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Forex World Cup Report

Posted on | June 20, 2010 by larry | No Comments

As if to prove they are kings like their currency the Swiss beat Spain in the Football World Cup (That’s soccer for our American friends). France capitulate, Germany trip up badly, Italy very very poor and England well, the usual mess and progress goes down to the wire.
This could almost be the currency report this year……….

In the forex world things were much the same. The Swiss franc certainly shone the most, the Swiss National Bank signaling a break in intervention. Elsewhere it was echoes of the previous week. Equity markets held up well and so too the Euro. Commodity currencies ( Ausie and Canadian) better, all at the expense of the Yen and dollar. That said the Euro/USD is close to reasonable resistance under 1.24. It would need continued confidence in the equity markets next week and risk generally to continue any progress.
It could prove to be an interesting week for the British Pound. The long awaited emergency budget will be introduced.The usual drip feed leaks of what is to be expected seems to point to the Chancellor Osborne trying to get all the bad news in terms of cuts in spending and taxes out all together. They may be fazed in but should get a good response from the market, all be the flip side on growth will be a negative.
On balance I feel the risk reward right now could be for a good move up in GBP/USD ( CABLE). Maybe owning some short term GBP Call Options could be a good play.

In the longer term I still think there will be another shake out in equity markets. The Euro situation while somewhat quieter is a sleeping giant of a problem. It maybe that a double dip does not occur in Europe bailed out by China and Emerging Markets. However, the austerity packages are definitely causing extreme economic pain for many countries. One fears that there will inevitably be social unrest this summer. To what degree may be the deciding factor for markets.

Elsewhere, notably gold made another high of 1263.75 against the dollar with little or no fuss. One suspects that given the excuse of some crisis we could finish the year much higher. On the other hand maybe it was just all those World Cup medals and football WAGS presents.They love their bling.

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eToro World Cup Forex Promotion Deposit and Get a Wide Screen TV

Posted on | June 16, 2010 by gideon | No Comments

Forex Promotion News
eToro is running a World Cup Promotion until the 10th July 2010. Make a deposit and take home a wide screen TV.

[ Click HERE to see the offer details ]

Make a deposit at etoro and get a new wide-screen TV for the 2010 FIFA World Cup.

Deposit any of the following amounts and take home a wide-screen TV, (or the equivalent worth in trading money):

Deposit 10k and get 32" TV or $1500
Deposit 15k and get 42" TV or $2500
Deposit 20k and get 50" TV or $3000

To make a deposit, click here.

Terms and conditions

  • The offer is valid between June 6th- July 10th 2010 or until the stock is over
  • The offer is valid for depositing via wire transfers only
  • The LCD/Plasma screen stock is limited
  • In case a TV cannot be supplied due to local customs regulations or limited shipping capabilities, eToro holds the right to grant you with the equivalent bonus instead.
  • The TV will be counted as a trading bonus in your real trading account, according to the following terms:
    1. 32” TV will be counted as if you received $2500 trading bonus.
    2. 42” TV will be counted as if you received $3500 trading bonus.
    3. 50” TV will be counted as if you received $5000 trading bonus.
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Markets look East for Hope

Posted on | June 13, 2010 by larry | No Comments

Forex markets continued to trade off the back of equity markets and risk sentiment generally. The good news all came from the far east in terms of a big jump in Chinese exports and Japan 1st quarter GDP revision.
This helped steady and eventually rally the equity markets. So it was a softer dollar and yen against the Euro but even more so against the commodity currencies.The Ausie dollar in particular against the Yen.

At this stage it seems far to early to be thinking in terms of a low for equities even if we do see further improvements next week. For sure forex markets will continue to take their lead from risk sentiment and technically both equity market and forex market trends may just be enjoying a breather before we see an about turn for sentiment and a return of dollar strength.
This week sees a good deal of inflation data so probably less market sensitive although the German ZEW Economic Sentiment Index my shed more light on the mood in Europe.
Sterling faired less well last week on some disappointing data but has enjoyed a good run against the Euro so some pull back was to be expected. It does look as though BP will be needing quite a lot of dollars at some time in the future but difficult to see how that might directly impact the currency markets at this stage. The UK budget the week after next will definitely be a major market watch.
 

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Appetite for US Dollar increases on Hungary

Posted on | June 6, 2010 by larry | No Comments

Most of the weeks dramatic action was reserved for Friday.
The bad news for equity markets and the Euro began with some strange comments from Hungary. The prime ministers official spokesman said the economy was in a grave situation and that default on its debt was possible.
The comments ignited fears that a debt crisis could be beginning in Eastern Europe. In a mirror image of Greece it appears that previous economic data had been falsified by the previous government. Hungary of course is not a member of the Euro so its currency the Florint can take some of the strain. However, this was easily enough to unsettle markets.
Close on the heels of this came the much awaited US employment data.The job growth not only came in lower than expected at 431,000 in May but more importantly showed that of those jobs just a paltry 41,000 was in the private sector.
These events left equity markets much weaker the Dow closing some 3% lower to 9930. The Euro fell to a four year low against the US Dollar closing at 1.1970 and 110 against a slightly stronger yen.
The Swiss Franc surged again against the Euro closing under the 1.40 level with the Swiss National Bank fighting a losing battle.
To add further woes to the Euro the Iranian State Television said the central bank had begun the process of reducing their holdings of Euro Reserves from 55% to 20-25%. This was reportedly going to US dollars and gold.Thus far according to their reports some 15 Billion of 45 Billion Euros have been sold. All in all some own goal for a country previously trying to cock a snoop at the US.Dollar.

Technically nothing has changed over the week. The equity markets remain very vulnerable to further sell offs with the Dow possibly targeting 9430 level now. This if it happens increases the likelihood that the forex markets will continue to sell the Euro lower. There remains good resistance between 1.1650 and the 1.1209 ( Key Fibonacci level). A break of the latter technically would signal an attack at the parity level for Euro /US dollar.

Thus far we have heard nothing from the G20 and that leads one to believe that we are in for more of the same over the coming days and weeks.Please do let us know if their is anything on the horizon to change sentiment…………..Now where did I put the can opener

Category: Market Comment/Analysis
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Weekly review

Posted on | May 30, 2010 by larry | No Comments

 No Chinese Takeaway

The Chinese rescued the week after denying the rumors that they were reviewing European Debt Holdings, confirming the Euro zone as one of the most important Investment Markets.
Hardly surprising when they have half a Trillion dollars worth of investments to protect.
The effect was to reverse the recent decline in Equities Oil and commodities together with the commodity currencies.
The Euro faired less well and thus far has achieved very little in terms of a rebound against the dollar closing just below the 1.2300 level. Against the recovering Australian and Canadian dollars it lost over 4% and 3% respectively.
The week ahead will again focus more on the equity markets for a lead although statistics , ISM indices and Non Farm payroll may add some weight.
Next weekend sees the G 20 meeting in Korea and one suspects voices to try and steady the markets. The worry that the Euro zone led panic will push Europe and perhaps elsewhere into a double dip recession will be high on the agenda.

Technically all eyes will remain on equity markets and on balance the likelihood that we have not yet seen a bottom will hang over markets. The Euro Dollar level of 1,2140/50 remains crucial but the odds are that it will be taken out  if equity markets and risk appetite in general suffer.That will lead to pressure on the 1.20 level

The Euro debate commands ever more press space. Whatever the immediate outcome further out into summer the problems will probably surface but may take a lead from how the austerity measures are reflected in civil unrest or not.
 

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Panic ,You aint seen nothing yet. ……..Buy Baked Beans and Gold

Posted on | May 23, 2010 by larry | 1 Comment

What a week eh. Firstly the Euro collapsed closely followed by equity markets.

The EUR/USD was sold off to a 4 year low of 1.2143 on a wave of selling following a announcements from Germany of a ban on naked short selling of bonds. This was seen as a panic measure.
However, the relief of the German government agreeing to the recent bail out package ( all be it by 7 votes) and a bout of intervention by the Swiss Central Bank helped the Euro back to 1.26 plus.
Equity markets which were largely in free fall may have some respite next week in response to Fridays rally in the US.
Volatility surged everywhere with Gold reacting sharply from its recent highs and the Ausie Dollar losing some 6% plus against the US dollar over 7% against the Euro and 9% against the Yen.

So where do we go to? My instinct tells be the heat may be off next week but that may require further consolidation from the equity markets and Euro.
Further out Investors ,hedge funds and other speculators from around the globe seem unconvinced on the Euro and at the very least the growth outlook for Europe as a whole.The dreaded double dip recession is now being predicted in some quarters.

It feels like only a matter of time before we see another bout of Euro selling. Judging by the fall out with Germany over their announcements regarding short selling there seems no real consensus from the politicians who frankly have no idea where this will end. That said , you should not underestimate the political resolve to keep the Euro ideal.

It is a funny old world when less than 6 months ago you could still find articles relating to the Euro taking over from the US Dollar as a reserve currency.

Sterling was largely sidelined but of note it has made very little headway against a much weaker Euro thus far.

Technically the Euro may have formed a short term base but remains for the time being firmly in a downtrend.

And Baked Beans? Well Henz shares been stable at around $47 for the last month (yes, stable) but they were sitting at 36 bucks a year ago. That´s a 25% increase year on year- beats putting your money in the bank by a long shot.

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EURUSD- Now That Was a Bigger Bounce

Posted on | May 19, 2010 by gideon | 1 Comment

EURUSD surged 250 pips or so following the release of the FOMC meeting notes (Federal Open Market Comitte).The pair rose to 1.2400- the biggest daily gain in almost a year.

The Federal Open Market Committee IS PART OF of the Federal Reserve System and looks after US interest rate policy.

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EURUSD Bounced Earlier Today But It Wasn´t a Particularly Impressive Bounce

Posted on | May 17, 2010 by gideon | 2 Comments

Well-there was a Euro bounce today, but we´ve seen bigger bounces off bean bags in quick sand quite frankly. Let´s just say it was more Nicole Kidman than Dolly Parton.

The Euro bounced off 4-year low this morning, but the outlook still looks bearish – it´s been slipping back in the last couple of hours or so.

After a four-year low this morning on ongoing euro zone sovereign debt worries and fears that austerity measures will hurt growth, the currency pair floated up a bit as traders cashed out of short positions.

At 1152 GMT, the EURUSD limped back up to $1.2360, but it´s still 7% down in May month, and 14 percent down in 2010 making it the top winner for bears.

The next key support is $1.2135

Against Japanese money, the euro was down 0.7 percent at 113.80 (EURJPY).

GBPUSD bombed down to its lowest since March 2009 at $1.4249 before clawing back to $1.4410. Data showing that British house prices might be cooling was probably the catalyst for that.

We are still bearish on the single currency. It looks like its continuing to head down to $1.20, but time will tell.

Meanwhile, Larry´s playing the Volcanic Ash/BA Strike Lottery and was last seen wandering around Stanstead Airport trying to find a shop that sells Karrimats.

Category: Market Comment/Analysis, News
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EURO BACK ON THE ROPES???

Posted on | May 11, 2010 by larry | No Comments

Now the dust has settled somewhat on the weekend announcements from the EU it seems worthwhile reflecting on reactions thus far.
After an initial surge in the EURO to nearly 1.31 we find ourselves back nearer 1.27 today. The euphoria of Bond and Equity markets has certainly not been matched by the forex markets.
The reasons would appear that the market has viewed the backtracking of the ECB into its own variation of quantative easing as negative. Rate increases in Europe may lag behind the USA and elsewhere and growth will be sluggish on the basis of the fiscal tightening required.
The fact that decisions were not agreed by all members namely Germany (Mr. Weber) you can see that the ECB has compromised itself badly. Any view that the ECB was the Bundesbank in disguise is dispelled.
I would therefore not be surprised to see further Euro weakness and at some point a test of levels nearer EUR/USD 1.20

A consideration if this happens is that we could indeed see some forex market central bank intervention to support the Euro. This if it happened would be done at a time when the market was very short Euros and designed to get maximum effect.
Further out nothing has changed and as I have said before this is throwing even more good money after bad. Can the cultures of Southern European countries be changed or will we see more civil unrest as austerity bites.

As for the equity markets they will continue to take their lead from US markets where Economic recovery at least looks more stable thus far. The technical picture there is still a little cloudy so we wait and see

Category: Market Comment/Analysis
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Τι μια εβδομάδα να δούμε τι κάναμε στις αγορές σας……

Posted on | May 9, 2010 by larry | 1 Comment

 …… or for non Greek readers …What a week see what we did to your markets

It is difficult to describe last weeks events but suffice to say it completed one of the most volatile ever for forex, bond ,equity and commodity markets. The biggest winners in the forex markets was the Jap Yen 4% stronger against the USD which itself was 4% stronger against the Euro. In bond markets the flight to quality saw the German and US government bond markets rally as the blood bath in Greek and other Southern European Countries continued. Equities collapsed everywhere not least the Dow which dropped an incredible 900 plus points on Thursday most in a matter of minutes before recovering 600 points in the same time.
The Greek problem certainly went global. Amazing as it is for a country accounting for just 3% of European GDP, but such is the fear of contagion.

As I write the markets are awaiting announcements from the EU on an Emergency Funding Mechanism which is designed to support Euro members and therefore the Euro. How the markets react will be interesting .Will it be one handed applause or will it put a squeeze on Euro shorts and and also the so called bond market vigilantes’.
It seems that whatever is announced the upshot will be to throw more good money after bad.When the politicians finally realize that the Euro in its current guise is floored and the final cost may be catastrophic.For sure If the so called PIGS were not within the Euro they would not have been able to get to this stage.
The equity markets have been spooked big time and it may well be some time before confidence returns. Risk appetite has been choked and so we will be back to more volatile and uncertain markets.
Good trading opportunities but for Investors not so much fun.

Amidst all this the UK election came and went much as expected. Sterling which had faired better than the Euro lost some ground as the uncertainty of who would actually end up in government dawned on the markets.At this time a Conservative, Liberal Democrat Alliance looks just about more likely. If that happens then Sterling and Gilts may get a lift. However, if that is not forthcoming early in the week then uncertainty and the possibility of a Labour Lib Dem Alliance will weigh on them: Indeed if a Brown Clegg pact happens the markets will vote with their feet at the prospect of a Laurel & Hardy run government.

ps At some point I believe there will be an investor stampede into Gold and other precious metals

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