Dow Jones Industrial Average limped into the second half of the year, declining for six consecutive trading weeks and posting its worst performance in nearly a decade. It should come as relatively little surprise that especially sharp equities sell-offs forced EURUSD weakness, and indeed a continuation could see the US Dollar further regain ground against its high-flying European counterpart.

Euro in Favorable Long-Term Trend but with Considerable Risks in the Second Half of 2011

The Euro remains well within a decade-long uptrend against the US Dollar, but the medium-term outlook is fraught with risk as doubts remain about euro zone economic and political stability. Of course, the US Dollar is not without its own issues and actual EURUSD price action will depend on a great number of different dynamics.

Whether or not the euro remains in its broader uptrend will greatly depend on developments in sovereign debt crises and market expectations regarding the European Central Bank. It seems that risks generally favor Euro losses, and indeed our forecast remains bearish into the end of 2011.


FOREX: US Dollar to Rise if Bernanke Testimony Sinks QE3 Hopes


FOREX: US Dollar to Rise if Bernanke Testimony Sinks QE3 Hopes

By Ilya Spivak, Currency Strategist

13 July 2011 06:48 GMT

Talking Points

  • NZ Dollar Leads Risk-Linked Currencies Higher as Stocks Rise
  • Chinese GDP Data Cools Rate Hike Fears, But Not for Long
  • Traders Turn Spotlight on Bernanke’s Testimony on QE Hopes
  • UK Jobless Claims to Cement Dovish Bank of England Outlook

The New Zealand Dollar outperformed in overnight trade as Asian stock exchanges rebounded after yesterday’s selloff, boosting sentiment-linked currencies. The Australian and Canadian Dollars likewise yielded considerable gains. Needless to say, safe-haven currencies came under pressure, with the Japanese Yen suffering outsized losses while the Swiss Franc and US Dollar also suffered, though the greenback held up best among the three.

The MSCI Asia Pacific regional equity index rose 0.6 percent after minutes from June’s Federal Reserve policy meeting revealed policymakers were divided about additional stimulus to bolster growth if economic recovery remains anemic, offering a sliver of hope for those worried about looming global slowdown in that a third round of quantitative easing (known as “QE3”) has not been ruled out outright. China’s Gross Domestic Product reading offered additional support, showing output grew at an annual pace of 9.5 percent in the second quarter, slowing from 9.7 percent in the three months through March. The outcome stoked speculation that slowing growth will delay further interest rate hikes.

However, the figures’ supportive powers seem decidedly limited. Indeed, the timelier Retail Sales and Industrial Production readings came in dramatically above economists’ forecasts, the former yielding the strongest increase since January while the latter returned the highest print in 13 months. Taken against a backdrop of soaring inflation as well as buoyant money supply and loan growth, the case for further tightening is remains a very compelling one, with fears of

Looking ahead, the spotlight turns on the Federal Reserve Chairman Ben Bernanke as he delivers his semi-annual testimony on monetary policy to the US House of Representatives. While the central bank chief’s prepared remarks are likely to toe a familiar line, traders will pay close attention to clues about the likelihood of further stimulus in his response to lawmakers’ questions. A strong statement squashing budding hopes for QE3 (at least for now) would stoke worries of broad-based slowdown in the second half of the year, weighing on risk appetite and spurring demand for safe-haven currencies anew.

On the data front, UK Jobless Claims figures headline the docket, with consensus forecasts calling for a fourth consecutive monthly increase to put overall applications for unemployment benefits at the highest level since April 2010. The result promises to cement expectations that the Bank of England will hold off from interest rate hikes in the near term, keeping a firm lid on the British Pound.

Asia Session: What Happened

GMT CCY EVENT ACT EXP PREV
0:30 AUD Westpac Consumer Confidence (JUL) -8.3% -2.6%
0:30 AUD Westpac Consumer Confidence Index (JUL) 92.8 101.2
2:00 CNY Industrial Production YTD (YoY) (JUN) 14.3% 13.9% 14.0%
2:00 CNY Industrial Production (YoY) (JUN) 15.1% 13.1% 13.3%
2:00 CNY Fixed Assets Inv Excl. Rural YTD (YoY) (JUN) 25.6% 25.7% 25.8%
2:00 CNY Real GDP YTD (YoY) (2Q) 9.6% 9.5% 9.7%
2:00 CNY Real GDP (QoQ) (2Q) 2.2% 2.1%
2:00 CNY Real GDP (YoY) (2Q) 9.5% 9.3% 9.7%
2:00 CNY Retail Sales YTD (YoY) (JUN) 16.8% 16.7% 16.6%
2:00 CNY Retail Sales (YoY) (JUN) 17.7% 17.0% 16.9%
4:30 JPY Industrial Production (MoM) (MAY F) 6.2% 5.7%
4:30 JPY Industrial Production (YoY) (MAY F) -5.5% -5.9%
4:30 JPY Capacity Utilization (MoM) (MAY) 12.8% -1.1%
5:00 JPY Bank of Japan Monthly Economic Report (MAY)

Euro Session: What to Expect

GMT CCY EVENT EXP PREV IMPACT
6:00 EUR German Wholesale Price Index (MoM) (JUN) -0.2% 0.0% Low
6:00 EUR German Wholesale Price Index (YoY) (JUN) 8.8% 8.9% Low
7:15 CHF Producer & Import Prices (MoM) (JUN) -0.3% -0.2% Low
7:15 CHF Producer & Import Prices (YoY) (JUN) -0.3% -0.4% Low
8:30 GBP Jobless Claims Change (JUN) 15.0K 19.6K High
8:30 GBP ILO Unemployment Rate (3M) (MAY) 7.7% 7.7% High
8:30 GBP Claimant Count Rate (JUN) 4.7% 4.6% Medium
8:30 GBP Average Weekly Earnings 3M/YoY (MAY) 2.1% 1.8% Medium
8:30 GBP Weekly Earnings ex Bonus 3M/YoY (MAY) 2.0% 2.0% Low
9:00 EUR Euro-Zone Indus Production w.d.a. (YoY) (MAY) 4.8% 5.3% Medium
9:00 EUR Euro-Zone Indus Production s.a. (MoM) (MAY) 0.4% 0.2% Low

Critical Levels

CCY SUPPORT RESISTANCE
EURUSD 1.3855 1.4080
GBPUSD 1.5813 1.6049