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Markets Ready to Put Recent Financial Collapse Behind?

Tue, Sep 15 2009, 13:58 GMT
by Lena Manousarides

SpikeCharts

What a day today is for the financial industry, as one year ago, on the 15th of September, markets across the globe got hit from the news that the biggest lender in USA Lehman Brothers filed for chapter 11 bankruptcies, amid the credit crisis and therefore starting the biggest liquidation that markets have seen for a long time. It was a black Monday and investors still shiver when they think how that day changed the course of history for all market participants. Today, a year after the worst recession since the 1930s, markets are in a better position with investors ready to pick up the pieces of the “financial earthquake” and never look back.

The EUR/USD so far has proved to be on the right track for 1.4650 which was a very important resistance level and therefore found sellers which took the pair back down towards 1,45. For now, as long as the pair holds 1.45 as support we may be more for further upside in the coming days. The channel that the pair trades for now in the 4hour chart is 1.4550 to 1.4650 and a breakout of those levels could give us the next move for the short term. On the downside, next level to watch will be 1.4470n ahead of 1.4430.

The economic calendar was full of important economic releases out of Euro zone and also US, with German ZEW printing yet another high number, proving that the sentiment in Euro area is getting better by the day and companies are giving better results which are a sign of recession easing. Also the UK CPI showed that inflation fell at a slower rate, giving investors fuel that the economy is improving faster maybe than anticipated originally and that Bank of England could very well start rethinking its monetary policy in the next few months. The data out of US were the surprise of the day though, as retail sales printed a really good number last month, showing that consumers did find them more positive about the whole economic crisis and went out to do what they know best: spend, spend, and spend.

The most impressive move in the markets since the Lehman collapse last year was the price of gold, as it appreciated more than 25% in the last year and made a breakout above 1.000 which signaled that the markets were looking for riskier assets to place their bets and risk appetite has returned in trader’s actions. Long gone the days of dollar being the flavor of the month due to risk aversion and we have seen the market sentiment stronger in the past few months, making market conditions more normal and easier to predict than before.

The words of President Obama yesterday, though were calming and reassuring for the American public, as he stressed the need of tighter regulation in big banks and Institutions; however the reality still remains that the country still suffers from unemployment and the tax payers still are the ones who are left to pay for the huge mistakes of the past. One thing is for sure, that the recession is still very much alive and kicking and the next stage now is to see what will happen towards the end of this difficult year. Many analyst predict that 2010 will be a year to start making the recovery a reality, however others warn that this market correction we experience at the moment is just that: a simple correction before another meltdown occurs in the near future.

Whatever the case is, let’s see where this week takes us, what with further economic data coming out of US and Europe and how the markets will react to that, what with oil and gold and the dollar all being in crucial levels for future direction…

Published on  Tue, Sep 15 2009, 13:58 GMT

To Be a Bull or Not to Be a Bull?

Fri, Aug 14 2009, 09:49 GMT
by Lena Manousarides

SpikeCharts

The week has come to an end, with dollar showing signs of weakness once again against its major counterparts and especially the euro, after better than expected news out of Germany and France yesterday, suggested that the worse may indeed be over for the Euro area and recovery may very well be a reality. The GDP numbers in Euro zone were surprisingly strong and traders honored the European currency by buying it gains the buck, taking the EUR/USD back up towards 1.43.

The EUR/USD closed the day on the upside trend, and the daily charts suggest that further move up may be seen tomorrow towards 1.44. As long as the pair holds 1.4230 ahead of 1.4180, there is good reasons to think that pair is heading north in the coming hours, as traders felt some kind of relief after the better news we saw from Germany. Next level to watch for now is 1.4330 and a clear break may open the way to 1.44.

The economic calendar today has a few releases out of the US, with CPI being the one that traders will monitor in order to see how the inflation is performing with the current rates close to zero and also consumer confidence which should give us a better number, judging from the recent euphoria that we saw due to better economic numbers. The question is how traders will take the better news and what will mean for the dollar. The answer lies at how the stocks and commodities will perform and if indeed we see New York stocks rise, together with gold and oil, then dollar may weaken further. Although recently we saw dollar gaining after better US economic news, however it is a matter of how long this will last and if another negative cycle of news hit the markets, how it will affect trader’s sentiment.

Stocks are poised to close the week on a positive note today, after Asian markets advanced and the same positive note occurs in Europe. It will be interesting to see New York open and as long as dollar weakening, oil and gold may continue to climb against the buck. The oil is trading above $70 once again; however the rally does not look strong for now. Next important level for the oil is $ 72 and if that level breaks then $73.50 comes back into focus. The fact that both the oil and the euro keep meeting resistance in important year highs of 1.45 and $74 respectively, shows that investors are not ready for further upside just yet, as they await for further evidence regarding state of recession.

Let’s see how the day will progress and if the euro and the pound reach new weekly highs above 1.43 and 1.66 respectively in the coming days…

Published on  Fri, Aug 14 2009, 09:49 GMT

Dollar and Markets in Anticipation of NFP

Fri, Aug 7 2009, 11:39 GMT
by Lena Manousarides

SpikeCharts

The big day is here once again, with market participants ready to get all the information they need from the employment sector in US, as we have payroll data and unemployment rate. There are speculations that the unemployment rate will reach 26 year highs today, and this is what drives stocks and equities lower since early yesterday. The dollar has managed to stage a mini comeback yesterday and so far traders are in a wait and see mode amid the releases in couple of hours.

The EUR/USD seems to be trading in standstill since yesterday and the 1.44 level has worked as a temporary top for now. As long as 1.4430 holds, there may be further deterioration in the pair all news dependant. Traders are waiting to see how the payroll number will be and what it means for the current economic situation, however due to the recent euphoria that we all witnessed these days, if the data suggest further contraction, the dollar may continue to rise due to risk aversion. On the downside, we have 1.4230 which is a very good support level for the pair and if that breaks, we may see further slide towards 1.40 in the coming weeks. Please note that levels to be considered for today’s move after the numbers are: 1.4230 – 1.4430. We need the pair to break from these ranges if we want to see further price action.

The economic calendar had a few announcements out of Euro zone and UK, with PPI out of UK coming out much worse than expected and giving the pound another reason to fall, after BOE’s King said that the economy needs further stimulus plans in order to be revived. The current feel in the country is that although economic numbers were better in the previous days, nevertheless the situation has not changed dramatically and the inflationary numbers suggest that interest rates may have to stay low for longer than initially anticipated. Also later on we have the payroll data out of US which is expected to be better than last month at -320.000. If the number gives us a pleasant surprise closer to -200.000, that may suggest a recovery is underway and slowly we may eventually see positive numbers in the coming months. The important bit of information today will be the unemployment rate as recently has climbed to new yearly highs. The markets are expecting the number to soar even more, and this may put pressure even if the payroll numbers are better. The trading action may be choppy until traders filter all news after the announcements and decide how to play it.

It is important to note that from now on, we need to really pay attention to all banking results and economic numbers, as market participants are all hyped for a market recovery and speculators are making their plans for big moves up in the coming weeks due to the so called end of recession. Things may stabilize from now on, however it is not advisable to start running before we know how to walk, as the risk to the downside is always imminent at fragile times like the ones we live in. The summer is progressing, many traders are away on holidays and therefore trading action tends to be either extreme or nonexistent. The best way to go is to follow the market trend on a daily basis and only if we see real signs of longer term trend forming, to stay in and enjoy the ride.

Let’s see how the week closes today after the data and if the last few negative days are a small dent for now, before another move up next week…

Published on  Fri, Aug 7 2009, 11:39 GMT

Dollar: Please Handle With Care

Tue, Jul 21 2009, 09:19 GMT
by Lena Manousarides

SpikeCharts

The dollar continued to lose ground against its major counterparts yesterday, however today traders are a bit wary of selling the currency further amid Bernanke’s testimony in front of the House later today. The FED Chairman will “bare all” in front of the representatives and explain the current economic situation step by step. It is more than likely that the government officials will grill him once again about the “exit” plan out of the recession and also the ever so growing inflation danger which may arise sooner rather than later. The markets are more confident these days, mainly due to better earning s reports from Banks and corporations and there is a nice feeling in the air that markets are close to a bottom than ever before.

The EUR/USD is heading towards 1.43 and as long as 1.4130 holds for now, there is further upside to be seeing towards 1.4360. In the daily charts, the pair needs to take out 1, 4260 and until that happens, it is possible to see consolidation towards 1.41.

The economic calendar is almost empty today from important releases, apart from Bank of Canada’s rate decision which is expected to be unchanged. The Canadian dollar seems to be stronger these days, amid dollar weakness and also risk appetite which helps investors buy the commodity currencies as alternative assets. The USD/CAD is at very important support levels for now, and if 1.0980 breaks, then next target in the daily and weekly charts seem to be 1.0700. It will be interesting to see what will happen after the rate decision today and if BOC signals that due to better economic conditions in Canada, rates could rise in the coming weeks.

All eyes and ears will be at Mr. Bernanke today as he will do his testimony in front of the House and once again markets will take his words in order to see what the next step is. The current market euphoria seems to be ongoing, and DOW JONES seems to be at important resistance levels. The question is if the gains we saw in the recent days will have an expiration day once again, or if markets are ready to take them to another level. If Bernanke and co signals that recovery is indeed underway and the stimulus plans helped, investors may start to be less wary of another market crash and concentrate on the upside once again.

I personally think that the coming months towards the end of the year will show us what the bigger picture will be and if we are on the way to put all this current mess behind. Most of the major economies in the world have shown signs of improvement; however the economic conditions need to be better on a weekly basis. Lets not forget that it is the “hidden” dangers that we fear the most in times of recession and therefore we need to “handle” the markets with care until the confidence comes back to stay…

Published on  Tue, Jul 21 2009, 09:19 GMT

Market Sweetness…is Dollar Weakness

Thu, Jul 16 2009, 11:54 GMT
by Lena Manousarides

SpikeCharts

The dollar continued to weaken all across the board, after the FOMC meeting didn’t show anything new regarding the rates direction, as most members of the FED were passing along mixed messages, with some saying economy is stalling for now and others that recovery will be fast in the coming months. The lack of a unified message passing across market participants left the investors more confused as to what will happen in the monetary policy over the next few months.

The EUR/USD is trading heavily since the FOMC meeting yesterday and the pair needs to take out 1.4130 in order to sustain further gains above 1.42. For the time being, as long the pair trades above 1.40, the upside seems like the possible plan.

The GBP/USD looks good for further gains, and the daily charts suggest that as long as 1.63 is kept intact, the pair has potential to break above important 1.65, towards 1.6630.

The economic calendar has a few releases today, with TICS data out of US later on, which will show the demand of domestic securities from foreign investors and it will be interesting to see if the number improved for the month of June, what with latest risk aversion coming back into focus. Also we have jobless claims to take under consideration, and the fact that numbers have been better for the last few weeks, gives market participants a new found hope that the employment sector will start to stabilize in the coming months. All the economic data lately have been monitored closely by traders and the latest numbers by China this morning, which saw GDP rising at a faster pace than estimations projected, are making investors buy risky assets again.

In other markets, we saw the DOW JONES and NIKKEI gaining overnight, following by better earnings for banks and corporations, therefore giving investors some kind of reassurance that conditions may start to stabilize. One thing I have noticed though, talking to other traders around the world, is that when markets rally these days, we don’t feel optimistic anymore but feel even more wary and analyse what the rally means and when the sell off will occur! It is difficult to” fall in love” with a market rally and it always feels right to sell on highs until we have solid proof the rally will be justified and sustain itself.

Let’s see how the markets will react after the New York opening and if recent optimism fails to impress traders ahead of this week’s close…

Published on  Thu, Jul 16 2009, 11:54 GMT

Dollar Stalls…But for How Long?

Mon, Jul 13 2009, 15:03 GMT
by Lena Manousarides

SpikeCharts

Markets are getting ready for an interesting week, with FOMC meeting the big event of the week, together with Bernanke’s testimony in front of the Senate, which could be crucial for market direction and the dollar. The market participants are waiting for the bank to explain how the current monetary policy is working with low interest rates and potential inflationary dangers which could harm the economy further. The recent comments by Bernanke and co that they see “green shoots” in the economy are not proving to be of any substance and therefore traders always fear that another market downside could come in the coming weeks.

The EUR/USD is trading still within tight ranges and as today is Monday with not much happening in the economic calendar, we may continue to see 1.38-1.40. For now, 1.3830 is next important support level and as long as the pair trades above it, there is further upside towards 1.40. Traders may want to take advantage of these levels to either buy or sell until a clear breakout occurs.

The economic calendar is almost empty of important events with traders still digesting the G8 outcome, as world leaders agreed that economic recovery is ongoing and the need for countries to exit the current stimulus plans does not exist in current conditions. All the recent money that has been put into the system from central banks across the globe, are not seem to be making a lot of progress, according to the latest statistics and that’s what creates further pressure for investors around the world who still are in search of ways to invest their funds. The dollar is still preferred as safe haven currency, as traders fear to place their bets on riskier assets, hence the stocks and equities weakness and also oils recent slide below $65.

The trading action today has been very quiet, as traders are getting ready for the coming events of the week, with inflation numbers out this Wednesday, which will show if indeed the analyst’s inflation fears are true. The monetary meeting will shed more light as to what the bank will do regarding the interest rates, and if Bernanke does not imply a rise, investors may sell the dollar as an aftermath. Also, it is crucial to see any changes in the statement form last month concerning the economic recovery and how the bank will exit the current monetary stance if things are improving. Basically, currencies are in a wait and see mode for now, and the dollar’s resilience to break either way against its major counterparts, gives us an uncomfortable feeling, that something big is coming in the next few weeks.

For now, let’s see how the dollar will move against the euro and pound towards London closing and is GBP/USD will manage to break on the upside once again towards 1.65, amid absence of important economic events…

Published on  Mon, Jul 13 2009, 15:03 GMT

Dollar and Yen Weaken as G8 Progresses

Thu, Jul 9 2009, 09:07 GMT
by Lena Manousarides

SpikeCharts

The dollar continued to gain overnight against its major counterparts, with EUR/USD trading below important 1.39 and GBP/USD finding it hard to gain above 1.61, after new regulations and plans were introduced yesterday by Alistair Darling, concerning the banks and their survival. The reality of that matter is that investors are not in a euphoric mood any more regarding the economic outlook and there is the feeling amongst traders that something is” cooking" underneath the rallies we see every now and then, and that it may progress to another market crash later in the year, amid inability of world economies to recover in a timely manner.

The EUR/USD is trading still between tight ranges and the pair found a support for now at 1.3860 as we mentioned the other day. The latter level is very important for the pair to hold for now, therefore next level to watch will be 1.3960 ahead of 1.3930. A clear break of those levels will take the pair above 1.40. Basically, for now, unless we have breakout of 1.38 or 1.40, best way to go is to buy or sell those ranges. The euro does not have any data today, so therefore the moves may be influenced by the pounds direction, what with BOE’s rate meeting the next big thing.

The economic calendar has a few important economic releases out today, with the main one being the BOE’s monetary meeting, which is expected to provide some kind of volatility, although the rates are expected to remain unchanged for the time being. The pound is in a wait and see mode these days and the range for GBP/USD is 1.60-1.65 for the current time. It is vital for 1.60 to hold for now, if further upside is to be seen. With all the political instability and financial trouble that UK is still facing, it makes it hard for traders to stay “faithful” to the British currency, as conditions seem to although improve slightly, nevertheless still deteriorating at a fast pace. Also, later on we have the jobless claims out of US, and this will be monitored closely by traders, after the worse than expected non far payroll the previous week. If the numbers continue to disappoint, further speculation about the economy could hit the markets and the dollar may benefit once again.



The G8 is still controlling the markets attention and although there has not been any mention for currencies and especially the dollar,-something which most traders were expecting to happen, the fact that world leaders don’t see economic recovery materialising as fast as initially predicted, keeps investors in the sidelines for now, and makes risk aversion a possible threat. Only the fact that the 8 biggest economies decided that they wont stop the stimulus efforts just yet as it was initially mentioned, makes us wonder, how “green” were the latest “green shoots” in the economy.

Stocks are slightly up since early European session; however let’s see how New York will open and how traders will react to further G8 rhetoric and economic numbers later on. One thing is certain for now, the current environment does not inspire one to start building long positions in stocks, equities or commodities and that is why, we see investors seek alternative investments. Also, with summer progressing and more traders planning their holidays, there is that risk of another choppy and dangerous markets action , one that could very well resemble last years “tragedy”…

Published on  Thu, Jul 9 2009, 09:07 GMT

Dollar Fights for Market Domination

Tue, Jul 7 2009, 08:54 GMT
by Lena Manousarides

SpikeCharts

As we are getting closer to the G8 meeting which will take place in Italy, the markets are in a wait and see mode, as economic conditions don’t show any real signs of improvement and economic numbers from world indexes continue to disappoint. The markets were trading mixed yesterday, with Europe and Asia down due to return of risk aversion and New York trading on positive note, amid better than expected Manufacturing numbers out of US, which also helped the euro and pound rise, after a really bad performance.

The EUR/USD did not manage to break important 1.40 as yet, as the dollar fights against time for domination lately and therefore making the euro weak on the process. For now, the pair seems to be trading within tight ranges of 1.39-1.40; however a clear break of the latter levels may set things in motion for the next possible target. The failure of the pair to break 1.40 for one more time is negative for the euro for now; however let’s see how markets will react after the New York open.

The economic calendar has not got many important releases today, with Manufacturing Production and Factory orders out of UK and Euro zone, which both expected to show improvement. Traders are not really paying much attention on the news currently, as the main events they await are the G8 meeting which starts tomorrow and also the BOE monetary policy meeting which once again will shed some light on what the banks plans are for the near future. The UK government announced last weekend that the recession has deepen further and the latest housing numbers shows that contraction still persists, making the investors think twice about buying the pound and staying in for long term. The UK economy although has shown improvement over the course of the last few weeks, nevertheless still suffers from high unemployment and bad earnings and the instability and uncertainty of the current government are not helping the matters.

The pound is weak against the euro, as seen in EUR/GBP and the pair looks good for further gains towards 0.88 in the coming days. Market participants know that the bank won’t do something to alter the current record low rates; however they are waiting for the magic words of recovery in the economy before they commit.

Stocks are slightly down this morning, with a possibility of US futures trading lower later on, as traders are getting ready for the coming events. The oil has lost over 5% lately, on worries that recession is not over and demand is low, and also the recent scandal of PVM with the fraud allegations still fresh in trader’s minds. The oil has to keep important $60 support for now, if further upside is to be seen, and if the dollar continues to strengthen, we may see a breakout of the recent $60-$70 range.

Lets see how the day progresses and if the dollar will manage to dominate for another day in light of the G8 meeting, as traders may want to exit riskier trades in case risk aversion hits us once again…

Published on  Tue, Jul 7 2009, 08:54 GMT

Dollar is Strong Ahead of G8 This Week…

Mon, Jul 6 2009, 10:37 GMT
by Lena Manousarides

SpikeCharts

The dollar has started the week strong once again, against all major currencies and especially the euro and the pound, on back of risk aversion which seems to keep haunting traders across the globe as economic conditions worsen. Stocks were down since market open and continued to do so during European session, as earnings dropped worldwide due to high unemployment and consumer confidence, which printed worse than estimated numbers.

The EUR/USD has found a temporary top at 1.40 and as long as the pair trades below the latter level, there is further risk to the downside towards 1.3860. In the daily chart, the pair is trading within 1.38 and 1.41 and therefore a clear break of these levels will show us the direction for the coming days. If the dollar continues to gain due to safe haven buying and negative sentiment, then the euro may be doomed for another leg down if 1.38 gives way. For now, as it is Monday after a Holiday weekend, traders are not committing either way and reposition themselves for the coming week.

The economic calendar is almost empty today, with only important release being ISM non manufacturing out of US, which is expected to print a better number. The recent better than expected data out of US, made investors being happier about economic outlook, however after the negative employment numbers and high unemployment rate, traders are speculating that the “green shoots” of the economy were not as “green” as initially thought and it will take more than Bernanke’s encouraging words to restore market confidence.

The main event of this week, apart form BOE’s rate meeting this Thursday, is G8 which will be monitored closely once again from all market participants, in order to see what the world leaders will say about the current state of the economy. The general feel is that the meeting won’t give us anything new; however it will be interesting to see if there will be any mention of the latest currency debate form China regarding the dollar. The Chinese officials have said over the last few days, that they wont change their currency reserve ,as they have trust in the US economy and its currency and that statement gave dollar bulls some kind of relief for the time being. All eyes and ears will be upon the world officials, regarding any mention of monetary policy or further stimulus to fight current recession.

Let’s see how New York opens later on and if traders will continue to buy the buck amid uncertainty about the economic future. Things to watch for now are, EUR/USD and if a breakout on the downside towards 1.3860 occurs and GBP/USD and how it will behave towards 1.60 which is a very important level. As long as the pair trades above 1.60 there is hope for another leg up towards 1.65.However, don’t forget that the BOE meeting could be the catalyst for the pound this week and although rates are expected to be unchanged, nevertheless any mention of deteriorating conditions in UK economy may disappoint traders and make pound weaker once again…

Published on  Mon, Jul 6 2009, 10:37 GMT

Dollar Strengthening as Recession Worries Persist

Fri, Jul 3 2009, 09:40 GMT
by Lena Manousarides

SpikeCharts

The week has come to an end, with dollar strong across the board and especially the euro, as the pair fell below important 1.40, amid renewed worries about the state of global economy and the so called recovery. Stocks fell yesterday in New York, more than 200 points and Asia followed on the same note. The European markets are trading mixed so far, and Trichet’s rhetoric yesterday did not provide any reasons for investors to keep buying the single currency, as he said that the bank will keep rates at those levels for a long period of time due to economic instability in the Euro area.

The EUR/USD is trading lower, since yesterday’s payroll numbers suggested that the employment sector in US is still suffering and may continue to do so for the time being, which made investors think twice about buying riskier assets. The pair saw choppy action before and after the news, however towards New York close, the pair settled for the downside, from 1.41 down to 1.40 and this morning the latter level gave way towards important 1.3930.As long as the latter level holds for now, there may be further upside towards 1.4060, however traders may choose to sell the pair as liquidity may be thin due to US markets being closed. Levels to watch for now, are 1.4060 on the upside and a clear break could lead to further gains towards 1.4130.

The economic calendar is almost empty today, with only important news out of UK, being the Services PMI, which came out better than expected but not providing any reaction for the pound, as market participants are either making plans for the weekend or are already celebrating the US 4th of July away from their desks.

The ECB meeting came and gone, with Trichet implying that rates are appropriate for now at current low levels, as Euro zone economy still struggles with recession and unemployment is reaching new highs by the week. The euro is stalling for now, as economic data are not improving consistently and at the end of the day, although conditions are dismal in the US also, the dollar is always preferred in times of crisis.

Let’s see how the markets will close for the week and if current realization that recovery may be a long and painful process, will affect the global markets to the extend of another downside in the coming week. An important event next week will be the G8 which potentially could provide a lot of liquidity in global markets and especially the currencies, as crucial matters will be discussed and the dollar’s value may be mentioned once again…

Published on  Fri, Jul 3 2009, 09:40 GMT

Euro and Pound Fight Back!

Wed, Jul 1 2009, 15:01 GMT
by Lena Manousarides

SpikeCharts

The yen has managed to lose ground against its major counterparts, with USD/JPY reaching another weekly high at 97 and EUR/JPY AT 136.50 amid good news out of China regarding its better than expected Manufacturing data. The fact that the Chinese economy has staged a recovery over the course of the last four months is making investors return to riskier trades and the carry trades seem to benefit once again. Although the rate differentials are not the same anymore in terms of Japan versus US or Europe, nevertheless the reality is that Europe or the US are most likely to raise rates in the coming future when the recovery globally starts to become reality.

The EUR/USD has managed to hold important 1.40 for now, and next level to watch is 1.4160. Traders are waiting the news later on today before they commit either way, however it seems like the EUR/JPY has helped the pair maintain its gains and if better than expected news come out, risk appetite may continue to weaken the dollar all across the board. The range for now is 1.3960-1.4160 and a clear breakout of those levels will show us the next move.

The economic calendar had a few important releases out of UK, with PMI coming out better than expected and also the very important ADP report out of US which came out worse than estimated. This Friday the non farm payrolls will monopolize traders interest as it will reveal if the so called recovery in the economy continues with a fast pace or if its just a myth. The ADP report showed that -473.000 got lost last month instead of a better number which was widely expected, and now traders are betting that maybe this Friday they will be in for a nasty surprise which could very well create uncertainty and confusion about the economic future. Also we have ISM Manufacturing and Pending Home Sales which will give more reasons for investors to buy stocks and riskier assets if they print positive numbers.

The dollar has continued to weaken across the board, as the investors know that ADP could be false alarm regarding the real number; however the stocks continued to rise, after the Chinese better economic numbers. Investors are hoping that the worse is indeed over for now, as China is a big player globally and if their economy is getting a lift then that means the rest of the world is next. Although we see stocks rising, market participants are in no harry to stay long in stocks and equities, as news may be better, however not consistent, which makes it complicated for hedge funds across the globe.

For now, let’s see how the EUR/USD reacts at 1.4160 and GBP/USD AT 1.6560, AND if the latter levels give way. It will be interesting to see how the traders will position themselves for tomorrows’ rate decision by the ECB, which although the forecasts wants the bank to leave rates unchanged, nevertheless, Trichet’s speech will be important for any more euro strength in the coming days…

Published on  Wed, Jul 1 2009, 15:01 GMT

Dollar Struggles to Remain Strong!

Tue, Jun 30 2009, 13:40 GMT
by Lena Manousarides

SpikeCharts

The dollar has started to weaken against the euro since early Asian session, with the pair finally breaking important 1.4130 at the time of writing and printing yet another weekly high at 1.4160. The dollar has been weak mainly due to the risk appetite which has been seen all across the markets and especially in commodities, as oil has made another multi week high above $73. Stocks have been trading mixed however, with Europe down slightly so far, as UK‘s GDP printed a really negative number since the late 50’s, indicating that the economy has shrunk with a fast pace and the damage is seen in most of the country’s sectors.

The EUR/USD is trading on the upside once again and the dollar’s strength we witnessed yesterday did not manage to last long. Although the risk aversion creeps back, the dollar has managed to keep key levels against the pound and the euro and for now as long as EUR/USD traders above 1.40 and GBP/USD above 1.65, there is room for further upside. Next level to watch for the euro is 1.4160 and a breakout may put 1.4230 back in the picture.

The economic calendar had few releases out of Euro zone and UK which came out mixed, as GDP reached multi year lows and house prices raised for the second month, giving out some kind of hope that a housing bottom may be nearing. The fact that the GDP was low made the pound dive against the buck and the pair found a top at 1.6750 for now. However, traders are aware that the situation in UK was dismal and therefore the pound has managed to take back some of its loses. Also later on we have Chicago PMI out of US and consumer confidence which both are expected to print better numbers, giving the stocks more reasons to rise and make wonders for trader’s confidence.

The oil has managed to stage a rally, due to the weaker dollar and also the geopolitical unrest in Nigeria which always affect the commodity price. The Nigerian attacks make investors nervous and the oil is bought as an aftermath. For now, as long as oil trades above $70 another move further up towards $75 looks like the possible target. The coming days will tell us how the commodities react to several key data out of US.

It is clear that investors are getting more positive by the day about the state of the economy, however, beware of the incoming news we get especially out of employment sector as although we see improved numbers all round, we are still far away from recovery. The payroll data have been negative for several months now and the last months we seen extremely bad results on the -700.000 mark. So, the main point I try to make is that everyone wants to feel that the worse is behind us and things are back to normal, however sometimes the wishful thinking is playing us tricks and as we are getting ready to say goodbye recession, the risk aversion comes back to remind us that conditions are fragile and the recovery is not underway.

One thing is for sure, when markets are ready for a comeback and conditions improve officially, traders won’t be on board for the move up, as too many fake rallies will make them stay in the sidelines, and when the real thing unfolds, it will be like the boy who cried wolf…too little too late…

Published on  Tue, Jun 30 2009, 13:40 GMT

Dollar Seeking Answers This Week!

Mon, Jun 29 2009, 12:28 GMT
by Lena Manousarides

SpikeCharts

Another week is starting with the dollar once again strong on Monday, mainly due to the fact that Chinese officials have announced yesterday that China is not thinking alternative currencies for now and they will stick to the dollar despite all the rumors and speculations of market participants that the country is looking for a way out. This statement is what keeps the dollar bid for now, however with a busy week in front of us and nonfarm payrolls later in the week, the risk of loses is always a threat which could materialize if economic numbers out of US are better and risk appetite returns once again.

The EUR/USD has found a temporary top at 1.41 and for now the pair seems to be trading within ranges of 1.40 to 1.41. As long as 1.3960 ahead of 1.3930 keeps, there is a further upside move pending towards 1.4160. The euro bulls are waiting for economic data out of Euro zone later in the week and the risk of better non farm payrolls is always an indication of further dollar weakness as fundamentals seem to work backwards in the latest months due to risk aversion and risk appetite.

The economic calendar is almost empty today with just a few releases out of UK and Euro zone which came out mixed and not provided a lot of volatility as traders are positioning themselves for a busier week. The coming days, together with ADP report of Wednesday which show us how many jobs got lost according to ADP, will provide some action and traders will start speculating on the real number this Friday which according to the forecasts may be better than expected. For us to say that recovery is solid and employment sector is improving, we need to see good months on payroll data for more than 6 months. However, even if numbers are better, the unemployment rate is what keeps us in the sidelines for now, as it is rising almost every month. The task of Obama and his boys is challenging, as they have to not only struggle with maintain an economic stability but worry about a potential rising inflation due to the massive debt that the country is facing and more money being printed. The dollar will find difficulty to maintain its gains as investors are losing faith in the currency especially due to the recent rise in commodities.

The other important event of the week which traders are waiting for is ECB’s monetary policy decision and Trichet’s speech afterwards. The forecasts want the rates unchanged; however everyone is waiting for the wise words of Trichet regarding the future of the interest rates. The fact that latest data out EU have shown improvement is making market participants speculating that the bank will keep rates at 1% for now, however it will be interesting to hear how they feel about inflation expectations and the single currency.

Stocks are trading mixed since early Asian session, with Europe up for now and it will be interesting to see how the DOW JONES will behave after the open and if this week will be another positive week…

Published on  Mon, Jun 29 2009, 12:28 GMT

Economic Recovery and the Dollar...

Thu, Jun 25 2009, 13:30 GMT
by Lena Manousarides

SpikeCharts

Yesterday's important FOMC meeting came and gone with not so many new elements from the bank as the rates were left unchanged as widely expected and Bernanke not giving the market participants many clues as to what's next. The bank said that economic conditions have improved according to latest data and recession maybe starting to ease slowly. The bank didn’t reveal any new plans as to how it will handle inflation in the future, however they indicated that there is not a lot of worry about deflation which could mean that at some point they are ready to hike interest rates.

The EUR/USD was trading heavily on the upside just before the FOMC meeting; however the move was reversed after the meeting, as investors bought the dollar on the absence of any earth shattering news. The pair found resistance above 1.41 at 1.4130 and the move is yet to be seen if it was strong enough for euro bulls to take out that latter level. As long as the pair trades above 1.3870, we may see continuation of the move in the coming hours.

The economic news yesterday helped with the initial risk appetite, as durable goods orders came out higher than expected, giving traders the confidence that the recovery may be here.
The calendar today has a few releases worth watching, with GDP out of US which is expected higher for the quarter and also jobless claims out which will be monitored closely for any signs of easing in the employment sector. Also Bernanke is testifying before the Senate regarding the acquisition of Meryl Lynch to Bank of America and it will be vital to see what the rhetoric is and how much he will get “grilled” by the representatives. We don’t expect something new on his testimony; however markets are always vigilant about comments on the recovery and hints on rate outlook.

With a new air of confidence across the global markets, it was maybe advisable not to get carried away about the so called recovery, and wait until next week's payroll data which could either make or break the current euphoria. The latest employment data suggested that fewer jobs were lost, however the unemployment rate reached new highs and in order to see a substantial improvement, we need to keep seeing fewer jobs each time. The reality is that US is still in recession together with the rest of the world and it will take more than a few “green shoots” in the economy before we can start talking about stabilization.

One of the mistakes of market participants in the past, is underestimating the crisis and the level of damage of the sub prime mortgage, and when the first signs of market collapse came, investors were caught over exposed, hence the liquidity we witnessed last fall. The way to go for now is to be realistic and wait until clear signs of economic recovery. The politicians and bank officials are making a good job of trying to convince everyone that the worse is over, however beware of the false prophets, as anytime risk aversion could kick back in and another slide in stocks and equities could happen when traders realize that things are not as rosy as Bernanke and his pals are presenting them.

For now, lets watch EUR/USD and how it will behave at 1.39 ahead of 1.3870, as it needs to keep the level before any further upside is to be seen and also how GBP/USD will behave at current levels. The pound is weaker than the euro today, as EUR/GBP is making a recover towards 0.86. The estimations from OECD that the UK economy is shrinking faster than expected, is giving investors jitters for now and the uncertainty over the economic recovery is what keeps the pound from further upside. The 1.60 level is important for now and the pair needs to trade above it if further upside is to be seen in the coming days…

Published on  Thu, Jun 25 2009, 13:30 GMT

Dollar's Fate in Bernanke's Hands?

Tue, Jun 23 2009, 15:43 GMT
by Lena Manousarides

SpikeCharts

The dollar is weakening once again against the euro, as traders are getting ready for the FOMC meeting and Bernanke’s speech tomorrow about the future of interest rates. Investor’s expectations for a rate hike are diminishing by the day and this is bad news for the dollar all round. Stocks are trading mixed since early European, and so far DOW JONES is down amid worse than expected earnings and uncertainty about tomorrow’s meeting.

The EUR/USD is trading heavily and the pair is ready to take out the important 1.4030 at the time of writing. Next level to watch is 1.4070 and only a clear break of the latter level will give euro bulls the upper hand once again. As I mentioned yesterday, the dollar is weakening as we are getting closer to the FOMC meeting and if tomorrow Bernanke indicates further plans to buy government bonds to revive the economy, the dollar may continue to slide. As long as the pair makes a breakout of recent 1.38-1.40 range, we shall see continuation of the move in the coming days.

The economic calendar had a lot of releases out of Europe, with PMI coming out slightly lower than expected but not giving the euro any trouble as yet and also Existing Home Sales out of US coming out worse than expected, making traders wondering where the recovery that everyone is talking about is. The market participants are waiting for the FOMC meeting and traders now start to worry what FED will do about the rates and likely higher inflation and how will this play with the current dollar level.

As we understand in the previous years, the Bush administration was doing everything in its power to undermine the dollar and did not care one way or another about the weakness. The EUR/USD was climbing fast towards 1.60, however as long as it was helping the exports and creating jobs, the previous government did not care that much. However, after the recent economic crisis and the market’s collapse, the dollar came back in power and the recent strength we witnessed was mostly due to risk aversion and safe haven buying. The truth of the matter is that the dollar’s direction does not affect the actions of previous or current governments as Obama is trying his hardest to tackle the economic crisis by putting more money into the system and essentially crating the need to print more money. In other words, this could eventually be lethal for the dollar, and it will be interesting how they will cope with a weaker dollar and rising inflation in the coming months.

For now, let’s see how EUR/USD behaves above 1.40 and if the current rally will create a breakout amid important meeting tomorrow and testimony by Bernanke. Traders are in a wait and see mode and after tomorrows statement we will be hopefully wiser as to the dollar direction and the FED’s imminent plans…

Published on  Tue, Jun 23 2009, 15:43 GMT

Dollar Strong Ahead of This Week's FOMC Meeting

Mon, Jun 22 2009, 11:41 GMT
by Lena Manousarides

SpikeCharts

Today has seen the dollar gain slightly against the euro, despite high Euro zone data and expectation of a quick recovery returning to trader's minds. The buck seems to be gaining on the back of poor economic estimates by the World Bank, which announced a 2.9% contraction in world economy. Stocks are down and the absence of important economic releases for the rest of the day may be used as consolidation and repositioning before the busy week ahead.
The EUR/USD found a temporary halt at 1.3930 and the move that started last week was not strong enough to take out the latter level. So far the pair is moving within tight ranges and only a break out of 1.38 or 1.40 may lead to something further. Germany's good news, the IFO showed a substantial increase for the third month, was not enough to spark a new rally on the pair and this being Monday, we may not see any big movements. The next level to watch is 1.3830 ahead of 1.3780.

The economic calendar had only the IFO out of Germany today, which printed yet another high number and traders are getting ready for important events this week, such as the FOMC meeting which will be crucial for the dollar’s direction and market participants will monitor Bernanke's statement for signs of inflation worries and further economic recovery. The upcoming FED statement is important, as it is widely expected the bank will leave the interest rates unchanged. There has been speculation recently that the FED is ready to start hiking rates as early as September, as inflation may rise, however it has been made clear by several FED members that the bank is not looking to hike any time soon. This statement may give traders what they are looking for in terms of rates future, and the dollar will react accordingly.

Also this week we have Durable Orders and Existing Home Sales out of the US and many other releases out of UK and Europe to keep us going. The markets are looking for an excuse to rally further and if we see further weakness in the buck in the coming days, the oil may rise again too. For the time being, the oil is falling below $69 as the dollar is strengthening due to the latest predictions of the World Bank, making investors wary of the economic outlook. The reality is that market participants are in need of good news and positive sentiment towards an imminent economic recovery, that sometimes they are blinded by the better economic numbers that hit the wires, however when another set of bad news approaches, risk aversion still wins.

Let’s see how today will progress and if New York will continue on the negative after its opening and if the buck can actually continue to gain over these pre-FOMC days. The dollar’s strength feels temporary for now, as traders may want to start selling the buck as we approach the meeting and not to get caught on the wrong side of the market if Bernanke announces further measures to tackle the current economic situation, which could have negative effects on the dollar.

Published on  Mon, Jun 22 2009, 11:41 GMT

Euro and Pound Vs Dollar: The Fight is On!

Tue, Jun 16 2009, 15:09 GMT
by Lena Manousarides

SpikeCharts

The dollar is trading mixed since early European session, with EUR/USD gaining once again and GBP/USD keeping the support levels in tact for now as we mentioned yesterday. The markets are trading on positive territory for now, as economic numbers out of US beat estimates and got investors thinking that the worse may indeed be over for now.

The EUR/USD is trading heavily since the beginning of the week and the slide we witnessed yesterday managed to find a stop at 1.3760 a very strong support level. As long as 1.3830 keeps for today we may see a run up towards 1.40 in the coming days. The dollar does not have a clear direction for now, hence the pair’s tight ranges, therefore we need to see a clear break of either 1.40 on the upside or 1.37 on the downside before we can say that something meaningful is happening.

The economic calendar had a few important releases today, with ZEW out of Euro zone which came out much higher, giving the Europeans something to smile about and also CPI out of UK which came out higher than estimates giving the pound a push back above 1.64. The better than expected US data also helped the risk appetite returning back to the markets and generally gave investors a wave of much needed confidence after the G8 outcome. However, the PPI numbers were lower than expected, making investors think twice about rate hikes out of the FED and so for now, things are in a wait and see mode.

The current sentiment is optimistic from market participants out there, and the yen seemed to be the winner of the day as Japanese officials declared that the economy is back on track and recovery may be sooner than originally thought. The numbers out of Japan were higher, giving the yen a push and it will be interesting to monitor all data in the coming weeks in order to have a wider picture of what the next step of BOJ will be.

For now, let’s see how the dollar moves and if major breakouts will occur in the next 24 hours. The oil kept the $70 support nicely and therefore another wave up towards $75 seems the logical outcome. ..

Published on  Tue, Jun 16 2009, 15:09 GMT

Week Starts With Dollar Strength!

Mon, Jun 15 2009, 12:27 GMT
by Lena Manousarides

SpikeCharts

A new week starts, with dollar appreciating against its major counterparts and EUR/USD making another dive towards 1.38 as a result. The G8 meeting was enough to spark new worries about the global crisis and although the message was that the big economies may start to recover soon, Ministers indicated they may start to withdraw money out of the stimulus plans as the economic recovery progresses. The greenback is enjoying some gains after market opening on the back of Russian Finance Minister’s comments who basically re assured investors that US dollar was and still is the world’s main currency and they should have more confidence towards the buck!

The EUR/USD continued to slump after European morning and the fact that pair rejected 1.40 once again makes euro’s rally more difficult to be sustained in the coming days. Next level to watch now is 1.3830 and if that gives way then the pair may continue its slide towards 1.37. The euro bulls need to keep the important support levels untouched and if they do so, the current dive may be reversed as dollars future looks gloomy also.

The economic calendar is almost empty today, with only important data out of US being TICS data later on and Empire State Manufacturing Index. Investors have indeed returned to basics lately and fundamentals seem to work, however the risk aversion is always a reality when things start to go south. Only last week the stocks, equities and commodities were positive, with oil printing yet another high above $72, however come Monday and the gains seem to be fading away along with investors new found confidence.

The fact remains that a lot of geopolitical issues are of concern to global leaders lately, with swine flu being back on the media radar, Iran’s latest elections hazard, and the need of G8 Leaders to create synchronized “exit strategies” in order to keep the recovery from retreat. Investors know that the next months will be crucial for all markets direction and try to keep a low profile until further signs of recovery hit the news wires.

Let’s see how New York will open and if this week will be another positive one which will give traders optimism that from now on, economic numbers may start to stabilize and employment sector may be nearing bottom. The real problems may start after the inflation numbers confirm what everybody fears now, high inflation in these economic conditions which will only complicate things even more. For now, EUR/USD needs to keep 1.38 ahead of 1.3760 intact and GBP/USD need to be trading above 1.6250 if there is further hope for gains towards 1.65 again…

Published on  Mon, Jun 15 2009, 12:27 GMT

Dollar Weak as Market Sentiment Strengthens!

Thu, Jun 11 2009, 14:08 GMT
by Lena Manousarides

SpikeCharts

The dollar continued to fall against the euro and the pound, with GBP/USD printing yet another daily high at 1.65. The market sentiment seems to be back to positive, with commodities and stocks gaining since yesterday and a new wave of hope amongst traders that the worse is over and recovery is progressing slowly but surely.

The EUR/USD is trading heavily since yesterday and the pair seemed to find a good resistance at 1.4060 so far. As long as the pair trades below the latter level, further downside may be in store. The euro is much weaker against the dollar and the pound and EUR/GBP is what is driving the European currency lower in the last few sessions. EUR/GBP is trading on the downside and a clear break of very important support level 0.85 may indicate further losses towards 0.8430.

The economic calendar has a few important releases today, with retail sales out of US the most important event of the day and also jobless claims which traders will monitor closely especially after the latest nonfarm payroll numbers. The retail sales are expected to be higher due to better consumer sentiment and greater expectations that the economy is on the way to recovery. The US government has tried its best lately to promote confidence and hope for a better future and the latest economic indicators show that the market may find a bottom sooner than later.
The crude oil has resumed its upside move and the commodity broke higher above $70 to $72. Next important level is $75 and it seems like a probable target for the time being. The crude oil has appreciated a lot in the last few weeks mainly because elf speculators driving it higher and not fundamental reasons, so therefore it feels like a top may be in place soon and the bears are waiting patiently for the green light until they go south once again.

The trading environment feels very fragile again even with the latest confidence and it feels like any day we can have another big move on the downside what with summer approaching and traders still reluctant to keep positions open for a longer period of time. Investors have always at their back of their minds that last year the whole market crash started after the summer holidays, so this time they do not wish to get caught in another collapse if and when it happens.

Let’s see how stocks and equities will react later on at New York session and if better than expected retail sales will keep the flows positive for one more day. The week is almost finished and it’s looking to be another positive one for markets across the globe. The question now is if the dollar will continue its slide on the back of risk appetite and if we see further breakouts in all dollar related pairs in the coming days….

Published on  Thu, Jun 11 2009, 14:08 GMT

Euro and Pound Fight Back Against the Buck!

Tue, Jun 9 2009, 13:46 GMT
by Lena Manousarides

SpikeCharts

The dollar started to show signs of fatigue on its upside move that we witnessed recently and EUR/USD together with GBP/USD held the levels we mentioned yesterday and therefore both pairs continued higher above 1.39 and 1.60 respectively. The reason so far seems to be the fact that traders are losing their confidence that FED will hike its interest rates soon, after recent comments from members of the bank said that rates are appropriate for now. The inflationary dangers are real for the coming future and traders know this very well hence the negative sentiment we see in the last few days. Rising inflation means rising dollar and rising problems for the economic and markets are aware of this.

The EUR/USD is trading heavily along with the GBP/USD and next level for the pair seems to be 1.40. We need a clear break of 1.4030 to 1.4060 in order to say that further upside is to be seen. So far the euro seems strong and don’t forget that aside from all fundamental data that we get every day, traders always look at the interest rates situation and the reality is that ECB is clear about the fact that no more rate cuts will occur, however FED’s picture is looking more gloomy by the day hence the dollar’s inability to perform.

The economic calendar is almost empty today, with a few releases out of Euro zone and US, however nothing earth shattering, so traders are only reacting to their latest feelings about the whole economic recovery scenario which lately seems to be a science fiction. There have been many comments from US officials and other EU ones about recession ending soon; however there is a feeling amongst traders that the recent rally is nothing but a correction from the lows before further downside occurs.

The better nonfarm payroll data we saw last Friday, together with highest unemployment rate in US for at least 25 years, makes one wonder how accurate are those numbers in order to tell us that the worse is over. According to the President of US, recovery is starting to happen and more jobs will be open in the coming months as more money will be put into the system. Only yesterday, Obama declared that he was going to deliver more than 600.000 jobs out of his recent stimulus plan; however this was far from reassuring as the stimulus plan of more than $740 billion still needs time to work.

The stocks and equities are trading mixed since early Europe and the same is happening in New York. Investors are at a loss as to how they should move from here and the general feeling is that until there are clear signs to either way, the best way is to remain aside. The fact that summer is here and most traders are planning their time off makes things even more choppy and one day’s rally can easily be reversed the next day…

Published on  Tue, Jun 9 2009, 13:46 GMT

Dollar is Strong…But for How Long?

Mon, Jun 8 2009, 11:36 GMT
by Lena Manousarides

SpikeCharts

The dollar continues to dominate against the euro and the pound, as EUR/USD broke important 1.39 and GBP/USD is trading below 1.59 at time of writing. The market participants came back from the weekend, feeling a bit more positive about the economic outlook ,after Fridays payroll data showed an improved number which helped the dollar on its upside journey. The fundamentals are starting to matter again and traders bought the dollar as an aftermath of better than expected economic data.

The EUR/USD continued to slide and the pair did not even stop at important 1.3930 but broke on the downside after the market open. Next support level lies at 1.38 ahead of 1.3760. The pair needs to keep those levels in tact for any recovery hope, however clear break of 1.38 may indicate that the euro could fall even more in the coming days. As long as the pair keeps 1.40 untouched, the downside may prevail.

The GBP/USD is trading lower again not only due to dollar strength but the pound has its own drama to deal with, as UK government is having a crisis and the Prime Minister’s future looks gloomy at best. Gordon Brown has refused to step down, after ministers asked for his resignation and the fact that this has been even discussed as an option makes the pound weak and investors not willing to buy it before the picture is clearer . The political instability in UK weighs on the country’s economic outlook and all the positive sentiment that traders had in previous weeks, seem to be fading away. The next few days will be crucial for the currency and the country’s outlook and GBP/USD needs to keep 1.5760 for now if further upside is to be seen.

The economic calendar is almost empty today, with no economic data out of US and a few numbers out of Euro zone which showed an improved economic sentiment in Europe but not enough to swift the current negative euro direction. The dollar strength can be seen as a pure correction of all those negative days we had in previous weeks, however hints that FED may increase its rates in the coming months, gives investors more reasons to buy the currency. After many months of almost zero rates, there are signs that inflation may be coming back and the recovery may be in motion, so therefore FED may be called to re think its low rate monetary policy. Traders have started to speculate that the bank may start to hike its rates from the September meeting, however let’s not jump into conclusions until we see more economic data out of US.

Many economists and analysts across the globe have dismissed the recent recovery trend that the US government is trying to promote and instead are seeing this recent rally in stocks and equities as a simple correction before another wave down. The truth is that the recession is still a reality and it will take more than a few “green shoots” in the current economic environment in order to talk about a true recovery. The markets are still confused as to which direction to take and always risk aversion comes back when another headline or news disappoint.

Let’s see how this week progress form here and how the other markets like commodities, metals and stocks will react…

Published on  Mon, Jun 8 2009, 11:36 GMT

Risk Aversion is Back with Dollar's Domination!

Thu, Jun 4 2009, 13:59 GMT
by Lena Manousarides

SpikeCharts

The dollar has managed to gain back its losses slowly after today’s monetary meeting by ECB and BOE and although Mr. Trichet told reporters that rates are appropriate at those levels, the confidence of market participants is fading as the economic outlook seems uncertain. The green shoots of economy are starting to wilt and risk aversion is returning to haunt investor’s.

The EUR/USD is moving like a roller coaster today, with pair declining below 1.42 once again and printing yet another weekly low at 1.4060. The pair cannot sustain its new found gains above 1.43 and that is a reality, as dollar is coming back to claim all its recent losses. Next level to watch now is 1.4030 ahead of 1.40 and these levels have to hold for now if further upside is to be seen in the coming days.

The economic calendar had many important events today, with Halifax house prices out of UK coming out much higher than expected giving the pound initially a move on the upside, however the absence of any more information regarding the economic outlook failed to convince traders to buy the pound further, hence the decline afterwards. Later on we had ECB and its rate decision which came unchanged too, however the combination of a relatively non committal Trichet together with risk aversion coming back, gave the euro a nasty surprise on the downside which took the pair all the way down to 1.4060.

Markets are not sure anymore about how sustainable is the current rally and optimism that we witnessed these days and as usual, risk aversion came back in the markets and took stocks equities and commodities victims of yet another slide. The dollar seems to be benefiting from all this and it makes one wonder if the recent dollar weakness was overrated and if the dollar will continue its upside trend when the markets realized they ran before they could walk.

Things to watch for now, is EUR/USD and how it will react at 1.40 level which if it breaks could easily take the pair down to 1.3960 and GBP/USD at 1.60 which is a good support level for now. The current market sentiment is negative and today we witnessed many whipsaws all across the board, therefore, until the markets settle back to their “normal mood” it is advisable to hold small positions or stay aside. Don’t forget tomorrow is another very important day for the dollar and all markets, as nonfarm payrolls will show if the “green shoots” in the economy is real or wishful thinking…

Published on  Thu, Jun 4 2009, 13:59 GMT

Dollar Still Under Pressure Despite Earlier Gains…

Tue, Jun 2 2009, 11:57 GMT
by Lena Manousarides

SpikeCharts

Markets are trading mixed since early Asian session, with Europe down for now and New York heading this way too. The economic data are better than expected these days, nevertheless traders are not convinced on the recovery latest story and always are careful not to over expose themselves in the current euphoric mood.

The EUR/USD is trading much lower this morning and a brief slide towards 1.41 was able to find good support. At the moment the pair is back up towards 1.42 and next level to watch is 1.4230 and 1.4280. Traders are reluctant to commit further on the upside, what with important economic events ahead of us tomorrow like the ADP report which will give us the first indication of the payroll numbers and also Bernanke’s testimony in front of the Congress. The range of the pair is 1.41-1.43 and we may see a sideways move until the first important event unfolds.

The economic calendar today is almost empty and traders are taking the opportunity to book profits and reposition themselves for the busy week. The data out of UK today were very positive for the pound; however traders did not take the chance to boost the currency further, due to uncertainty of the political situation in Downing Street, as Darling’s job is at risk after the recent expenses scandal. As long as GBP/USD keeps 1.63 intact, further upside is possible in the coming hours. Later on we have pending home sales from the US which are expected lower than previous month but the news may not find reaction at present as everyone is waiting for tomorrows events.

For now, things to watch is the dollar’s recent weakness and how it will progress from these levels and if EUR/USD will break on the upside once again, as it held the important 1.41 support. In other markets gold and oil both reversed earlier gains seen last week; however the move was more of a consolidation before further upside occurs. The news that the hurricane season is about to begin and therefore pose risks to several countries, is making oil investors wary and as long as oil keeps $65 as support for now, another wave of gains may push the commodity to $70 in the coming days.

Let’s see how New York opens and if the dollar will resume its downside trend ahead of important economic events in the coming days. Don’t forget that euro bulls are waiting in the sidelines for now, as Trichet will deliver his speech this Thursday and may give out signals as to what the next move in rates will be. The forecasts want the ECB to keep rates unchanged but the main question will be if the easing cycle has come to its end or if there is more cuts to follow below 1%...

Published on  Tue, Jun 2 2009, 11:57 GMT

Dollar Weakness To Be Continued?

Mon, Jun 1 2009, 10:40 GMT
by Lena Manousarides

SpikeCharts

The dollar outlook continues to be gloomy, what with EUR/USD breaking higher from important 1.4160 and GBP/USD skyrocketing more than 300 points towards 1.65 which is a very good resistance level for now. Investors are clearly happier about the global economic outlook and they don’t feel the need to buy the buck as a safe haven currency, hence the recent weakness. The more the economic numbers continue to pleasantly surprise, the less traders feel obligated to buy the greenback.

The EUR/USD is trading heavily since market opening, with pair breaking important levels on its upside journey towards 1.43. For now next level to watch will be 1.4260 and a clear break may give euro bulls’ further excuse to take the pair towards 1.4330. The new found euro strength will be put to the test on those levels though and the fact that the ECB is deciding on its rates outlook later on this week, may stop traders from taking the euro too high as the risk of a split between ECB members is always likely to put some pressure on the euro outlook.

The economic calendar had a few releases today, with Manufacturing PMI out of UK which gave us better numbers hence the pounds new found strength and also ISM Manufacturing out of US later on which is expected to improve. The numbers we get out of UK recently have been much better and therefore traders have started to feel that really the worse is behind and there is a big possibility that recovery has already started. This gives the pound some kind of leverage for now and 1.65 seems to be the next test for the currency. Investors have been short the pound for too long in the previous months and if we get further good news for the economy, we may be in for another rally in all pound related pairs in the coming weeks.

This week is crucial for the dollar and other markets, what with so many economic indicators looming and ECB and BOE rate decisions out later on. The main event that traders await though is once again the nonfarm payroll data which will be very telling on what is going on in the US economy recently. The market sentiment is positive again and that can be seen clearly on stocks and equities direction and also the oil which is climbing slowly towards $70. If the number indicates that recovery is almost certain then the dollar may continue to lose steam as the risk appetite is growing by the day and investors are looking elsewhere for other “interesting” ventures.

Let’s see how New York opens and if the start of the week indicates that the upside is back to stay for now…

Published on  Mon, Jun 1 2009, 10:40 GMT

Market Euphoria All Day...Keeps the Dollar Bulls Away!

Fri, May 29 2009, 08:09 GMT
by Lena Manousarides

SpikeCharts

As we approach the weekly close, dollar is moving lower against all major currencies. The euro did exactly what was expected against the dollar, by breaking important 1.3960 once again last night amid thin trading conditions and gained even more today breaking higher than important 1.40. US traders are getting ready for the weekend hence the low liquidity seen across the markets and that is why the danger of further breakouts in dollar related pairs is imminent.

The EUR/USD is trading heavily since yesterday and the first resistance at 1.3960 broke easily as there were not many sellers to protect the levels. Now, next level to watch is 1.4030 and then 1.4080 which may find some sellers. It is important to note that if 1.4080 gets out of the way then further upside could easily be seen towards 1.43 as there is not a lot to keep the ranging euro bulls in line! As long as 1.3860 holds as support, all retracements in the pair could spark even more buyers as dollar gets hammered across the board.

The economic calendar has a few economic releases, with UK data coming out better than expected showing that recession may be easing and recovery may be underway. The same happened for EU data, as we had better than expected retail sales out of Germany which helped the euro on its “journey” above 1.40. Also early this morning we had economic numbers out of Japan, which came out better than expected, giving investors a nice surprise and more confidence that there is light at the end of the tunnel after all! Later on today we have the preliminary GDP out of US and also consumer confidence and traders will monitor closely both numbers in order to see if the “green shoots” are real or a fairytale!

The European markets are trading on positive territory since early opening, taking their cue from Asian session and it feels like US will follow on the same path, as economic numbers seem to improve and also the market sentiment is full on positive at the moment which although helps stocks and equities, nevertheless it does damage to the greenback as it started to lose against all majors once again. The dollar has lost its safe haven status and investors are selling it off the moment they feel more positive.

In other markets, oil has risen to 6 month highs amid weakening dollar and stock’s gains. As long as the commodity trades above $60, there may be further upside towards $70 in the coming weeks.

Let’s see how New York opens and how the day progress till the closing and if the new found hope and euphoria lasts for more than a few days…

Published on  Fri, May 29 2009, 08:09 GMT

Dollar Unable to Sustain its Gains!

Wed, May 27 2009, 14:27 GMT
by Lena Manousarides

SpikeCharts

Another day, another wave of confidence all across the markets, with stocks and oil rising on speculations that economic recovery may be underway as governments are making plans for the future. The pound is the winner of the day in the currency markets so far, as GBP/USD printed new multi month highs over 1.60 and the pair so far found resistance at 1.6030. A clear break of the latter level may give the pair further upside towards 1.61.

The EUR/USD is trading lower since early European morning and that is mainly because of recent comments by ECB members, which said that there is room for further rate cuts in the near future as EU economy has not shown clear signs of improvement. The pair has failed to break 1.40 once again and instead it fell more than 100 points just above 1.39. Next level to watch is 1.3860 ahead of 1.3830 and the latter level should hold if further upside is to be seen.

The economic calendar is almost empty today and therefore markets are driven mainly by news headlines and market sentiment which so far seems to be positive. Market conditions are still fragile and traders are not committed either way amid worries of the economic future. The only important release out of US is the existing home sales, which is expected to show a slight improvement and it will be interesting to see how investors react in the aftermath. It is important to mention that fundamentals are coming back to trader’s attention and if data is better, risk appetite returns in the markets which drives the dollar down instantly.

The one thing that market players have in their minds at the moment is the massive debt that US government has to deal with and this is making everyone wary and the stocks direction uncertain. The point is that Obama’s administration has to deal with this by either borrowing money from “willing” lenders which could create all sorts of problems or by monetizing the debt by printing more money. Printing more money will eventually create higher inflation and more problems for the US Treasuries holders. Either way it seems that investors want to exit their long term bond positions, as the future looks gloomy and recovery slow and painful.

For now let’s watch US stocks and equities and also the dollar which seem to be weakening once again across the board. Levels to watch on the upside is 1.4030 for EUR/USD and 1.6080 for GBP/USD which for now need to give way before further upside is to be seen…

Published on  Wed, May 27 2009, 14:27 GMT

Dollar Fights Back…But Will it Win?

Tue, May 26 2009, 10:47 GMT
by Lena Manousarides

SpikeCharts

After a long weekend for UK and US, traders are back today, in a dollar bullish mode, after both EUR/USD and GBP/USD found a temporary top at 1.4060 and 1.5950 respectively. Markets are down since Asia session and the same happened after London opening, amid new worries that economic stability may be prolonged and also geopolitical concerns over North Korea’s latest missiles , which are driving dollar and yen higher as a need of safe haven currency is coming back in focus.

The EUR/USD has been rising exceptionally since last week; however the pair found a top at 1.4050 and the dollar bulls took their revenge by selling off the pair since early European open. For now, 1.3830 has to keep intact if another wave of upside is to be seen in the coming days. A clear break of 1.3830 ahead of 1.3760 may put the pair back on the defensive towards 1.35. The current retracement in the pair may be just that: a simple retracement after many days of rise in the European currency. If the current levels hold, we may see the pair rising again if economic data and events also assist.

The economic calendar has not got many important releases today, with some releases out of Europe which came out mixed and later on consumer confidence out of US which is expected to give us a more positive number now, as the US government together with FED are trying their hardest to lift consumers spirits up on any given occasion. The reaction in the news are limited today, as markets are still on holiday mode and also the latest missile tests form North Korea are the main events which occupies everyone’s attention. There has been negative response out of UN and many European officials condemned the latest actions and at a time that economy suffers worldwide, these actions do not help traders to be optimistic about the future.

Investors are still confused as how to feel about the economic outlook and this is very obvious when we take a look at stocks and equities, as one day’s rally is been wiped off the next day. The possibility of another market selloff is so real especially if economic numbers continue to prove that the recovery is not under way. This is the main reason why traders are poised to keep positions open for long and also why we see such extreme trading conditions with one day currencies rise more than 200 points and the next a reversal occurs. Until market participants are more certain as to what tomorrow brings, the moves may be choppy and with no direction.

Let’s see how New York opens and if the current situation is just a consolidation before another upside rally commence…

Published on  Tue, May 26 2009, 10:47 GMT

Is the Pound A Victim of Over Confidence?

Thu, May 21 2009, 10:19 GMT
by Lena Manousarides

SpikeCharts

The pound has started the day on the negative side, after UK data revealed that the economy is far from recovering and the economic situation got downgraded once again. Market players did what they know best after the announcement, by exiting the longs in pound and therefore we saw a massive liquidation all across the board on pound related pairs. This only proves one thing: the worst is not over yet and investors are getting punished when they “run before they walk”. All we saw in the last few days was a swift in market sentiment from negative to over positive and today’s negative economic revisions wiped all gains printed yesterday.

The GBP/USD lost more than 100 points in a few minutes following the S&P’ s ratings and at the moment the pair is trading just above 1.56, with daily low at 1.5520. It will be imperative for the pair to hold 1.55 if more upside is to be seen, however if further liquidation occurs, next level to watch is 1.5470 ahead of 1.5430.

The economic calendar has a few important releases today, apart from UK numbers which came negative, with jobless claims out of US later on, which are expected to be risen again last week and if that happens, the dollar may gain against the major counterparts as traders might lose their new found confidence that things are improving on the US economy. Also we have Philly fed Manufacturing Index which is expected to be higher so let’s watch how markets react after the news and if stocks will continue to rally towards the end of the week.

It is so obvious that markets conditions are still fragile and market rallies cannot sustain for long, hence the whipsaws we see in currencies as traders are unsure of the short term market direction. We started seeing some volumes in euro and pound related pairs in the last few days and now it’s time to monitor if further breakouts will occur in EUR/USD towards 1.3860 or if risk aversion returns to wipe recent gains.

How can one be sure of anything relating to economic recovery, when the officials themselves are passing misguided messages? For example only a few days ago FED officials were bragging about how things are stabilizing and improving in the economy and how they see early recovery. Today, the same officials declared that they are not convinced anymore that the economic stability will persist. Basically, what we need to do is ignore all rhetoric from “experts” on recovery and try to trade the signals we see on a daily basis. The best way to go is to follow the short term outlook and forget about long term positions, as the recession is still a reality and the bad economic numbers keep coming back and strip off all hope and gains almost on a daily basis.

Let’s see how EUR/USD moves for now, and if the pair has the power to sustain its recent gains. Also let’s see how stocks will open at New York and if we have another day of loses amid negative outlook…

Published on  Thu, May 21 2009, 10:19 GMT

When Hope is Up…Dollar is Down!

Wed, May 20 2009, 15:04 GMT
by Lena Manousarides

SpikeCharts

The euro and the pound are enjoying some good old profits so far against the dollar, with EUR/USD opting for important level of 1.3830 and GBP/USD looking ready to break higher above 1.5660. The dollar weakness came on back of risk appetite returning back to the markets. Stocks were up since European open and continued in the same tone towards New York open. Traders are selling the buck and buying stocks in yet another try to make a point that recovery in the global economy may be a reality.

The EUR/USD broke important 1.3670 as we mentioned yesterday, and next target seems to be 1.3830, which is very important resistance. A clear break of the latter level may give euro bulls another try for 1.40 in the coming days. For now, as long as the pair retrace not more than 1.3630, it looks good for further upside.

The GBP/USD is also trading higher and the BOE minutes did not offer any more insight of the UK economy deterioration, hence traders bought the pound in the aftermath. The pair is looking ready for a breakout in the daily and weekly charts and as long as 1.55 holds for now, anything is possible.

The economic calendar had a few releases out of UK, with minutes out of BOE taking the center stage, and the fact that they did not offer anything unpleasant for traders, was taken as a green light to buy the British currency on hopes that the recovery of the UK economy is underway. Today we also have FOMC minutes later on and so far the dollar is losing against all major currencies as traders bet that the outcome of the minutes may bring yet another hopeful message to already battered sentiment that indeed the US economy may start to improve. At times like these where confidence is high, the way is to buy and hope for the best! This is obvious if we have a look at the stocks and also the commodities. The dollar is always the victim of the risk appetite returning and it will be interesting to see how it plays out until the end of the week.

Things to watch for now are EUR/USD and GBP/USD and possible breakouts in store. The crude oil is also appreciating and as long as $60 holds we may see further gains above $65. Speculators are back with a vengeance and clearly want to see higher prices.

One last note, we should always beware of the upside at times of recession and although we should enjoy the ride, risk aversion should be in the back of our minds. We need to see rallies sustain for more than a week or two in order to say that something bigger is coming.

Published on  Wed, May 20 2009, 15:04 GMT

It's All About Market Sentiment…

Tue, May 19 2009, 14:52 GMT
by Lena Manousarides

SpikeCharts

Watching the market’s behavior these days is like watching an Australian soap opera. Emotion has been running high and investors are trading according to the good, bad and ugly circumstances. The stocks were trading higher into European session and finished positive, as better than expected news came out of Germany and therefore trader’s feelings were once again positive about the recovery. However, come New York session and so far DOW JONES is trading lower, amid worse than expected housing data.

The EUR/USD looks better today, after surging ZEW numbers, gave the euro bulls an incentive to buy the currency and break the important 1.3530. So far the pair has found a temporary top at 1.3660 which worked as good resistance, however if it holds 1.35 for now, further upside may be seen towards 1.37-1.3750 in the coming days.

The economic calendar had a few important releases out of UK and EU, with CPI coming much lower and the Bank of England been put on the spot once again. The fears for deflation are real these days and King with his pals need to convince the government that they actually have a plan about the economic recovery and not make things up as they go along - which is how it feels for all of us. Also we had a better ZEW number out of Germany which gave Europeans some kind of hope that the worse is over, however notice how the better number was for ZEW sentiment, which actually means the way businesses “feel” about the economy. As I mentioned previously, it’s all about feelings, after the November and December market lows and dismal economic data, traders are getting ready to leave that behind and opt for a substantial market recovery. However, every day there is always something that stops them, be it pessimism or realism that the economic crisis is not over by far.

In other markets, we saw oil pairing up gains, right after the worse than expected economic data out of US, however it feels like speculators are back and wish to see the commodity rising further above $65 in the coming weeks. The market participants are searching for proof that the global economy is improving and therefore demand for oil will be once again top priority.

Let’s see how markets end up closing today and if DOW JONES will feel the worst of recent indications the US housing sector is underperforming. It is very interesting to see how US and world officials are trying their best to fix the current negative economic sentiment, with optimistic speeches and smiles, nevertheless, beware of false prophets, as if their optimistic estimations are proven to be wrong, the market will make them pay with another collapse.

Published on  Tue, May 19 2009, 14:52 GMT

Euro and Pound in a Wait and See Mode…

Mon, May 18 2009, 10:48 GMT
by Lena Manousarides

SpikeCharts

A typical Monday morning in the global markets so far and especially in the currencies, as traders are still going through last week’s events and get ready for this on. Asian stocks were down this morning more than 200 points and so far European stocks are trading mixed amid uncertainty of what this week may bring. The yen also fell against the dollar, after Japanese officials indicated that the current economic outlook in Japan may be in danger, if “excessive moves” in currencies are printed. The good old way for Japan to “intervene” on its currency is visible again and it’s clear that the government do not wish to see its currency gaining too much as the economy continues to slide.

The EUR/USD is trading below 1.35 since late Friday and a break of 1.3530 which is important resistance for now, may open the way towards 1.36. The euro outlook remains gloomy as the pair stalled once again towards 1.40. On the downside, watch out 1.3430 ahead of 1.3380 which for now seem to be the next targets.

The economic calendar today is almost empty, and that may give another reason for traders not to be very active today, and get positioned for a more interesting calendar later this week. This week we have speeches by Treasury Geithner and also Ben Bernanke, on the current economic outlook and traders will monitor their words closely for signs of “green shoots” and general optimism on economic recovery.

The oil has risen since London opening, after a slide last week, which was mainly due to geopolitical events in Nigeria and also bad economic data out of US. Traders are in a wait and see mode, however if rally can sustain current gains, we may see further strength towards $70 in the coming months, because if traders feel that recovery is ongoing, the feel to buy commodities will be even more real.

Things to watch for now, are the pound against the dollar and the euro, as it is trading much higher for the last few days. As we said last week, the EUR/GBP is trading lower, and the first target was reached early this morning at 0.8820. A clear break of the latter level may give us further losses towards 0.8760. The pound has every reason to be stronger than the euro, as the latest data suggested that the worse may be over and also recent comments by ECB’s Webber, implied that the banks estimations for quicker recovery were “exaggerated”. Investors are trading with heir emotions lately and comments like that may easily swift their sentiment, hence euro’s weakness…

Published on  Mon, May 18 2009, 10:48 GMT

When in Doubt…Dollar is About!

Fri, May 15 2009, 09:33 GMT
by Lena Manousarides

SpikeCharts

Another week is coming to an end, with markets still trading with no clear direction, amid mixed economic data being released and a general feel that the worse is not really behind us. US stocks rose slightly yesterday and NIKEI followed in the same way after slight optimism that global economy may be improving followed China’s better economic outlook.

The EUR/USD has been trading lower following this morning's German GDP number shrank its most in more than 13 years! The same has happened with the French economy; therefore traders have exited any euro positions they have! The fact that the Euro zone data continues to disappoint weighs on the currency and any rallies toward 1.40 fade quickly. The next level to watch on the downside is 1.3530 ahead of 1.35 which is a very important support level. If the latter gives way we may have further losses towards 1.3460. However, as today is Friday we may see some profit-taking in the pair and also traders may not want to be exposed during the weekend.

The pound has trading higher since early in the European session which is mainly due to the downside trading EUR/GBP. The bad economic data out of Europe, in combination with no data out of UK, is weighing on the pair and further downside may be seen if 0.8930 gives way. The next level to watch is 0.8870 ahead of 0.8825.

Today the economic calendar had a few important data out of Euro zone, which all came worse than expected, hence euro’s current negative outlook and also later on we have CPI out of US, which traders will monitor for any hints as to how the inflation outlook is working out after all the rate cuts that FED have done over the months. Lets not forget the TICS data and also consumer confidence which may be beneficial for the greenback, if the sentiment turns negative and the need for safe haven comes back. The dollar is trading mixed against all major currencies at the moment and there is no clear direction.

The fact that Trichet said in the last monetary meeting, that Euro zone economic outlook has improved, makes one wonder, as more bad economic data are released every now and then, making investors think twice about going long euro and stay long. The truth of the matter is, that lately, traders are reacting more with their emotions rather than anything else and ones day’s good news becomes a rally, where another day of dismal economic outlook becomes their worst nightmare. There is no sentiment on any currencies particularly at the moment, and traders are buying the less of two evils. For example, when US outlook seems gloomy, traders are turning to euro for comfort, however, that changes the minute we see deteriorating data out of EU. Until we see “real” signs of improvements, and not those “green shoots” that officials are trying hard to promote, markets will trade with no direction and traders won’t commit either way…

Let’s see how the day will progress until New York closes and if the dollar will continue to gain against the euro, amid bad Euro zone economic conditions and also risk aversion towards the greenback. ..

Published on  Fri, May 15 2009, 09:33 GMT

Feelings…Nothing More than Feelings! .

Tue, May 12 2009, 11:15 GMT
by Lena Manousarides

SpikeCharts

After a relatively quiet Monday with no major economic events on the agenda, traders found the opportunity to lock in profits and re position for the coming days. Markets were negative yesterday, with DOW JONES closing down more than 100 points, and Asian session also trading on the negative. Investors fear that the recovery may be prolonged and they don’t share other US official’s optimism that the worse is over just yet…

The EUR/USD is trading heavily since early this morning and although we saw a brief consolidation yesterday towards 1.35, the move was not strong enough to alter the current bullish sentiment on the euro. Next level to watch will be 1.3670 and 1.3730 and a clear break of the latter levels may open the way for further gains.

The dollar continues to weaken all across the board and that is a signal that traders feel more confident in buying other currencies at present, and the need for dollar as a safe haven asset is fading slowly. Better than expected news this morning out of China, indicated that the country is battling the recession and is one step closer to recovery, which gave stocks so far a push higher. European futures are up and so far it looks good for US stocks after New York open. It is so obvious these days that market participants trade with nothing more than their feelings about a better economic future or further deteriorating outlook.

The economic calendar today had a few economic releases out of UK and so far all data showed improved economic conditions for the country and a stronger pound as a result. Also later on we have trade balance out of US and the number is expected worse than previous month, which may very well give more reasons for traders to sell the dollar further.
After 8 months of deteriorating market conditions, dismal economic data from US and EU, falling stocks, uncertain economic future due to a great recession, we see finally some signs that the market bottom is maybe near. In previous days, we got better results from banks, President Obama said the recovery has started and Trichet stated that the Euro area showed signs of improvement and even indicated that rates will remain above 1%.

What we experience right now in EUR/USD ,is a mixture of suppressed feelings towards the EU and its economic conditions, together with risk appetite returning thanks to better economic news.EUR/USD broke important 1.35, and now it will be crucial to see how it extends its gains. So far it is looking good for further upside; however the real test will be 1.40 once again which may show strong resilience. Let’s not forget what happened last time when euro was gaining fastly, ECB intervened indirectly and caused it to slump, by cutting its discount rate unexpectedly. Is ECB ready for a strong euro at this point? Possibly not…

One thing is certain for now, recession is still a reality, however recovery is not, therefore risk aversion can come back any time and therefore we can see dollar gaining. For now, let’s watch how stocks perform after New York opens and if euro’s new found strength can take the pair to new levels not seen for some time...

Published on  Tue, May 12 2009, 11:15 GMT

It's the Jean− Claude Trichet Show!

Thu, May 7 2009, 14:42 GMT
by Lena Manousarides

SpikeCharts

It's Thursday, we're at the ECB, so let's welcome our host with the most, Jean-Claude Trichet! Today’s rate decision was crucial for the euro’s direction as it had the potential to make or break its short term outlook, so when Mr. Trichet took centre stage and indicated the bank was happy with rates above 1%, traders recalled the better than expected US jobless claims and took all this as a green light to sell the dollar and buy the euro, hence the current euro strength.

Heavy EUR/USD trading followed the ECB's decision to cut rates by 25 points and the pair seems poised for further gains towards 1.35; where a clear break of 1.3470 could potentially boost the euro towards 1.3530. Seeing as 200 points have been gained already today, we may see some consolidation soon, however if the euro proves to be made of sterner stuff, any dips which may occur could see shrewd traders using them to build further longs. For this to be a possibility however, 1.3269 must hold.

In addition to the ECB's decision, today's economic calendar provided more economic goodness, with the BOE's rate decision coming through as expected along with the message the bank planned to increase its bond purchases in order to revive the deteriorating economy. The US jobless pleased with its lower than expected number and the ADP report was positive too; letting traders dream the dream of a joyous Friday in the US economy.

It is now obvious the better economic numbers we get, the higher stocks and equities move, providing investors with the feeling they may all soon be groping the proverbial economic bottom. This then raises the important question of whether we should be looking at going and then staying, long? Are we really over the worst? We should get our answer over the coming couple of months, where stabilisation of weekly data will be our Star of Bethlehem.

But before this we should be observing the euro's new found strength and the rise of the stocks, however this better market sentiment shouldn't lull us into a false sense of security, as we know it could bite back at any time. Observe its progression and prepare for battle..

Published on  Thu, May 7 2009, 14:42 GMT

Buy the Rumor Sell the Fact for the Euro?

Wed, May 6 2009, 14:30 GMT
by Lena Manousarides

SpikeCharts

The euro has been trading higher against the dollar since the beginning of the week, however the rally found a temporary stop above 1.34 as traders took their profits before tomorrow's ECB rate decision. Now we must wait and see what happens, however the word is another rate cut of 25 points will be made by Mr. Trichet, however market participants are waiting for his statement before they commit to further gains for the single currency.

The EUR/USD has found support at 1.3260 for now, and as long as this level holds, we may see another round of gains towards 1.34 in the coming hours. The pair is poised for further gains, with risk appetite returning to the markets and the dollar weakening as a result. In order to say that further upside is coming, we need to see a clear break of 1.3380 ahead of 1.3430. The next level to watch is 1.3260…

The economic calendar had a few important releases today, with better than expected UK PMI numbers and also retail sales out of the Euro zone. The ADP report showed a better than expected number of -491.000 against a predicted -644.000, giving traders some renewed hope Friday's payroll number will be slightly more optimistic and that the economic recovery may be nearer that initially thought. Markets seem to love every bit of good news and that is how things should be for longer periods of time, in order to be able to justify market rallies.

Yesterday we had Bernanke’s speech in front of the Senate which gave markets some hope that the recession may be easing and by the end of 2009 we may see stabilization. However he warned that another shock in the credit sector may prolong any economic recovery. It is clear that risk aversion will always be a threat to this and traders are now looking for the bottom in stocks in order to build up their longs.

The gold has risen since early in the London session, and although we saw losses towards $890 yesterday, as long as this holds for now we may see further gains, due to traders need for commodities. As long as the euro is rising, the gold will rise too and the correlation between them is once again visible.

Market activity today is thin, with traders waiting for tomorrow's ECB and BOE rate decisions. The Bank of England is likely to hold its interest rates coupled with better than expected economic numbers, makes the pound currently more lucrative. The GBP/USD is holding 1.50 as a support and it will be interesting to see what happens after tomorrow’s decision. The ECB is expected to cut further weight on EUR/GBP and the pair looks good for further loses towards 0.8760.

Let’s see how the currencies behave after tomorrow's important events and if the euro will be able to hold to its gains after Trichet’s speech. Don’t forget last month we saw the euro gaining across the board before the ECB announcement, then reversing immediately afterwards; proof of 'buy the rumor, sell the fact' tactics. This time it’s simple: if Trichet signals cuts below 1%, the euro will decline immediately. If he indicates that rates don’t need to be under this, the euro will have the green light from Trichet to keep rising…

Published on  Wed, May 6 2009, 14:30 GMT

Crucial Week for Market Direction...

Mon, May 4 2009, 13:50 GMT
by Lena Manousarides

SpikeCharts

The week has started with markets showing more signs that economic recovery may be nearer than first thought. The Asian session was positive, closing up more than 100 points and so far European stocks are up too, with London markets closed due to Bank Holiday. The action in currencies is contained so far, what with Londoners enjoying a day away from their desks, however this week is potentially very important for the market's direction - the dollar in particular - as we have the ECB and the BOE monetary decisions, together with payroll data and housing data out of US.

The EUR/USD is still trading within 1.3160-1.3360 and so far the pair seems unsure as to which way to go. The euro is holding its recent gains; however we need to see a clear break of 1.3330 in order for further upside towards 1.35. Let’s not forget that traders are still none the wiser about the ECB's interest rate plans and the recent differing opinions between members of the bank, including Mr. Trichet, is keeping everyone wary and cautious about the economic outlook.

Today's economic calendar is almost empty, with Manufacturing PMI from Europe earlier, printing a better than expected number and also US Pending home sales later on, which is expected to be negative once again. Apart from that, today being Monday and with UK out due to holiday, the action may be contained, as traders want to get ready for a busier week. What we see now is risk appetite coming back, and better economic numbers out of China gave investors the impression that the recession is easing.

However, we should beware of the false prophets, as one month ago, we had better GDP numbers out of China, giving everyone a short term relief that things are starting to stabilize, and come the next day, it all disappeared as Chinese officials said the numbers were not the exact truth. Let’s see how stocks move after New York opens and if today will be the start of another positive week…

Published on  Mon, May 4 2009, 13:50 GMT

What's Next for the Dollar?

Fri, May 1 2009, 11:14 GMT
by Lena Manousarides

SpikeCharts

The dollar continues to search for direction as the week is coming to an end, and although we saw a lot of weakness in the last few days, it will be crucial to see how the currency behaves in the following week, what with important economic data coming out of US. Markets are trading on positive note since Asian session, as signs that the recession may start to stabilize are making investors more positive on their economic outlook.

The EUR/USD is trading higher still, however the pair needs to break free of 1.3360 in order to say that more upside is to be seen, as long as the pair holds 1.30 for now. Let’s not forget that next week; the euro has a big challenge on its way, as ECB meets to decide on future of interest rates. Traders are speculating that Trichet and co may cut more by 25 points, however due to the latest split in members opinions, markets are unsure as to how the bank will proceed. For now, the euro is “trapped” within range of 1.31-1.33 and let’s sees how the pair behaves if the latter level will be reached.

The economic calendar has a few important data today out of UK and US, with Manufacturing PMI coming out better than expected, giving the pound a push against all other currencies. The sentiment for the sterling is getting better, after the latest economic numbers are showing signs of recovery, driving the GBP/USD marginally higher towards 1.50. The latter level is very important and if it breaks, we may see further upside towards 1.52. Also we have ISM Manufacturing out of US later on, which is forecasted to give us a better number, and traders may want to monitor the result as the latest data of Manufacturing sector contracted by the most for years.

The risk appetite is making a comeback in the markets and that is mainly due to the fact that traders anticipate better economic numbers from now on, however there is always the feeling that what we witness now is a bear rally which although looks strong and ready, nevertheless it could breakdown in the coming weeks, if more nasty surprises hit the world economy.

Next week we have a busy economic calendar, with ECB and BOE rate decisions and Trichet’s speech afterwards, which may determine the euro’s short term future. Also we have nonfarm payrolls and although we all know that the number may be once again more than -600.000 jobs, however there is always the element of surprise which if indeed comes, investors will welcome it with further bids.

With UK economy still in the dumps, ECB monetary policy so mixed, as Trichet and co keep giving us mixed signals about their monetary stance and also President Obama’s unlimited efforts to bring confidence back in American people, it is crucial to see how the next coming months will play out and if indeed there will be light at the end of the tunnel for traders across the globe. The constant battle between risk appetite and risk aversion is the theme of the markets currently, what with the newest swine flu “spreading” all across the media and investors trying to seek comfort and safety in the dollar as it is perceived the safe haven currency for now. So far, risk aversion always prevails and until we see better economic numbers getting released on a more permanent basis, traders will continue to seek safe haven assets...

Published on  Fri, May 1 2009, 11:14 GMT

Risk Appetite is Back with Dollar Vengeance!

Wed, Apr 29 2009, 14:51 GMT
by Lena Manousarides

SpikeCharts

The dollar is weak across the board, amid return of risk appetite and a euro bullish sentiment back in line with better than expected consumer confidence in the Euro zone earlier today. Markets are slightly mixed since the European opening as better earnings prompted some gains, which drove DOW JONES up more than 100 points at the time of writing.

The EUR/USD is trading heavily since yesterday and the pair has kept 1.30 for now, although we saw a brief move below at 1.2960. The speech by Trichet which essentially told traders that the bank is not to cut below 1%, together with better than expected EU data, gave euro bulls the excuse they needed to push for 1.32 once again. For now, the next level to watch is 1.3320 ahead of 1.3270 which if it gives way; the pair may head back up to 1.34.

Today's economic calendar gave us better than expected Euro zone data, while the UD GDP contracted badly once again. Later on we have the FOMC rate decision where rates are widely expected to be unchanged; however investors fear Bernanke's statement and its relation to the current economic crisis. Let’s not forget that last month the dollar weakened heavily after the bank announced they purchased US debt of more than 300 billion dollars in order to revive the economy. This time we see the dollar weakening before the announcement and it makes one wonder if traders are selling the rumor and then potentially buying the fact.

The market sentiment has been low since the beginning of the week, partly to do with the swine flu outbreak which hit the media, which made investors wary of its potentially grave outcome, on the already battered economy. Today the WHO announced that the number of deaths were exaggerated by the media or miscounted in Mexico and therefore we saw some kind of relief in stocks and equities and he dollar losing its safe haven status.

It is so obvious that market participants are trading their emotions these days and not actual economic events and that is the outcome of risk aversion which always seems to come back and control the moves. For now, we need to watch how the FOMC meeting plays out and although we don’t expect to hear anything new in the statement, it will be interesting to see if there are any signs of admission from the FED that economy is on the way to recovery.

Next week we have some very important events including the ECB and BOE rate decision and also the payroll numbers, which will indicate how much the employment sector, is under-performing. We cannot really talk about economic recovery in US just yet, as the numbers we get are still negative and although we have a few surprises on the upside every now and again, we need to see good numbers reoccurring every month in order to say that recession is ending…

Published on  Wed, Apr 29 2009, 14:51 GMT

Traders Buy Back the Buck Thanks to Risk Aversion!

Mon, Apr 27 2009, 17:09 GMT
by Lena Manousarides

SpikeCharts

The dollar has started the week on a stronger note, despite panicked new worries concerning a possible 'swine flu' outbreak in Mexico, however the stocks were down since early on in the European opening and continued to do so after New York's opening. Investors are buying the greenback and the yen once again, as risk aversion comes back to haunt them at every turn.

The EUR/USD did not manage to break 1.3230, as the pair found a temporary halt. After the impressive rally we saw last week, traders are not sure that the upside can sustain itself for long, as further fears of slowing in the Euro zone's economic recovery is in the back of traders’ minds. The failure of the pair to break higher above 1.32 may indicate it will see further downside towards 1.30 in the coming days, if the European sentiment continues to be negative.

The economic calendar was almost empty today, with news headlines about the flu in Mexico being the main driver for markets across the globe. Last week’s rally has been contained and traders want to see how the flu news will play out. Risk aversion always returns in current fragile market environments and that could be spotted in gold’s direction which seems to rise recently on the back of investors need for safe haven assets.

This week does have some important economic events, notably the FOMC meeting where Bernanke will give us more insight as to their plans The forecasts show the rates as staying put for now, however it will be interesting to see if the statement afterwards will changed to a more optimistic outlook. Bernanke himself said that the country is on the road to recovery, but that is yet to be determined with the next load of economic data next week. Also we have GDP numbers out later this week and more earning reports from banks and corporations which will be monitored from market participants in order to know if indeed the bottom in the current crisis may surface anytime soon.

The main thing to watch is how the dollar will perform this week, and if the risk aversion will finally drive the US currency into further strength; EUR/USD needs to keep 1.30 level for now, if more upside is to be seen. However a clear break may give the dollar bulls the upper hand and make the euro weak again. It seems like markets are stalling lately and there is no particular catalyst for traders to commit either way. The need for investors to believe that things can finally stabilize is stronger than it seems and the constant battle between risk appetite and risk aversion is the proof of that. So far, risk aversion always prevails and until we see better economic numbers getting released on a more permanent basis, traders will continue to seek safe haven assets.

Published on  Mon, Apr 27 2009, 17:09 GMT

Time for Euro and Gold to Rise and Shine?

Fri, Apr 24 2009, 10:37 GMT
by Lena Manousarides

SpikeCharts

The currencies started the day mixed , as better German IFO numbers came out unexpectedly, boosting the already high euro and worse than expected GDP out of UK, showed that recession has been the worse since 1979. The pound saw some heavy selling following the release for those numbers; however the fall was able to be sustained so far as retail sales gave better than expected rise and also a Moody’s report basically said credit rating is not to be downgraded in UK.

The EUR/USD has been fighting back since early week and the pair held the 1.2930 support level as we said and appreciated more than 250 points since then. The pair found resistance in 1.3270 which was to be expected and only a clear break of the latter level can gives us more strength towards important 1.3330-60. As long as 1.3060 holds for now, we may see further upside forming next week, data dependant of course; however for now 1.3330 is the next level that euro bulls should be aware.

The GBP/USD has been trading very choppily since the release of UK budget back in Wednesday, and although we saw a big slide in the pair after the news, the pound managed to reverse all losses and even continue to rise towards 1.4750. The risk appetite returned yesterday and traders were happy again to buy both the euro and the pound as a result. For now, the pair found a good resistance at 1.4730 and due to the dismal GDP numbers, the recent rally found a temporary halt. As long as the pair continues to trade above 1.45, we may see some range trading in the following days, as investors are still deciding as to which direction to go.

The economic calendar has a few important economic releases today, with German IFO and UK GDP and Retail sales, which all came out earlier. The currencies are now trading in the aftermath of the news, with euro still being strong across the board and pound weakening as the day progress. The fact that retail sales are still resilient to the downside, gives some kind of hope to traders that it is possible that economy may be on the right path to recovery. Later on we have very important numbers out of US, with durable goods orders and also new home sales. It will be interesting to see if we see some kind of improvement in the numbers, but more interesting will be the reaction of traders if better numbers are printed.

Lately we see a constant battle between risk appetite and risk aversion and markets are still under pressure regarding the economic future. So far, futures and equities managed to sustain the upside and it will be interesting to see how DOW JONES will close for the week. Gold is also on the rise again, with China vastly increasing its gold holdings. News that Asian central banks diversify its assets to gold is giving gold bulls more reasons to go long, despite the IMF’s recent implication they will sell a considerable amount of their gold holdings over the coming months. Is this latest move by the Chinese another way of saying they don’t want to have the dollar as their main reserve?

With the G7 meeting starting today and progressing in the weekend, let’s see what the 7 world leaders say about the current situation and if we’re actually going to hear something new about ways to solve the deepening global recession

Published on  Fri, Apr 24 2009, 10:37 GMT

Pound the Victim of UK Annual Budget!

Wed, Apr 22 2009, 16:04 GMT
by Lena Manousarides

SpikeCharts

What a day for the pound Wednesday is turning out to be, as the currency has been trading like a rollercoaster since early European opening. Traders were positioned negatively before the release of the annual budget statement by Chancellor Darling and although we saw a brief retracement on GBP/USD above 1.4630, the move was completely reversed, after it became clear that the recession is deepening and the deficit may be reaching new record highs…

The GBP/USD has found resistance at 1.4630 for now and the fact that psychological and important level of 1.45 made a clear breakout on the downside gives traders more excuse to continue the recent slide towards 1.44. Next level to watch is 1.4420 ahead of 1.4370. At the moment of writing the pair is trading heavily and with choppy action and a daily close below 1.45 may put further pressure in the coming days towards 1.41 once again.

The economic calendar had a few releases during the day, with BOE minutes from the last monetary meeting, which showed that all members were in favor of keeping the rates unchanged and keep buying government bonds with printed money in order to save the economy from further deterioration. The event of the day though was the annual budget release, which basically said that the economy may start to recover at the end of this year, however the UK government may borrow even more money than originally planned, in order to tackle the economic crisis and as a result the national debt may rise to new record highs. The pound felt the wrath of traders as it fell against its major counterparts and GBP/USD now is in danger of further deterioration in the coming days, as long as 1.4630 remains resistance.

Later on today, we have Treasury Geithner speaking again about efforts to revive the current economic crisis and the markets may listen once again as to what the next step is. Yesterday, Geithner said that the banks in US are well supported and stocks went up as a result, however come today and risk aversion is once again back, as banks continue to post bigger losses than initially projected, with latest one being Morgan Stanley and therefore the positive sentiment is being put to the test once again.

For now, things to watch are gold rising, which is visible once again, and the correlation it has with futures and equities, as it always manage to find buyers when the market sentiment is low. Also, the euro rising against the dollar after the pair broke important resistance at 1.30. Next level to watch is 1.3070. A daily close above 1.30 may give euro bulls more reasons to fight back…

Published on  Wed, Apr 22 2009, 16:04 GMT

Pound and Euro Are Fighting Back?

Tue, Apr 21 2009, 13:49 GMT
by Lena Manousarides

SpikeCharts

Mobile Price and News Alerts

After the Asian session finished down more than 200 points, stocks have traded negatively, as has Europe amid poor bank earnings results, giving investors more reasons to worry about the economic future. All of this is despite the confidence we witnessed during recent days, mainly because traders know the worst is not over yet and the banks suffering is likely to continue.

The EUR/USD has managed to find support at important 1.2860 for now, managing to trade a bit higher today after better than expected German ZEW data. However, the euro is still weak and its brief rally towards 1.30 was not enough to break its current resistance level. Trichet and his ECB monetary outlook is making traders wary and until we have a clear sign something will be done during the next meeting, the euro bulls won’t commit to further buys! The range for now is 1.2830-1.3030 and only a clear break of these levels will give us a new direction.

The GBP/USD has managed to hold at 1.45 and although we saw a brief move below towards 1.4460, the downside didn’t last, as better than expected CPI data gave the pound a temporary boost. The pair has a long way to go before we can say it is ready to break higher, where only a clear break of 1.4630 could give us more upside.

Aside from the ZEW, the economic calendar only featured the UK CPI and RPI, neither of which were as bad as forecasted. Traders tend not to take the economic releases as seriously as before, instead moving on sentiment and feeling about the future moves of the central banks. For example, yesterday we saw the pound plunge against the dollar and euro, mainly because of how traders felt about the annual budget release announced tomorrow, with speculators already expecting the worst. The same thing happens with the euro, as traders fear for further split within the ECB about the future of the interest rates, therefore they sell the euro at any given chance!

At times like this, where fear and uncertainty drive market participants, risk aversion returns, just as we saw in futures and equities over the last few days. A rally in stocks cannot hold for long, purely because traders do not trust the current levels for going long! The gold also rose today due to the falling stocks, as traders look for alternative assets when confidence in futures is low.

Let’s see how New York will progress and if the current negative sentiment will give us more downside, plus how the GBP/USD behaves above 1.4630 and if the pair finds a temporary bottom at 1.45.

Published on  Tue, Apr 21 2009, 13:49 GMT

Dollar Up, Confidence Down…

Mon, Apr 20 2009, 11:11 GMT
by Lena Manousarides

SpikeCharts

The week has started with the euro and pound continuing to weaken against the greenback, amid renewed worries about the ECB’s next rate move and the UK government's monetary budget which will be announced in a few days. Meanwhile the dollar continues to benefit from risk aversion and the minute traders don’t feel optimistic, we'll see a rise in safe haven need, hence the dollar and yen strengthening.

The EUR/USD is trading lower again today; with the pair breaking 1.30 after the market opened, and the next level to watch is 1.2930 ahead of 1.2870. The failure of the pair to break higher over recent days indicates there is substantial risk to the downside towards 1.25, especially if the ECB fails to reassure traders on the future monetary outlook. For now, 1.3060 is a good resistance level for the pair and only a break of the latter may indicate a temporary halt in its accelerating downturn.

Today's economic calendar is almost empty, with no important economic releases, however traders are positioning themselves for a busy week data wise, with important UK and Euro zone data out over the coming days, and also durable goods and Housing data out of US. It will be very interesting to watch UK and Europe's inflationary data and also the IFO and ZEW, as speculation of more easing by the ECB is mounting as the economic outlook continues to deteriorate. The fact the ECB members and Mr. Trichet are split over policy views is still keeping traders away from bidding on the euro and until this is settled, the single currency looks doomed for now.

The European markets are down amid investor concern and US stocks may follow suit, however it will be interesting to see how the recent futures and equities rally progress and if risk aversion will come back once again to ruin trader’s plans for a bigger move on the upside.

For now, levels to watch for EUR/USD and GBP/USD are 1.2930 and 1.45 respectively. The later level is very important for the pound and traders may want to use the fall to buy on dips for another try towards 1.50. However, with the UK data and MPC minutes this week, the pound may see choppy action against the dollar and euro, and the direction will remain unclear until the UK government speaks.

Published on  Mon, Apr 20 2009, 11:11 GMT

FX Daily Update

Fri, Apr 17 2009, 15:24 GMT

SpikeCharts

The week has almost finished, with euro falling substantially against the dollar and the pound amid new developments in the ECB, where a split amongst members, including president Trichet, over the future of interest rates has threatened the currency’s direction. The markets are already up for the day after Citigroup posted better than expected earnings and also economic data from US suggested that economy may be on the way to recovery some time soon.

The EUR/USD is trading much lower today and as we said yesterday the important support of 1.3130 did not manage to hold, hence the move below 1.31 since early on in the European session. The next level to watch is 1.30, which for now works as a psychological support level; however a clear break may indicate that the rally above 1.31 cannot be justified for now.

The economic calendar was almost empty today, with only consumer confidence for the US printing a better than expected number, giving investors some kind of relief and hope that the crisis may be starting to ease as President Obama indicated only a few days ago. Trichet provided the day’s main talking point with his comments that the bank is ready to do everything it can to tackle the current economic crisis in the Euro zone. Market participants have been disappointed by the ECB lately, as their reluctance to clarify their position is giving investors jitters, who subsequently are not willing to go long with the euro for now, as the risk is too great.

The week has been interesting for global markets and at the moment there is an element of hope floating around, giving trader’s confidence enough to go long in stocks and equities and short on the gold, as it starts to lose its lucrative status as an alternative asset to buy.

For now though, the situation is this; we are watching markets rallying with renewed confidence thanks to better economic data and investors eliminating the need to use safe haven assets, however that can easily change as the market is still fragile and the current advisable strategy is to follow the flow until signs of reversal commence. The euro looks very fragile and if 1.30 fails to hold, then further downside may occur towards 1.27 over the next coming weeks. The ECB holds the future of the single currency and if Mr. Trichet fails to convince us the bank is united on its decisions concerning the future, then the European currency will continue to feel traders' wrath…

Published on  Fri, Apr 17 2009, 15:24 GMT

Dollar Strength is Here To Stay?

Thu, Apr 16 2009, 12:40 GMT
by Lena Manousarides

SpikeCharts

The dollar has strengthened across the board since early in the European session, especially against the euro, amid new speculation the ECB may not have a clear stance as to what their next move may be concerning rates. Only yesterday, some members of the bank said that there is further room for cuts in the next meeting; however Mr. Trichet doesn’t want to cut heavily just yet, something which became clear in the last monetary meeting. The trouble is the bank has promoted price stability all along, but at the moment their inability to give the markets a clear path is making investors wary as to what the future of Euro zone will be. The euro is feeling it this week, as in every rally there are willing sellers taking the pair back down towards 1.31.

Today the economic calendar has a few releases, with US unemployment claims traders will monitor closely in order to find out once again how the job sector performs. Last week we had a slightly better number, but still more than 600.000. The forecast today sees another dismal number over 650.000 and that may give more reasons to traders to not be optimistic about the economy just yet. President Obama is doing his best to calm the markets and create some kind of hope about the future; however, yesterday he did warn that the US economy is “not out of the woods just yet”.

So far, traders are in a wait and see mode and the coming days will tell us exactly how things may progress from here. We have more earning reports coming out of banks and corporations and also important economic data which may give the dollar more to go about. Although we saw dollar weakness in the last few days, due to mainly a swift in the current sentiment, with stocks gaining and traders not feeling the need to buy the dollar as safe haven currency, however back in traders’ minds there is always the risk of more bad news and therefore risk aversion kicking in once again.

The EUR/USD is trading within tight ranges of 1.31-1.33 and only a clear break of the latter level will give us the next move. The failure of the pair to break on the upside in the last trading session, together with euro weakness due to the unclearness of ECB’s next monetary decision may give the pair the green light to break below 1.3130, and if that happens, the next level to watch will be 1.3080 ahead of 1.3030.For now however, 1.3130 is a good support level and we need to see it giving way before we can talk about further downside.

Let’s see how New York opens and if the recent euphoria towards stocks and equities continue in the coming days, as another positive weekly close may give investors more confidence to continue buying.

Published on  Thu, Apr 16 2009, 12:40 GMT

Dollar in Search of Direction…

Tue, Apr 14 2009, 14:34 GMT
by Lena Manousarides

SpikeCharts

The week has started on a positive note for markets across the globe, after traders came back from Easter celebrations in a joyous mood. Yesterday the European markets were still closed and therefore liquidity was thin and moves were more extreme than normal, with GBP/USD making an impressive rally towards 1.49. The first earnings results were positive for Goldman Sachs and also Citigroup, however traders are not convinced yet as to what the next day’s releases will mean to the current fragile economic environment.

The EUR/USD has been trading heavily since yesterday on the upside; however the rally came to a halt at important resistance level of 1.3370.The failure of the pair to break higher above 1.34, may indicate that more downside is to come as long as I.3230 gives way into the coming hours, as it is good support level. Traders are still uncertain as to what the direction of the pair is for now, as speculations for further rate cuts from ECB are mounting following recent comments from ECB members that the bank has room to cut even below 1%

The economic calendar has a few very important releases today, with retail sales out of US being the one that traders will monitor for signs of recovery in the consumer sector. Also we have PPI out of US and a speech by Bernanke later on today, regarding the current economic situation. The markets do not have a clear direction for now, as the threat of risk aversion is always imminent even if the risk appetite is clearly making a comeback in the last few sessions. The economic data continue to deteriorate, however in the recent days, we see that investors do not buy the dollar as a result of risk aversion, but sell it as fundamentals kick in and traders realize that deteriorating data means deteriorating currency.

Only today we had more comments and indications that Mr. Trichet and his pals may continue with the easing into he coming months, and that puts more pressure into euro, as the reluctance from ECB to act faster on cutting rates, means that they are stalling and that makes investors even more wary and uncertain about the future of Euro zone’s economy. The fact that the data continue to disappoint and inflation has come out at its lowest levels makes us wonder if ECB will go down the zero rate path like the other Central Banks. Until there is a clear stance for what is the bank planning to do, the euro won’t be able to keep its gains for now and potentially could find sellers on rallies.

In other markets, gold rose once again, after it found good support at $870 and another upside move took it above $890.The gold outlook seems to be entirely connected with how investors feel about the economic future and as long as risk aversion return to the markets, gold will get bid as an alternative investment. Next important level for gold is $900 and a clear break may open the way for further gains once again.

Let’s see how the day progresses and if the markets will turn negative after another round of bad economic data. The pound seems strong against the dollar and this time we need to see a clear break of 1.50 for continuation of the current bullish sentiment. The later level has been tried many times to break in the past, so let’s wait and see if traders are ready to take the pound to the next level…

Published on  Tue, Apr 14 2009, 14:34 GMT

Dollar Strong Ahead of Easter…

Thu, Apr 9 2009, 17:06 GMT
by Lena Manousarides

SpikeCharts

The week is almost over, with markets trading on a positive note since early yesterday and the Asian session seeing stocks move above 300 points, after the Bank of Japan unveiled its new stimulus plan which is intended to revive their deteriorating economy. Investors across the globe were more positive about the economic outlook today, after better than expected company earnings and a general feeling that the economic crisis is starting to ease off! However, this mood could easily change next week, as tomorrow the markets are closed and traders are in an Easter holiday mood.

The EUR/USD failed to break its important resistance level of 1.3330, and retraced all the way down towards 1.31. Traders are taking their profits and exit their positions ahead of a long weekend; hence we are seeing the euro slide despite risk appetite returning to the markets. The next level to watch is 1.31 ahead of 1.3080.

Important economic releases filled the calendar today, with the BOE rate decision top of the list. The outcome was very much as expected, the bank left its rates unchanged after it had cut them heavily in the earlier months, down towards 0%. The pound did not seem to be affected in any way after the news, however towards London's closing we see pound losing against the dollar as traders exit their positions for the long weekend. Traders hate a weekend with open positions praying on their minds, especially as the risk is bigger than ever now, therefore we saw a big retracement of today’s gains in all related pairs.

With markets being closed tomorrow for Good Friday, it will be interesting to watch for any choppy action, due mainly to thin trading conditions. Let’s not forget in past years that the absence of market players provides extreme action for dollar related pairs and due to the current fragile market conditions, we may see this happening once again.

Things to watch for the coming days will be 1.3050 ahead of 1.30 for EUR/USD and as the latter level is psychological important level, if it gives way, then the pair looks doomed for another go at 1.25. Also for GBP/USD we have 1.45 as a good support level and that has to hold if another go towards 1.50 has a chance during the coming days.
Let’s all have a wonderful long weekend and try to forget the current economic turmoil, and have in mind that no matter how gloomy market outlook seems, the best way to go is to avoid long term positions, as things can change on a daily basis, so 'get in and get out' should be our current motto!

Published on  Thu, Apr 9 2009, 17:06 GMT

Risk Aversion is Dollars' Best Friend!

Tue, Apr 7 2009, 10:54 GMT
by Lena Manousarides

SpikeCharts

The dollar continues to gain across the board and it looks like risk aversion has once again returned amid new fears of a failing banking sector! What sparked this fear and uncertainty was various statements from the IMF - warnings that toxic assets could easily mount up to more than 4 trillion. Markets fell yesterday early in the New York session and continued until the Asian and European opening this morning. This only proves how fragile the current situation is and that lately, markets have been driven only by how traders feel about the economic prospects.

The EUR/USD failed to break on the upside, after yesterday's brief rally towards 1.36 found an abrupt stop. The dollar’s new found strength took the pair all the way down to 1.3330 and a break of that level this morning indicates more losses may be in store. A clear break of 1.3280 may find more willing sellers towards 1.3230 in the coming hours.

The GBP/USD failed also to break towards 1.50 and yesterday's rally found its maximum at 1.4970. For now, the pair seems poised towards 1.45 ahead of 1.4480. In the daily chart this level is important to hold for now if more gains are to be seen.

What we are witnessing in the markets this week so far, is post G20 euphoria, as last week we saw big rallies in futures and trader's confidence returning. However, even after all the reassurance given by President Obama and other world leaders that they are united and ready to tackle the current economic crisis, investors lost their new found confidence in light of negative banking results. The dollar and the yen also seem to be the winner of the G20 so far, as both currencies have gained from the need of investors to buy the assets as a safe haven.

Today the economic calendar has a few economic releases from the Euro zone, with the GDP coming out worse than expected, hence giving the euro one more reason to plunge against the dollar. The UK Industrial Production came out slightly better than expected, however it did not manage to give the pound a much needed boost. The EU economic sentiment is getting more and more negative by the day and speculation is now growing amongst traders that the ECB will be forced to cut rates to below 1%. It is quite obvious that Mr. Trichet and his pals and planning more easing in the coming sessions, however the reluctance to act quickly and cut more heavily, makes investors wary and has the opposite effect of what the bank tries to achieve, which is price stability!

The gold has managed to break the $900 level easily in the beginning in of the week and that again is thanks to investor’s new found confidence, as we have determined that traders buy the gold when they feel low about the economic prospects as a safe haven asset and then sell it when their confidence returns. The next level to watch is $850, which could be a good level to buy, however the current cloud of fear and uncertainty hanging over the market could give gold its safe haven status back, when it may bounce back towards $890-900.

Let’s see what the day brings and in the absence of important economic data, the markets may move once again from news headlines and traders sentiment towards the economic outlook. The G20 message was clear: all countries are (or should be) united for a better economic tomorrow. The message sounds good and certainly a trader’s morale booster, however it will be imperative to see it become reality, as the severity of this recession continues over the coming months. For now, let’s try to find short term trading opportunities and not to look for the market bottom now or tomorrow, because there might not be one for quite some time…

Published on  Tue, Apr 7 2009, 10:54 GMT

Dollar at Crucial Levels!

Fri, Apr 3 2009, 16:12 GMT
by Lena Manousarides

SpikeCharts

With all the week’s important economic events out of the way – the ECB monetary policy meeting, G20 and Non-farm payrolls - markets are still none the wiser about the future of the global economy! President Obama’s message during the G20 was clear in G20, all world leaders must unite and fight the current economic crisis and only this way will we see a recovery! Markets did rally as they welcomed the communiqué; however come today and the fact that another negative payroll number and record unemployment hit the markets, gave investors a bitter taste after yesterday’s optimism!

The EUR/USD was trading higher after the Non-farm payroll data; however the pair seems to be trapped within 1.33-1.35 for now. The euro is much weaker today after yesterday’s ECB meeting and although Mr. Trichet did not slush rates more than 25 bps, which was widely expected however there is a feeling amongst traders that the ECB is only prolonging the inevitable: lowering rates towards zero! For now the pair has to break 1.3360 on the downside in order to say that more weakness may be printed, however as long as 1.3330-1.3360 holds, all bets are off!

Markets are choppy on the last trading day of the week and that is only to be expected with so many crucial events and the G20! Although traders knew deep down that the outcome wouldn’t bring more financial stability, however the need for hope of a better economic tomorrow made the rally in the global markets continue and now it will be interesting to see how it unfolds next week! The economic releases were all negative, with unemployment reaching a new record high of 8.5% and job loses printing yet another dismal number -663.000! Also the ISM Manufacturing data disappointed, making the economic outlook for US grim once again! So far US stocks are retreating after the news so let’s see how this will play out until New York’s closing.

This week has been eventful to say the least and traders are now left even more confused as to which direction to follow! One thing is for sure, the latest job data implies that Obama’s work will be even more difficult; however there is this positive sentiment the second economic quarter may be slightly better, with all recent stimulus packages kicking in!

The gold was sliding these days, as the optimism was higher and therefore there was no need for gold to be bought as a safe haven asset anymore, however as I said previously, the $900 level is still crucial and if it does hold during the coming days, we may see another leg up towards $960.

USD/JPY rallied this week with the pair making a brief appearance above 100, at 100.25; however as the latter level has good resistance it found willing sellers towards 99.50. For now, we need a clear break of 100.30 in order to say that more upside will occur, as the yen in recent days have been totally outperformed with the Japanese economy still sinking and data failing to provide the currency with its safe haven status.

At the moment the currency that currently outperforms every other is the pound and GBP/USD is making an impressive rally towards 1.4880 -1.49, however we need to see a break of the latter level before we can say the pair is heading towards a psychological 1.50 level! The pair has been influenced by EUR/GBP’s big move on the downside and for now, 0.9030 is the next support level to watch. A clear break may open the way towards 0.8970. Traders know the BOE has already taken its decision to lower rates down to zero and there is little chance of going even lower in the coming months. However, with ECB stalling and Trichet not acting as fast as the FED regarding substantial easing, the euro is getting hit and the EUR/GBP may continue to lose in the short term…

Published on  Fri, Apr 3 2009, 16:12 GMT

G20 and the Dollar!

Wed, Apr 1 2009, 16:46 GMT
by Lena Manousarides

SpikeCharts

The G20 has started! And on April fool’s day! Is that a sign? Markets are trading on positive territory today, with Asia and Europe gaining and also New York continuing on the same note! Fears of GM failing were wiped off when US housing data rose despite dismal forecasts! However, investors are still wary of the G20 outcome which is likely to monopolize everyone’s attention for now!

The EUR/USD is trading lower since New York open and the move towards 1.33 was not enough to sustain a breakout! As long as 1.3280 holds for now, the pair looks poised for another go at 1.31 in the coming days! Let’s not forget that traders await Mr. Trichets crucial words after the monetary decision which is expected to be a cut of 50 bps. The pair will likely stay within ranges of 1.31-1.33 for now, however a break of those levels may give us the direction we are looking for.

Today the economic calendar had a few important data out of Euro zone and UK and also US. The Manufacturing PMI came out much worse than expected for the Euro zone and better for UK, hence the EUR/GBP big move on the downside! The market participants have started to have less faith in euro than the pound, as the economic data of UK have been better in the last few days! Also today we had more bad news out of ADP report which saw -742.000 jobs being lost, which is making investors bracing for a dismal nonfarm payroll number this Friday! The rest of the data were better than expected for the US, with Housing and ISM beating forecasts to the upside!

Traders however, are turning their attention to the current G20 economic summit which takes place in London and already a lot have been said about the expected outcome! Most Europeans are pessimistic for the G20 outcome and they believe it serves no purpose to the economic recovery! Recently German prime minister Merkel warned that efforts of Obama and his boys to pump all that money into the problems won’t be enough and it may very well come back to haunt them!

The dollar’s direction may be determined this week, what with G20 and also the nonfarm payroll data. Dollar’s moves don’t really reflect on fundamentals and that may continue for now until we see some kind of economic stability materializing! Investors think this: euro and pound have more chances of failing rather than the dollar and no matter the severity of the economic trouble, the dollar is... was and likely will be the main world currency reserve and all the tries in the world by the Chinese or the Russians won’t change that…at least for now…so investors will keep buying it as a safety net whenever risk aversion kicks in.

As for the direction of gold, I feel that there is risk to the upside in the coming sessions and what we experiencing at the moment may be a simple retracement from the recent rally over 1000. As long as 900 level holds for now, I believe there is further upside towards 960-980. A clear break of the latter level will give us another try over 1000.For now the range is 900-980.

Let’s see how G20 unfolds and what the world leaders have to say about the current crisis and ways to resolve it and if the outcome will be enough for market participants to find again their lost confidence. The ECB meeting is the next big event for the euro and with inflation coming out at its lowest levels and data deteriorating further it will be crucial to watch how that will play out with further rate cuts below 1%. Will ECB follow US and UK all the way down to zero? That may be answered tomorrow and with the help of G20 it will be an interesting and volatile day for markets across the globe…

Published on  Wed, Apr 1 2009, 16:46 GMT

Week Starts With Dollar's Domination!

Mon, Mar 30 2009, 14:32 GMT
by Lena Manousarides

SpikeCharts

Another week has started with markets down so far, as investors are bracing themselves for a really eventful week, what with G20 nearing and payroll data out of US later on! The new found confidence is fading away today and it will be interesting to see how New York will react during the day! One thing is for sure…One week really becomes easily next week’s collapse.

The EUR/USD is trading higher since market open last night, and the pair broke important 1.3260 very easily and looks good for more losses as long as that level holds for now. The daily low so far was below 1.32, at 1.3160 which is a good support level on the daily charts. If the pair breaks the latter level then 1.31 ahead of 1.3080 becomes the next target!

The GBP/USD is also sliding today, however so far the pair holds 1.41 as support. A clear level of the latter level may open us the way for further weakness towards very important psychological level of 1.40.

This week is full of important events and its outcome may very well determine the market direction for the coming days! The economic calendar had a few economic releases today, with Euro zone consumer confidence coming out worse than expected earlier, giving yet more reasons for investors to sell the euro further. A speech by Trichet is expected soon in front of the EU parliament committee regarding the monetary policy and current economic turmoil. Investors are waiting to hear form Mr. Trichet as this week we have ECB’s monetary decision regarding the rates. Speculations are growing amongst traders that the Euro area “boss” will cut rates by 50 bps this week and maybe even more next month. The deteriorating economic data out of Euro zone is not helping investor’s confidence and ECB members are hinting that the bank may follow the FED and BOE’s lead regarding zero rates!

Also this week we have many important economic data out of US, with ISM Manufacturing, housing data as well as unemployment rate being the ones to follow and the highly awaited nonfarm payrolls on Friday! Investors will have their eyes and ears open regarding the upcoming G20 which will be taking place in London, as many important economic matters will be discussed amid the current crisis. Only today, German Prime Minister Merkel expressed her worries about the EU economic outlook and the need for more stimulus packages in order for the economy to be revived. Her words had a bitter tone as to how ECB handled the monetary policy in the previous months and how it affected the Euro area economy.

In other markets, gold continues to fall as its losing appeal from investors due mainly to the continuing economic strains! However, as gold has appreciated so much in the last few weeks, this could easily be a profit taking move by investors, before further upside occurs! For now, gold has to stay above $900 in order more upside to be seen and for now the levels to watch are $900 - $980. A clear break of either will give the next direction!

The dollar seems strong again and as I mentioned previously, it is the result of risk aversion! Investors still are turning to the greenback for safe haven purposes and that may continue this week coming into the G20, as there are too many risks to the downside. Traders are finding it hard to keep their new found confidence, even after Obama’s numerous efforts to keep everyone positive. With the prospect of higher unemployment form US and an even worse payroll number, it will be interesting to see how markets react, and if dollar continue its current domination…

Published on  Mon, Mar 30 2009, 14:32 GMT

Dollar Strong, But for How Long?

Thu, Mar 26 2009, 19:50 GMT
by Lena Manousarides

SpikeCharts

As we approach New York closing, markets are still in a euphoric mood, with DOW JONES up and S&P 500 so far its biggest monthly rally for many years! The markets are clearly in a more positive mood these days, and news today that economic growth was at its lowest did not seem to make any difference!

The EUR/USD did not manage to break higher than important 1.3630 resistance today and at the time of writing the pair is trying to test 1.3520 good support for now. A clear break of the latter level may open the way for further losses towards 1.3460. The dollar seems stronger today across the board and that shows how fragile things are still in the economic outlook in Euro zone and UK. Investors are not totally convinced yet about the euro’s upside, however there are a few days left for the month end and therefore what we witness today may be simply profit taking before another leg upwards towards 1.38 or even 1.40

Today the economic calendar had a few important releases from UK, with retail sales coming out worse than expected, giving the pound a reason to fall once again! The economic situation is still unclear and BOE has a tough job to do these days, what with its rates close to zero and inflation coming out higher! Also today we had jobless claims, with another record high number of 652.000 and a prospect that payroll data may reach a new low in the coining days! Investors are clearly ignoring the bad data these days, as their new found confidence in Obama’s and Geithner's plans seem to be holding for now, however the coming days will confirm if the current rally has an expiration date!
There are many issues that traders are monitoring at the moment, and the fact that next week we have the much awaited G20 in London, where many global issues will be discussed, makes investors even more wary about the economic future. The recent call by China to change the dollar as the only currency reserve, was met by objections from US government, however it was confirmed today that the issue will be discussed in next week’s meeting. Traders will monitor every word being said by G20 officials and therefore the markets may be choppy until the meeting commences. Let’s not forget that in the coming weeks we have the payroll data out of US which could potentially give us another negative number and it will be crucial for the market’s direction to see how traders react in the aftermath of the events!

The euro still has potential to continue its recent rally against the dollar judging by the daily and weekly charts, as long as 1.33 remains untouched for now. The question is if the current euro correction is just a simple correction before another upside move occurs or if the dollar will come back to haunt the euro due to risk aversion…

Published on  Thu, Mar 26 2009, 19:50 GMT

Is GBP/USD On the Way to 1.50?

Tue, Mar 24 2009, 18:04 GMT
by Lena Manousarides

SpikeCharts

After a record DOW JONES and global market rally on Monday, investors decided not to continue with the recent gains, and the euphoric mood has come to a halt for now at least! Today’s hearing with Geithner and Bernanke in front of the Senate regarding the recent AIG bonus scandal has put further pressure to investors as to what will be decided. Obama and Geithner both called for stricter regulation to big banks and corporations, however we heard this story before and it will be interesting to see how it plays out in the end!

The EUR/USD was trading heavily since early European and 1.3730 did not manage to break once again at least for now. The euro was under pressure and still is, amid Trichet’s implications that further rate cuts may be in store in the next monetary meeting. The market participants are speculating now that rates may fall below 1% and eventually go as low as zero following UK and US. As long as the pair keeps trading below 1.36 there is further scope for weakness towards 1.34. The EUR/USD was influenced greatly by EUR/GBP as the pound was stronger across the board today, after UK CPI came out stronger than expected. Levels to watch for the pair now are: 1.3460 for the downside and 1.3630 for the upside. A clear break may give us the direction for now!

The economic calendar was full of data out of UK and Euro zone, with UK CPI coming out higher than forecast, giving the sterling a reason to rise and shine against its other major counterparts. The data out of Euro zone were mixed, however the current account fell sharply giving another reason for euro bulls to back off for now. We also had BOE’s King speech regarding the latest economic developments and his words were more soothing for the pound today as he basically said that he sees sharp drop of CPI coming to an end in the next months and also positive sentiment regarding the future of the economy. The latest decision by UK government to buy securities and help boost the economy, has been wise according to King and the bank is anticipating the results very soon! The pound was trading higher across the board all day and the question that arises now is, if that rally is strong enough to take out 1.50 in the coming days. The daily chart so far indicates that as long as the pair holds 1.45, a breakout may be in store soon towards 1.50. The coming days will be crucial for its direction. Another indicator of pound direction can be seen at EUR/GBP as the pair is trading lower since the beginning for the week. A clear break of 0.9160 could put further pressure into the pair towards 0.90.

So far stocks are trading down, however that seems to be more of a profit taking move by investors who are locking their profits after a wild ride yesterday. The market sentiment is positive for now and the test will be in the coming weeks when we have the next load of employment data. The risk appetite seems to be back in the markets for now and yen has weakened immensely as a result, however as for all market rallies in the past, beware of the «bear trap” which always comes back to haunt the bulls…

Published on  Tue, Mar 24 2009, 18:04 GMT

Crucial Week for Dollar Direction!

Mon, Mar 23 2009, 12:16 GMT
by Lena Manousarides

SpikeCharts

Another week is starting, with markets trading on positive territory and Asia ending the session profitably and Europe still up for the day! Market participants are in a euphoric mood due to Obama new plan to get rid of toxic assets which will be presented later on this week! The question now arises of how long this positive mood will last, as markets have proven that good news doesn’t last long during recession!

The EUR/USD is trading heavily since the market opened, with the pair topping out once again at 1.3730 and since then consolidating in the narrow range of 1.3630-1.3730. Now it will be interesting to see how the pair behaves at those levels and if euro’s rise is strong enough to take out 1.3760. On the downside, if the pair breaks 1.3560 then more euro weakness may be in store till 1.35 ahead of 1.3480. Today it’s a typical Monday after a very volatile and choppy week, with no important news on the calendar and plenty of big events to follow over the coming days. Therefore, traders may want to take it easy and not commit themselves either way! As long as 1.3560 holds for now, further upside may be coming towards 1.38.

The GBP/USD is another pair trading higher since the market opened and for now 1.4680 is the next level to watch! A clear break of this level may open the way towards 1.48 or more. The pair has to remain above 1.43 in the coming days if any more upside is to be seen. Today there is no news from the UK and therefore traders may want to get ready for events later in the week. The dollar’s weakness is the main reason for the pound’s strength and it will be interesting to see how long it lasts during the UK's economic trouble.

Today's calendar is empty, however later in the week we have plenty of economic events to keep us going! Let’s not forget that Obama’s administration is announcing their plan to restore the mortgage crisis by getting rid of all the toxic assets. In theory the plan sounds easy and plausible; however investors are not totally convinced it will work as effectively as Geithner and co. hope. Also, Bernanke will deliver his testimony regarding the restoration of the deteriorating economy and the markets will monitor their words closely for further direction. So far the sentiment is positive, however we all know the 'buy the rumor sell the fact' situation and if traders don’t like what they hear, they will continue to do what they know best: sell, sell, sell…

The UK, US and also Euro zone will see news later in the week too and it will be interesting to hear the BOE's Mr. King testify in front of the House of Lords and to see what the bank has in mind for the future of interest rates and deflation! The rates are at their lowest levels and there is further speculation that they could reach zero in the coming weeks. Some extreme scenarios even predict rates below zero for the coming months, however I don’t personally think that BOE will follow that route at times where the economy is bad enough and last thing they want to do is bring deflation into the equation.

During Monday's lull, it will be interesting to see how the US will open and whether the current positive sentiment will last for the day until important events start to unfold from tomorrow. One thing to watch will be the data out of Euro zone, and what they could potentially do to the recent strong euro. If the data continues to disappoint traders may not want to commit themselves to longer term positions as the ECB monetary meeting approaches and the risk of a further dovish tone by Trichet is bigger than ever! So, let’s see what this week means for the dollar and its recent slide and if the newly found risk appetite is ready to be taken to the next level.

Published on  Mon, Mar 23 2009, 12:16 GMT

Simple Dollar Correction or Something Deeper?

Thu, Mar 19 2009, 17:39 GMT
by Lena Manousarides

SpikeCharts

The dollar continues to fall nonstop, what with EUR/USD and GBP/USD breaking important resistance levels of 1.35 and 1.43 respectively! One would say that investors cannot wait to get rid of their dollars, who they have bought in the last few months due to risk aversion! So far, March has been a very not dollar friendly month and this is likely to continue for a few days! Is this a simple correction of the big downside we witnessed these last few weeks? Or is there more to it?
The EUR/USD is trading heavily since yesterdays FOMC announcements and hasn’t stopped to breath. The pair broke important 1.35 very easily and also 1.36. Now it is trading above 1.37 and it looks like 1.38 is the next target! The whole move is happening very fast and it makes one wonder as to how easy is to be sustained! As long as the pair does not fall below 1.35, which works as a good support now, there may be further gains ahead! For now, 1.38-1.3860 is likely the targets for the coming hours!

The economic calendar today had a few economic releases, with jobless claims again printing a very high number over 600.000 and Philly Fed Manufacturing Index coming out slightly better than expected but nothing worth reacting to! All market participants, have ignored today’s data as eyes and ears now are all turned to FED and its new decision to buy $300B in US Treasuries in order to boost the economy. Yesterday, New York closed positively and with traders taking the news in a good way, however come today and investors are not convinced how this “cunning plan” could solve the current economic mess! FED’s actions seem desperate to market participants and desperation is not liked as it shows that the US government has not really got a clue as to how to tackle the problems!

Oil and gold surged today, with oil finding a temporary top at $52 per barrel, as investors now speculating that by printing money as a new plan, FED opens the door for more inflation and therefore further economic woes! The gold also skyrocketed to new highs and the weakness in dollar now is visible everywhere!

Is this the start of something bigger? Are we back in the good old days, when fundamentals reflex on market moves? This is very likely, as for the first time in months, we saw dollar weakening as an aftermath of FED’s latest action and the worries of investors about the future of US economy sparked a dollar dive and not a dollar rally as we saw previously! Let’s see how this one plays out and if in the next days to follow, traders sell the dollar aggressively when bad data keeps confirming their worst fears-that US economy is going down and maybe there are more nasty surprises in the employment sector over the next few weeks…

As a last note, do not let the euro and pound rally misguide you into thinking that all of a sudden Euro zone and UK are out of the damps! Mr. Trichet and Mr King have their own battles to fight in the coming days and it will be interesting to see what ECB do in their next monetary meeting! There is a lot of speculation by market participants that the bank may be forced to cut below 1%, and eventually adopt a zero rate policy like the others. If the economic data continue to disappoint then anything is possible and therefore euro bulls should never underestimate the power of the dollar as a safe currency! When economies fall globally, the dollar is always preferred as a safety net, as it has less chances of failing completely rather than any other currency in the world…

Published on  Thu, Mar 19 2009, 17:39 GMT

Shock and Awe' Tactics by the FED!

Thu, Mar 19 2009, 09:42 GMT
by Lena Manousarides

SpikeCharts

What a day we had yesterday, in the aftermath of the FOMC meeting and the “bold and beautiful” announcement by Ben Bernanke which left the markets shocked by the fact the bank was buying $300B in treasury bonds in order to revive the economy! That move was not expected by market participants and therefore traders showed their respect by making wild currency market, futures and equities moves all over the world! The victim of latest efforts by Bernanke and co. was the dollar, as it was easily sold off and lost more than 200 points against the euro and the pound!

The EUR/USD skyrocketed after the announcement and it makes one think the dollar bears were ready to hit it no matter what! The pair reached important psychological resistance of 1.3530 and since then consolidated 100 points down, but now looks poised for more gains. As long as it trades above 1.3360 there is still a risk to the upside during the day!

The markets showed the FED they are ready to welcome their efforts and if that means buying 300 dollars in Treasuries, then so be it! Bernanke and others are trying desperately not to let this recession escalate, but with interest rates so close to zero, everything indicates a need for great vigilance regarding deflation over the coming months - hence the unusual decision to print more money to tackle our economic woes. One could say that this move was well timed to come at a point when markets were fed up and angry with latest AIG bonus scandal, and it worked so far as a diverting our attention towards something else! Should we think more of it? Or should we let it lie and enjoy the prospect of a better economic tomorrow? All will be answered in the coming days; however traders in a euphoric mood after yesterday’s decision may need more proof the economy will get better, so the coming days will show us if the current rally still has life in it, or whether it’s just waiting to fade away, taken back from risk aversion once again!

So, let’s watch for further reaction today as it would be nice for the market to go back to basics, where fundamentals actually work and when things are grim and dismal for the US economy, the dollar gets punished…

Published on  Thu, Mar 19 2009, 09:42 GMT

Dollar Weakness Continues! Next Days Crucial for its Direction…

Tue, Mar 17 2009, 14:44 GMT
by Lena Manousarides

SpikeCharts

Another week starts with investors slightly more positive about the economic outlook, thus stocks went up for another day with Asia gaining more than 200 points overnight and Europe slightly down, amid poor earnings reports from European companies. However, New York has opened on positive territory and has every potential to continue its rally for the rest of the day.

The EUR/USD is retracing heavily since yesterday’s new high at 1.3070. The pair as expected found good resistance levels at 1.3070 and therefore went down more than 100 points this morning. As long as the pair doesn’t break support of 1.2860, and keeps trading above 1.29 there are many chances that the rally will find more buyers on dips to take another go at 1.3070 and 1.32 eventually. The dollar is trading lower these days, as the new found risk appetite, makes traders not favoring it as a safe haven currency and instead trying their luck with the euro and the pound!

The GBP/USD is trading lower too today, after the pair failed to break 1.4270 yesterday! The pound is weaker than the dollar and that can be easily seen in EUR/GBP. The next level to watch for the par is 1.3930 ahead of 1.3880. If the pair manages to hold those levels for now, then further upside is possible too. Let's not forget that this week we have the minutes of the last BOE monetary meeting and investors will monitor closely the statement for any signals as to what the bank may do next! The risk of further cuts is big, after King himself told reporters that the bank is contemplating dropping rates down to zero, if economic conditions continue to deteriorate! For now, the pair is trading within 1.39-1.42 range and a clear break may show us what's next for the pound! As long as 1.39 stays intact, another upside move is very possible in the coming days!

Checking the economic calendar sees some important economic releases out of Euro zone and UK, with German ZEW coming out slightly better than expected, however not being enough to give euro another push above 1.30. Also we had PPI out of US, which came out worse than expected and Housing data which were mixed and did not provide any reaction from traders. It will be interesting to see how the day progresses towards NY closing and if the recent gains we saw printed can be sustained!

Investors are in need of good news and are not afraid to show it, and the minute we have better than expected earnings reports out of banks or corporations, the sentiment becomes positive and stocks and equities rally as an aftermath! The question now that arises is should we let ourselves “fall in love” with the upside? I believe that the recent bullish move we witnessed was a combination of a needed retracement in all markets, after the recent fall and together with positive earnings from banks and the need for a better economic tomorrow, which pushed investors in a more positive mood. The catalyst for all that will be the coming days and if we see more risk appetite and investors free of risk aversion, then the rally can afford to run wild for now.

However, beware of “false prophets” like Bernanke and his recent interview which basically said that recession may finish before the end of 2009 and the worse may be behind us. It is not a matter of being optimistic or pessimistic about the economy, it’s only a matter of being realistic and if we take all the economic data in mind, together with recent statistics, we can see that the worse is not yet over and the next months will be crucial for US economic reconstruction…

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Published on  Tue, Mar 17 2009, 14:44 GMT

Is EUR/USD Finally Ready to Break Free of 1.30?

Fri, Mar 13 2009, 16:26 GMT
by Lena Manousarides

SpikeCharts

The week has come to an end, with markets rallying for the most of it! New York has closed positive yesterday and there is scope for more gains today! The European markets were up too, after investors welcomed better earnings reports from Banks and corporations. As a result, we saw weakness in the dollar against the euro and the pound, and EUR/USD moving higher towards important 1.30!

The EUR/USD has been gaining consistently these days and as long as 1.2680-1.27 stays intact, there is further scope for higher moves! The next level to watch now is 1.2970 ahead of 1.30. If the latter levels give way then 1.3060 comes back in the game! However, with today being Friday and last day of the week and also G20 this weekend, traders maybe wait till the Monday open before they commit either way!

The GBP/USD gained this week also, after a terrible start which saw the pair all the way down towards 1, 36. However in the last few days, the pair skyrocketed breaking important psychological support levels of 1.40 and printing a new daily high at 1.4070. Next level to watch is 1.4130 as it is a good resistance level and may keep for now amid weekend approaching. Investors feel more confident these days and the fact that more UK banks announced that are expecting profits in the coming months, is taking some comfort in traders’ minds!

Today the economic calendar had a few economic data, with Canadian employment numbers come out worse than expected, and also consumer confidence and trade balance out of US which came out better than expected, giving even more reasons for investors to increase their risk appetite for now! The dollar seems to be suffering today and yesterday as traders don’t wish to buy it for safe haven reasons and the hope that things may stabilize sooner than later is giving investors a renewed confidence!

Today, we have the G20 starting in UK, where 20 of the most industrialized countries in the world will get together to discuss the current economic global crisis and it will be monitored closely from investors for any signals as to what the world leaders are doing in order to bring stability into the financial sector! Yesterday we witnessed Swill National Bank taking matters at hand and intervene heavily on its currency, as fear of the gloomy economic outlook made the bank wary as to how suitable a strong Swiss franc is at current deteriorating conditions! Investors now speculate that other countries may follow Switzerland’s example and therefore moves in the currency markets may be choppy and volatile in the coming days.

Let’s see how New York futures will close for the day and if the week will finish on positive territory! Don’t forget that at such fragile market environments, rallies cannot be sustained for too long, as investors cannot afford to be long in a bearish environment! So it may be a case of not letting ourselves “fall in love with the upside” for now, but just enjoy the ride!

For now let’s watch how EUR/USD behaves at 1.30 and if the recent upside rally was enough to sustain further gains pass that level! In the last few months, the pair tried to break out of that level for many times, but risk aversion always came back to haunt it! Will the latest confidence in traders make euro bulls finally ready to “break free of 1.30? The coming days will be crucial for any direction in the currencies and also the outcome of the G20 this weekend…

Published on  Fri, Mar 13 2009, 16:26 GMT

Dollar Searches for Direction!

Thu, Mar 12 2009, 13:45 GMT
by Lena Manousarides

SpikeCharts

One day’s rally becomes next day’s dive in the current fragile market environment, and that is what we witnessed for stocks and equities over the last two days we saw big gains printed in NY, Asia and European sessions, however come today and we have already started negatively. The NIKEI ended up almost 200 points down early morning and so far Europe is in the red as new worries about the economic future are doing the rounds amongst investors as another wave of disappointing company earnings reports hit the markets. Traders are not comfortable enough to sustain gains for a long period of time as in the back of their minds; the economic crisis and risk aversion always prevails!

The EUR/USD gained yesterday towards 1.29, however the move was not strong enough to break important resistance of 1.2870 and therefore the pair met with sellers on rallies! For now, traders are waiting today’s data before they commit further on the upside, and if the latter level gives way, then 1.2930-50 becomes the next target! As long as the pair trades above 1.2660-80 it looks good for further gains, however a break of the latter level may open the way towards 1.26 ahead of 1.2580.

Today the economic calendar has a few important economic releases from the US, retail sales and jobless claims, both of which will be closely monitored by traders in order to see how the economy is progressing. The retail sales is expected to be yet another negative number, as statistics show that consumers were reluctant to spend due to the high unemployment and high job losses. It will be interesting to watch the jobless claims, as it may give us a hint as to what the next payroll number may be. For the last few weeks, the jobless claims are extremely high and that seems likely to continue for now. Today we also have the interest rate announcement from the Swiss National bank and traders expect them to lower its libor rate from 0.50% down to 0.25% - another case of rates close to zero.

Let’s see what the rest of the day brings and how markets will react to retail sales numbers! There are always risks to the downside for now, as investors fear that bad economic data outlines the severity of the economic conditions in US and the efforts Obama’s administration are using are not enough to create a solution for the current turmoil.

Published on  Thu, Mar 12 2009, 13:45 GMT

The Pound is Going Down! More to Come?

Tue, Mar 10 2009, 11:49 GMT
by Lena Manousarides

SpikeCharts

What a week so far has been for the British pound, with the currency plunging since yesterday, after it was revealed that more UK Banks are ready to fail due to the economic crisis and further speculation on what the BOE will do in the next meeting to tackle the serious economic deterioration! The fact that risk aversion hit the markets, due to comments by the World Bank that the global economy has shrunk to WWII levels and there is more to follow, made investors understandably wary about the economic future!

The EUR/USD has been trading within tight ranges since yesterday and not following pounds dive, however, the star of the day was EUR/GBP gaining more than 200 points on the back of the pound's extreme weakness. The euro seems to hold on to 1.2560 for now, however every attempt towards 1.2750 finds sellers quickly! The range for now is 1.2550-1, 2750 and a clear break of either level may show us the next target!

The GBP/USD opened above 1.4120 for the week, however the bad economic news from the UK banks plus renewed fears of traders regarding the UK's outlook forced traders to sell the British currency and important support levels got hit very quickly. As long as the pair trades below the important resistance level of 1.39, there may be further downside towards 1.35.

The economic calendar today has a few economic releases out of UK and Euro zone, with Manufacturing Production out of UK printing yet another really negative number and the drop in the sector has been worse since early 70s! Later on, we have another speech by Bernanke in Washington and traders may want to monitor his words for further signs of what the FED is planning to do with its monetary policy. It has become clear to market participants that by lowering the interest rates down to practically zero, the FED has not yet managed to bring any kind of financial stability into the system and therefore the question arising now is what is the next move? Bernanke and co. will have a tough job to convince the government that US economy can stabilize over the course of the next months! With economic data coming out really negative almost every day and with the employment sector suffering, it will be crucial from now on to see the steps the Bank will take in order to improve the economic conditions!

The stocks have gained since early in the European session amid news that Citigroup posted its biggest quarterly gains since 2007.
Investors welcomed the news, and now it will be interesting to see how the day progresses until the New York opening! It is clear that stocks are desperate to bounce back from recent lows and traders are doing their best to position themselves long, however in such a fragile environment when almost every day is hit by bad news, it is tough to maintain gains and hence the rallies are met with sell-offs!

So far, the things to watch today are the EUR/USD and a potential break on the upside if 1.2750 gives way, plus the GBP/USD and if it manages to break the important 1.39-1.3930. As long as the latter levels hold for the pound, it is very possible we'll see another leg down, with bad economic news printed earlier and also if dollar receives a lift from risk aversion later on…

Published on  Tue, Mar 10 2009, 11:49 GMT

Bank Decisions Weigh on Pound and Euro, NFP Next…

Thu, Mar 5 2009, 17:49 GMT
by Lena Manousarides

SpikeCharts

The rate decisions have come and gone, with both the ECB and BOE cutting their rates by the 50bps expected. The prospect of more easing to come made the euro and pound weak once again, with both currencies printing new daily lows as an aftermath! Traders now speculate that both banks may proceed in more cuts over the course of the coming months and that is weighing on investors’ minds regarding the euro and pound's short term outlook

The EUR/USD was traded heavily today, mostly on the downside and traders took every re-tracement above 1.2530 as a cue to sell the euro even further. The ECB rate decision and the prospect of further cuts due to the deteriorating euro zone economy is making everyone reluctant to hold on to long euro positions! For now, the next level to watch is 1.2450 and if that gives way, further downside may be possible. On the upside, the pair may find resistance at 1.2570 and if the move is not strong enough to take out the level, euro bears may win once again.

Today the economic calendar had a few economic releases, with Housing prices out of UK showing lower numbers once again and also jobless claims out of US exceeding 630.000, giving traders more fuel to speculation the non-farm payroll and unemployment may come out very negative. The dollar appreciated due to risk aversion and stocks are already trading lower after the New York opening as confidence is again negative. The current market environment is very fragile and due to renewed worries regarding the global economic outlook, investors are quickly exiting any risky trades from fear of getting caught in the next day’s market collapse!

The rate decisions provided us with more proof the banks are living in desperate times and therefore need desperate measures. Even the ECB is considering lowering rates in the same fashion as both the FED and the BOE – each in an attempt to revive the gloomy economic conditions. With unemployment reaching new highs and manufacturing sectors extremely negative, Trichet sounded more determined than ever to do everything in his power to boost the economy and if that means lower than 1% rates, so be it!

Let’s not forget that tomorrow we have the final big event of the week, the non-farm payrolls, so traders may not want to commit either way for now as they are getting ready to position themselves ahead of the number. The forecasts so far have been very negative, and if we go by the latest jobless claims and ADP report, the number may potentially reach more than -680.000 jobs, which will make more than 2 million jobs lost over the last four months!

The euro and the pound are still negatively trading after the London closing, and at the moment we can see a brief re-tracement above 1.25 and 1.41 respectively. Traders are taking their day's profits and getting ready to trade Friday’s events. From now until tomorrow’s NFP, the pairs may consolidate between 1.25-1.26 and 1.4050-1.4150…

Published on  Thu, Mar 5 2009, 17:49 GMT

FX Daily Update

Wed, Mar 4 2009, 18:11 GMT

SpikeCharts

Today has seen the markets gain following a positively traded Asian session, a trend which continued through the European session! The news that China is preparing a new stimulus plan to help the global recession and also US mortgage defaults, was welcomed positively by investors, who currently welcome any good news! The risk aversion seemed to take a step back today and risk appetite returned to the markets, causing the dollar and the yen to weaken against their major counterparts.

The EUR/USD did not manage to break 1.2450 and instead managed to find temporary support, causing Euro bulls to get in at new lows and driving the pair above 1.26! The next important level to watch for is 1.2630 and a clear break may lead to further gains towards 1.2680. However, tomorrow we have the ECB rate decision and traders may not want to commit to further gains in the single currency, as they await Trichet's words for further instruction!

Today the economic calendar had two important pieces of economic data. The ADP report came out negatively, showing that last month -697,000 jobs were lost, which gave traders a hint as to what Friday's actual number maybe! Analysts predict the deteriorating economic conditions will continuing and the fact the ISM Non manufacturing index contracted for yet another month, makes everyone wary of how the FED will act during the next meeting!

Traders are getting ready for tomorrow's crucial events, with the BOE and ECB rate decisions potentially set to determine both the euro and pound’s short term outlook! The markets have already priced in cuts from both banks and therefore a surprise outcome may actually create volatility! The BOE is expected to cut by another 50bps, taking the rates down to 0.50% - its lowest ever. The latest economic data suggests the economy is deteriorating quickly and the bank therefore needs to act fast to tackle further slump in all sectors! Markets however, have priced in this fact and therefore we may see a 'sell the rumor buy the fact' situation as an aftermath! The pound has lost a lot since the beginning of last week and needs a re-tracement, which may come after the decision! However, if there is an accompanying statement which gives a signal the bank has decided to cut and maybe continue cutting, the pound may drop once again.

The ECB is also expected to cut rates by 50bps, after Trichet stated the economy is worsening and the bank has room for further cuts. Many analysts however, predict that the bank won’t cut below 1% and may stop at 1.50%, giving the euro the upper hand as to the rate outlook. The European currency has been very weak these days and traders are waiting for further instruction from Mr. Trichet before they commit themselves for further upside. If his tone is bearish, indicating that more cuts are in store, the euro may continue to drop, perhaps even below 1.24!

So far, both euro and pound have made recovery attempts by both trading above 1.26 and 1.41 respectively, now let’s see if the moves were strong enough to sustain these gains. However, as the risk of tomorrow's decision is on the upside, traders may wish to close their positions and square their gains before opening more. It will also be interesting to see how DOW JONES closes later today and if risk aversion prevails once again..

Published on  Wed, Mar 4 2009, 18:11 GMT

Dollar Resilient to Weakness Ahead of Bernanke!

Tue, Mar 3 2009, 15:32 GMT
by Lena Manousarides

SpikeCharts

Today the Australian dollar gained against the greenback, after the RBA decided to leave rates unchanged. The forecasts wanted the bank to continue cutting heavily, however a temporary halt for now was totally unexpected, giving the Aussie dollar a chance to shine against the greenback. Traders took this opportunity to buy the other high-yield currencies, sending the New Zealand dollar to new daily highs. The stocks moved on positive territory after the European open, after the World Bank announced late last night that the global economy has seen the worst for now! These words are yet to be proven, so until we see clear signs of global stabilization, the downside may be the case for now!

The EUR/USD managed to reverse some of its losses early in the European session, however the move found a temporary break at 1.2670 which is a very good resistance level for now. Only a clear break of the latter level will give us further upside towards 1.2730. The dollar seem to be weak against the euro and the pound today, however a re-tracement after many days of dropping is expected. The question is, can the euro manage to break higher? As long as the pair trades above 1.2630 there may be some likelihood of further gains, however, in such an extremely fragile environment, any rally is always met with further selling and in the case of euro, it looks like the dollar bulls are waiting just round the corner to sell the pair down to further lows!

Today the economic calendar has a few important economic releases out of Canada, with the BOC's rate decision which is expected to be another cut of 50bps! After the RBA'S sudden decision to keep rates unchanged, all bets are off now, and it will be interesting to see if they decide to cut even further down to 0.50%. The Canadian dollar is seeing mixed trading and traders have already priced in another cut. The surprise in the markets will come if rates remain unchanged or the cut is less than 50bps. Also, we have pending home sales which is expected to print a dismal number and the main event of the day: Mr. Bernanke's testimony in front of the Senate regarding the economic outlook! Markets are not expecting anything major to be announced by the FED's president, however any bearish tone on the economic outlook may start off another wave of stock sales, therefore providing safe haven in the dollar!

Markets are getting ready for the next day's important data, and traders are wondering what the ECB and BOE will do in their respective rate meetings! The economic situation in Euro-land continues to deteriorate and there is much speculation as to how the situation will effect the already battered euro! Some economists predict the unthinkable - a collapse of the Eurozone and eventually of the euro as a joint currency! This scenario is extreme; however in extreme times we have extreme measures!

Let's see how New York opens and if the DOW JONES retrace from 12-year lows which got printed yesterday! Market participants are weighing all data and the prospect of another bad payroll number is making everyone wary regarding the stocks outlook! The forecasts are really negative for the non-farm payroll, a potential -630.000 job losses, which if that occurs, investors may continue the bearish move which started after the New Year...

Published on  Tue, Mar 3 2009, 15:32 GMT

This Week's Crucial Events May Determine Dollar's Direction!

Mon, Mar 2 2009, 14:24 GMT
by Lena Manousarides

SpikeCharts

Today sees the first week of a new month starting with the stock market dropping in the Asian session and continuing to fall through the European, amid renewed worries about the global economic outlook. The dollar is clearly getting stronger and it seems for now that investors are favoring the US currency as the safest asset. This week has crucial economic events which may determine the dollar’s direction and the futures and equities outlook.

The EUR/USD finally broke 1.26 in early trading, printing a new multi-week low of 1.2540. The latter level is holding as a support; however a clear break of 1.2530 may open the gates for 1.2470. Traders may not want to commit themselves for important breakouts before the important economic events, however in such a fragile environment, we may see stops getting hit and further downside arising. On the upside, as long as 1.2680 holds, it is clear that the pair will continue to trade lower.

Today the economic calendar has important economic data, with the UK's Manufacturing PMI being lower than expected and also Mortgage approvals, which also dropped. The economic conditions continue to deteriorate fast in the UK, which puts further pressure on an already weak pound. Analysts speculate the BOE will cut rates even more this week - possibly even to 0.50%. Also today we have ISM Manufacturing out of US, which is expected to come out lower, emphasizing how bad the economy is in almost all sectors. The dollar however, continues to benefit with or without bad data, as investors have decided that they can put their faith in the greenback as it seems to be the last currency to fail!

This week seems to have it all; the BOE and ECB rate decisions, which will be crucial for the euro and pound's direction and also Bernanke’s testimony in front of the Senate which traders will monitor for any hints as to how the bank is dealing with the crisis. Let’s not forget the most important event of the week either, the non-farm payroll. According to the latest estimates, the number may reach new highs – or should that be 'lows' - of minus 630.000. The employment sector is suffering so much; it bears comparison to the US Great Depression during the 30s.

Let’s see how New York opens and how we'll find the prices and whether the dollar reaches new highs against all major counterparts. So far, the pound has started out on a weak note and is likely to continue until the BOE’s rate decision. Let’s watch GBP/USD and how it behaves towards 1.40, which is a very good psychological support for now. A clear break of that level won’t be good for the pound's short term outlook and further downside may prevail towards 1.37 if the latter level gives way…

Published on  Mon, Mar 2 2009, 14:24 GMT

Dollar Wins Best Currency at Forex Oscars!

Fri, Feb 27 2009, 09:58 GMT
by Lena Manousarides

SpikeCharts

Another week is coming to an end, with dollar still the strongest currency across the board, as the fear and uncertainty of economic future is making market participants turn to the greenback for “safer” option. The weakness of the yen and the Swiss franc indicates that for now traders have made the choice…And that choice is the dollar! Stocks experienced mixed trading, with New York closing negative yesterday and Asia gaining more than 100 points. However, come today and already Europe is trading down and it is looking that New York may follow on the same path.

The EUR/USD has managed to break important support of 1.27 and has moved lower towards 1.26 as we have said in previous days. For now, important level to hold is 1.26 ahead of 1.2580, however a clear break of the latter levels may open the way for further losses towards 1.2530. Today as it is the last trading day of the week and month, traders may want to readjust their positions and therefore we may see some choppy action all across the board towards the closing. As long as 1.2780 holds for now, further weakness is very likely in the pair.

Today the economic calendar has some important economic releases, with CPI out of Euro zone and also GDP out of US a bit later on. The last one especially will be monitored closely by the markets and it is expected to be disappointing once again. The fact that all data this week out of US was negative, show us the level of damage that exists in the US economy and all the packages in the world that Obama’s administration is suggesting cannot take away the fact that the economy is sinking and we are merely observers! Yesterday we had jobless claims and the number was above 650.000 which just saws how high the unemployment is and will be even higher and also it indicates that next nonfarm payroll number may be even worse!

The pound is also trading on the downside and after yesterday’s speech by King, it became clear to the investors that the UK economy is nowhere near ready for recovery and further deterioration may arise soon. The bank basically said that the deficit has grown immensely and also that it may be ready to start buying government bonds to support the whole system. Traders took that as desperate times needs desperate measures and sold off the pound once again. Many analysts predict that the bank will cut once again in 5th of March and there is further speculation that the zero rate policy is just around the corner!

Let’s see how the markets behave today, last trading day of the month and if we see choppy action after London closing and just before New York closing! The month of February has been so far dismal for the markets and it looks as the New Year has started on a negative note and continues to do so! Let’s hope for a better March regarding the markets sentiment; however for us traders the way to go is to follow the trend…And as the trend is down for now we may as well go with it…

Published on  Fri, Feb 27 2009, 09:58 GMT

Dollar Strength is Haunting the Markets!

Wed, Feb 25 2009, 16:03 GMT
by Lena Manousarides

SpikeCharts

Today it was another typical sell off day for the euro and pound, after yesterdays short term rally found a temporary stop near 1.29 and 1.46. The currencies are trading on the downside today and dollar seems to find bidders at any selling opportunities. Stocks yesterday gained in New York and Asia, after investors heard Bernanke’s testimony and found some hope that the recession may come to an end sooner than originally thought. However, come today and futures already trading in negative early New York opening, as investors are weighing Obama’s new stimulus plan and its effect on the banking system.

The EUR/USD failed once again to break on the upside and its continuing failure tells us that further downside may be in store. The pair found sellers at 1.29 this morning and its now trading lower near 1.27. A clear break of the latter level may open way towards 1.26. Traders don’t want to commit on the upside just yet, even with negative US data being released almost daily and the bearish market sentiment gives investors more reasons to exit long positions in the European currency.

Today the economic calendar had a few important releases, with UK GDP coming out worse than expected and also revised down which made investors instantly aware of the pound and its fate and therefore given more reasons to sell the British currency! Also we had existing home sales, again coming out much lower than expected, driving the stocks lower once again as the US economic future seems dismal at best! The sentiment of the markets is still negative and yesterday’s markets rally came to a halt as investors are now contemplating what the FED will have to do to speed up the US economic recovery. Some analysts predict that the deterioration may continue even after 2010, as Bernanke himself said yesterday that if banking sector doesn’t improve, things won’t be able to better in the next years.

The yen seems to continue on negative tone, making USD/JPY lucrative for investors and as we said in the previous articles, the pair reached 97, its first target and now next target seems to be 100 in the coming days. The fact that dollar is strong and yen is extremely weak, makes the pair the ideal trading pair for now and even risk aversion don’t seem to influence the buying appetite. Economic conditions in Japan are so negative and therefore make traders not trusting the yen as a safe haven currency any more.

Let’s see how markets will react after the second testimony by Bernanke in front of the Senate and if the dollar continues to gain at the back of futures losses. There is a strong correlation between action in stocks and the dollar, and the weakness we witnessed yesterday in dollar came more from futures appreciating. Today that has changed so far and if futures continue to fall, further dollar strength is awaited…

Published on  Wed, Feb 25 2009, 16:03 GMT

Dollar Stalls Ahead of Bernanke's Testimony! What's Next?

Tue, Feb 24 2009, 15:22 GMT
by Lena Manousarides

SpikeCharts

Another week has started, with markets already down since the Asian session began and continuing on into the European session, amid fears of a US plan to nationalize banks and how it will affect an already suffering economy. New York closed negatively yesterday, with traders clearly unsure of what the economic future will bring.

The EUR/USD did not manage to break 1.30 once again and its weakness to do so indicates there may be more downside to follow. The pair broke 1.27 late yesterday and printed a new low for the day at 1.2650. For now, levels to watch are 1.2630 ahead of 1.26 on the downside and 1.2780 to 1.2830 on the upside. Any breakouts of those levels may give us direction for now. The euro seems to trade on the negative once again and dollar is getting bid as a result of risk aversion.

The economic calendar has a few important events today, with the German IFO coming out mixed and the euro appreciating as an aftermath. However, the move was not strong enough to take out important resistance of EUR/USD at 1.2830. Traders will want to hear Bernanke’s speech in front of the Senate regarding the economic crisis and monetary policy. This speech is eagerly awaited by market participants and is likely to spark a new wave of risk aversion if it fails to convey a more hopeful message for the future! Later we have consumer confidence out of the US, which is expected again to be negative thanks to high unemployment and jobless claims indicating consumers are not spending.

The latest data out of Japan suggests the country’s economy has deteriorated quickly over the last few months, a fact which made many investors stop buying the yen as a lucrative and safe haven currency. Therefore we see USD/JPY appreciating as a result and now the next level to watch for the pair seems to be 97. If the current action continues we may see further gains in all carry pairs, as risk aversion does not seem to hit them any longer!

This week may give us some idea of what’s next for the markets, as we have some important economic data out of both the US and Europe, but also we have Bernanke’s testimony today and tomorrow which traders are waiting anxiously for before they commit either way. The current climate in the markets is negative though, and it is likely to stay for now, as daily loses are printed in futures and equities amid fear for the global economic future. Traders are not sure anymore which currency to hold their money in, as the pound and euro are facing economic turbulence and the prospect of more rate cuts is always in the back of our mind! This Thursday we have testimony from the BOE’s governor, where he will lay out the current situation in England and give us a hint as to whether the bank will slash rates down to zero.

For now, traders are waiting for tonight’s testimony by Bernanke and his words will be monitored closely. If the markets don’t feel the government is doing enough to tackle the current situation, it is more than likely they will continue to trade on the downside, where the dollar may strengthen as a result.

Published on  Tue, Feb 24 2009, 15:22 GMT

Don't Be Seduced by the Upside!

Thu, Feb 19 2009, 15:41 GMT
by Lena Manousarides

SpikeCharts

The euro and the pound rebounded from early in the Asian session today and continued through the European session, as investors were a bit more positive about the European economic outlook after German Prime Minister Merkel vowed that she will do everything in her power to boost the current economic deterioration. The risk appetite rose after 3 days of continuous selling and now it is crucial to see where this correction will take us! Stocks were trading positively also, with Asia and Europe up following better earnings reports from banks and big corporations.

The EUR/USD retraced heavily at 1.25, which is a good psychological level for now, with the pair jumping more than 200 points, breaking 1.27. The next level to watch is 1.2780 ahead of 1.28 and if that breaks, higher strength may be seen in the pair. However, the sentiment is still negative and euro bears are waiting to sell on every rally attempt. The economic data is being closely monitored by market participants, and the fact that jobless claims out of US showed another increase over 620.000, makes investors wary of any further upside commitment.

The economic calendar today has some important economic data out of the US, with jobless claims being worse than forecast; showing the employment sector is still suffering at the hands of the current crisis and therefore the next payroll number may also be dismal, signaling the recession is still deepening. Also, we had Philly Fed Manufacturing Index, which came out negative at -41.2, confirming the collapse of the manufacturing section. Traders took the data as confirmation that risk aversion always comes back after a positive day in the markets. The current environment is so fragile that upside moves cannot be sustained for long and therefore the best way to go is selling on rallies.

The Obama administration stimulus plan has not yet managed to create a positive atmosphere amongst market participants and the more the data disappoints, the less confidence traders have in its effectiveness. So far, the month of February has proved to be a dollar-orientated month and traders continue to favor the US currency, even if the conditions are gloomy for the near future. The day we see the dollar weakening will be the day that confidence comes back in the markets and investors are looking for alternative assets to invest. This day has not yet come and is likely not to for some time, so we may as well go with the flow – which currently says: buy the greenback against its major counterparts at every opportunity and sell only at good resistance/support levels and only for a short term trade. The bigger picture shows the dollar may remain strong and there is no reason why traders should go against the sentiment unless clear signs for reversal are spotted…

Published on  Thu, Feb 19 2009, 15:41 GMT

In Crisis? Befriend the Dollar!

Wed, Feb 18 2009, 16:46 GMT
by Lena Manousarides

SpikeCharts

The dollar continues to trade strong against its other major counterparts and for now it seems investors are favoring the US currency due to fear and uncertainty. The stocks fell yesterday before New York close and also during the Asian session, after another wave of bad economic data hit US, which sawed manufacturing sector plunging by much and also renewed worries that Obama’s new bailout plan won’t be able to do a lot to the fast deteriorating economy!

The EUR/USD is trading on the downside once again, making new lows closer to 1.25, where it found buyers to defend the important psychological support. For now, next level to watch is 1.25 and if that gives way then 1.2460 seems the next target. On the upside, 1.2630 is a good resistance level and if that keeps for now, further downside is possible. The fact that 1.2630 didn’t break show how bearish the euro sentiment is as it cannot sustains higher corrections and therefore the downside seems unavoidable.

The economic calendar today had a few important economic reports, with BOE MPC minutes showing that the economic conditions continue to deteriorate and more easing may be in stall for the coming months. All recent data suggest that the country is deep in recession and the bank is thinking of ways to avoid second round effects by any means possible. It was made known today that bank officials are asking the government to let them print more money in order to boost the economy and avoid further economic slump. The pound was trading lower after the news and continues to do so, with GBP/USD making new lows for the session at 1.4090 and looks poised for more as long as it holds 1.4280 on any retracement s up.

Also today we had housing data out of the US, with Housing Starts dropping the most since the credit crisis begun and stocks responding negatively once again as risk aversion always seem to follow the bad economic numbers! The fact that markets have placed their hopes into this new stimulus plan that Obama will detail sometime today, is giving even more reasons to investors to trade without clear direction and exit their risky positions due to uncertainty and disbelief that the crisis will be eventually tackled.

The gold continues to gain from all this and for now it looks that next target is 1000 or even higher. Although gold usually correlates with euro, we don’t see that happening now and euro continue to fall against the dollar as market sentiment is full negative regarding the European outlook. The dollar is the flavor of the crisis and may continue to do so, however beware of any weakness coming if risk appetite returns in the markets in the coming weeks. If that occurs, then dollar may start to lose its attraction and therefore sell off fast, however for now that scenario is only a farfetched dream for dollar bears…

Published on  Wed, Feb 18 2009, 16:46 GMT

Crash Boom Bang for the Euro…

Tue, Feb 17 2009, 14:21 GMT
by Lena Manousarides

SpikeCharts

The week has started with euro plunging once again, early Asian session and continued through European opening, after traders sold the euro against all other major counterparts! The main reason for the sell off was renewed worries regarding the Euro area countries, after a report showed that Eastern European emerging markets were in a high risk of bank collapse due to the economic crisis. The better than expected ZEW data out of Germany were not enough to breathe life into the European currency and therefore the sell off continued.

The EUR/USD pair finally broke important support of 1.27 and made new multi week lows at 1.26. The latter level found buyers immediately as it is a good support level, however with the current negative tone the pair looks poised for more losses if 1.26 breaks after New York open. The pair is trading heavily and traders are buying the greenback with great passion as it is perceived as safe asset! Next level to watch now is 1.25 if the downside persists. The latter level is crucial for the pairs direction and it has to hold for now if we want to see any retracement happening any time soon!

Today the economic calendar had CPI out of UK, with the numbers coming out lower than previous month at 3% and also the house prices declining yet again for another month, making the pound weak and traders wary of what ‘s next! The speculations regarding further cuts by BOE are now even stronger and some analysts predict that the bank may be forced to cut as heavily as FED all the way down to zero! Also we had Empire manufacturing out from US, which showed really negative numbers, showing how bad the economy is contracting in all its different sections, with manufacturing getting hit the most. The future outlook for US economy is dismal to say the least and even the fact the Obama is signing the stimulus package later today, does not give traders any kind of comfort for now.

The sentiment remains negative and at times like these, we see gold rallying against the dollar, as investors are betting on gold in times of crisis. History from other recessions in the past shows gold always the winner of such events and there is big risk to the upside for the coming days as traders know very well that the difficult times are just beginning and more is to be expected. Also in the currency markets, we see that the dollar is rising no end these days, and again this may continue to do so as risk aversion is the only thing that is certain in such uncertain environments! The investors know that right now there is no point in investing in other currencies like euro or the pound, especially after recent reports suggest further contraction and bank exposure in both areas. We all know how bad economic conditions are in the US, and therefore know what to expect in the coming months, however when it comes to other world economies, the US still remains the bigger and therefore the “safer” for traders to place their bets!

Beware of any further breakouts in the EUR/USD and GBP/USD; if 1.2580 and 1.4130 give way, both pairs are looking good for further downside towards recent multi week lows…

Published on  Tue, Feb 17 2009, 14:21 GMT

Gloomy Outlook for the Euro! What's Next?

Fri, Feb 13 2009, 14:25 GMT
by Lena Manousarides

SpikeCharts

Another week is coming to an end, with markets still trading on the negative sentiment present in the aftermath of US stimulus package agreement by the Senate! US stocks rose slightly yesterday and NIKEI followed in the same way after slight optimism that global leaders will agree on more help for struggling economies in this weekend's G7! It should also be noted that China's economy is showing signs of recovery too.

The EUR/USD has been trading lower following this morning's German GDP number shrank its most in more than 20 years! The same has happened with the French economy; therefore traders have exited any euro positions they have! The fact that the Euro zone data continues to disappoint weighs on the currency and any rallies toward 1.30 fade quickly. The next level to watch on the downside is 1.2830 ahead of 1.2780. If the latter gives way we may have further losses towards 1.27 and the euro cannot sustain its gains over 1.2950, showing how negative the sentiment currently is. However, as today is Friday we may see some profit-taking in the pair and also traders may not want to be exposed amid the G7 meeting!

The pound has trading higher since early in the European session which is mainly due to the downside trading EUR/GBP. The bad economic data out of Europe, in combination with no data out of UK, is weighing on the pair and further downside may be seen if 0.8830 gives way. The next level to watch is 0.8780 ahead of 0.8725.

Today's US economic calendar is empty apart from consumer confidence figures later on and the number is expected negative once again, however unless it gives us a big deviation from the forecast we may not see any trading action. For now traders are concentrating on the G7 where central bankers and financial ministers from the 7 richest countries in the world are gathering to discuss the current economic problems. At times like these, where the global economic future seems so dismal, investors will monitor all statements in order to assess what the next step is and we can expect statements regarding the monetary policy, so it will be interesting to see what officials will say regarding rates!

Let’s see how the day will progress until New York closes and if the dollar will continue to gain against the euro, amid bad Euro zone economic conditions and also risk aversion towards the greenback. All eyes and ears will be upon the G7 leaders this weekend and therefore traders may not wish to keep open positions during the weekend pause amid fears of market gaps on Sunday's opening…

Published on  Fri, Feb 13 2009, 14:25 GMT

Dollar Continues to Benefit From Risk Aversion!

Thu, Feb 12 2009, 14:57 GMT
by Lena Manousarides

SpikeCharts

The markets continue to trade on negative sentiment, following the stimulus plan which was accepted by the Senate, however left investors even more worried about its ability to restore the current deteriorating economy! Asia stocks were down overnight and Europe followed on the same note, amid worries about the economic future.

The EUR/USD plunged during the day yesterday, and a brief rally towards 1.30 again was not strong enough to send the pair higher. Today traders were anticipating the data out of US and the aftermath send dollar higher once again! Next level for now is 1.27 and if that gives way, then we may have further loss for the pair towards 1.2630 and even lower in the coming days. It is quite alarming for the euro bulls that the pair is stalling over 1.30 and cannot sustain gains for too long! Until we see signs that bulls are in control, the downside always prevails!

Today, traders were anticipating the major economic news of the week, which were the retail sales out of US and the numbers rose unexpectedly for the month, however market participants were not celebrating too much as the jobless claims were high once again, emphasizing the state of employment in the country and how much it suffers at the moment. The dollar is getting bid across the board as it is viewed as safer asset to hold for now, and with Euro zone economy deteriorating further as last data suggests and Trichet ready to cut heavily, there is not a lot of incentive to buy the euro and actually hold it for too long.

The pound is also weak against its other counterparts and especially the dollar and again it is quite interesting to see that GBP/USD cannot sustain any moves towards 1.50 and a fast correction is always under way! The words by King yesterday that UK is in deep recession and the only way for now for BOE is to continue cutting aggressively, suggests that the pound may continue to trade under pressure. We know that traders have already priced in this fact and bad economic conditions in the UK, and therefore one would say that the move may be overdone and a retracement is well needed! However, let’s not forget that talking about zero rates and actually doing it is a whole other ball game and if that occurs in the coming months, we may see pound deteriorating further as other implication may arise by having such low rates!

For now, markets continue to be wary of what the future holds in the global economy and the dollar seems to benefit so far from the current economic conditions! Yen is also another currency that traders seem to go for these days as the risk appetite is not strong enough to make investors bet against the yen! The winner of the current mess seems to be the gold as it has appreciated heavily in the last few weeks and it seems to the preference at times where anything else seem risky and unpredictable..

Let’s see how New York trades and if the euro and pound manage to avoid any breakouts on the downside, which at this moment it seem unavoidable!

Published on  Thu, Feb 12 2009, 14:57 GMT

Dollar and Yen Strong after New Bank Plan Failed to Convince!

Tue, Feb 10 2009, 19:56 GMT
by Lena Manousarides

SpikeCharts

Today's most important event has been and gone, with markets being completely disappointed by Geithner's new bank plan and also Bernanke’s outlay of the current economic situation and ways to dissolve the crisis. The investors are clearly not convinced after the Senate decided to pass the stimulus package earlier today, as the plan on how to use the package failed to bring hope it will, or even may, save the day for the US economy!

It was fascinating to watch the markets gaining yesterday, in anticipation of the plan, with traders selling off the dollar as they did not see it as a safe haven, with new hopes of the “plan” being spread out across the markets! Also futures and equities gained; however come today, all the hype and confidence that traders once had regarding the economic future evaporated on the spot, after it was made clear the Obama administration has the plan in theory, but being able to put it into practice is a whole different ball game! Mr. Geithner came up with astronomical amounts of money in order to unfreeze the credit markets; however he failed to present to the markets a detailed and convincing plan as to how it will all work!

The EUR/USD plunged after the testimony and the pair found resistance again at 1.3070. The latter level did not give way and the fact that it didn’t make us wonder about the next move! The dollar is strong across the board and against the euro and now trades at 1.2890 at time of writing! If the pair closes below 1.29 today, there is a high chance we may have continuation of the move towards 1.28. For now 1.28 works as support, however a clear break may lead further lower towards 1.2760 ahead of 1.2730.

The GBP/USD is also trading heavily today and so far the pound did not manage to break 1.50! That shows there is risk to the downside for now, as investors know very well the economic conditions in the UK are deteriorating further and more cuts may be needed soon! The latest numbers show that things haven't gotten any better and King along with his pals may need to take drastic measures in order to stabilize the economy. That itself is a worry for pound holders, who are looking for ways to get rid of sterling at any opportunity! The next level to watch for is 1.4470 ahead of 1.4430 and if the latter levels don’t manage to hold for now, we may see 1.43 in the coming days!

The markets have spoken: In fragile trading environments the only way to go is to either stand aside of the action or join in the bearish sentiment! One day’s rally becomes the next day collapse and that is exactly what is happening right now in the futures and the currencies. The yen is a clear winner once again, as investors trust the currency at times like this, together with the dollar.

Let’s see how New York's session closes today and it is very possible the Asian session will continue on the same note!

It will be very interesting to watch the Bank of England's Mr. King tomorrow as he will speak about the inflation report, so traders should closely monitor his words for signals of what the next move will be! Zero rates for BOE too? Well, the FED has done it, the BOJ is there and likely to stay there, the ECB is looking to cut further towards 1%, so it's looking like the BOE may have to think seriously about the zero rate policy despite warning from bankers across England about the serious consequences which may arise.

Published on  Tue, Feb 10 2009, 19:56 GMT

Will Bernanke Determine Dollar's Direction This Week?

Mon, Feb 9 2009, 10:55 GMT
by Lena Manousarides

SpikeCharts

With payroll data out of the way and traders waiting in anticipation for this week’s events, there is a feeling amongst market participants that this week may be important for the dollar's direction. It finished near its lows against the euro on Friday night, after the bad economic data out of US showed that -598.000 was lost in the space of one month. With unemployment rising and the ISM manufacturing contracting for several months now, it is clear the economy is deteriorating and may continue to do so for the time being.

The EUR/USD was trading heavily on Friday after the payroll data release, and there was a lot of choppiness in the pair due to investor uncertainty. The pair broke on the upside after the London closing but the move was not strong enough to reach 1.3030, which worked as good resistance. The next level to watch for now is 1.2870 which if gives way, may open the way for 1.2830 ahead of 1.28. Today with no important economic data out of either Europe or the US, we may see some consolidation in the pair and the ranges for now may be tight as traders will want to prepare for the week’s events.

The non-farm payrolls did not provide us with any further direction regarding the market outlook, as investors already knew the severity of the economic situation and how bad things are; however the fact that in a space of three months we had more than 1.5million jobs lost, makes everyone wary and reluctant to believe things may get better in the coming months. After it was announced by Obama's administration that a new rescue plan is in motion, investors found some kind of confidence that the new government is ready to take things to the next level and tackle America's economic trouble. We saw a brief rally in futures, equities and commodities, however it did not last long as the risk aversion returned in the markets and traders exited their risky assets once again.

Today's economic calendar is empty of important economic data; therefore as it is the Monday after the payroll data we may see some consolidation in the currencies and traders getting positioned for a busier week. With Bernanke’s testimony in front of the Senate tomorrow and retail sales out of the US later this week, traders will have the chance to weigh all economic events and decide which way they want to go for now. All eyes and ears will be upon Bernanke and his speech about the economic crisis and ways to solve the credit crunch, but if his words don’t provide any comfort for markets participants, we may see another wave of risk aversion taking over and dollar together with the yen gaining in the aftermath.

Let’s see how this week will play out and if tomorrow's testimony provides us with more clues as to what the economic future holds. Don’t forget that for now, the trading environment is very fragile across the board and therefore any rallies in all markets can eventually lead in sell-offs, as the sentiment is bearish and may be here to stay…

Published on  Mon, Feb 9 2009, 10:55 GMT

Non Farm Payrolls Didn't Provide and Direction! What's Next?

Fri, Feb 6 2009, 18:48 GMT
by Lena Manousarides

SpikeCharts

The non-farm payrolls have come and gone and the market is moving without a clear direction so far! The euro and the pound have imitated a roller coaster since the release and although we saw a brief rally in the EUR/USD towards 1.2930, the move found sellers high up and it dived once again towards 1.28. The data was worse than expected and traders are clearly confused as which way to go!

The EUR/USD is trading within the 1.27-1.29 range since early in Europe's opening and the payroll data has not yet provided us with any breakouts from those ranges. So far the pair finds resistance at 1.2930. However a clear break of the latter level may lead to further gains towards 1.30. On the downside, if the pair closes below 1.28, then there is very real possibility we see a continuation of the move towards 1.27 early next week!

Today's calendar saw important data come out of UK, Canada and US. Firstly we had the PPI from the UK which jumped unexpectedly, however Manufacturing production came out lower, therefore traders shrugged off the data. Later on we had a big surprise in Canada's Employment Change and Unemployment rate, as both came out much worse than expected, giving the Canadian dollar a nasty surprise as it moved towards 1.2550 – a new low for the week.

The most important event of the day was the US non-farm payrolls, together with the unemployment rate, both of which managed to disappoint us once again thanks to worse than expected data. The jobs lost in the last month were almost 600.000, making it very hard for the unemployment and the economy itself. In the space of three months, we have managed to see over 1.5million jobs lost, a situation which may continue for the coming months as conditions seem to worsen by the day.

Traders are pining new hope on the latest Obama stimulus package which is very close to being accepted by the senate, therefore we saw a jump in futures and risk appetite came back slowly! There is speculation amongst investors that with the latest bad payroll data, the government will be more willing to agree on a new stimulus package which could eventually lift US out of recession, however it may take a long time before any normality is restored, making investors wary of any big moves on the upside!

This week had enough excitement to keep us going, thanks to the ECB and BOE rate decision, and the market is now predicting what the Central Bank's next move will be in terms of rates. The Bank of England is clearly in an easing mode at the moment and we may see further cuts - even below 1% - if things don’t show some kind of improvement. Remember that King said all options are on the table, even zero rates, something that Trichet was against from the beginning of his statement. ECB recognize the deteriorating economic conditions and may well continue to cut in the coming sessions; however it looks like they don’t want to go below 1%.

Let’s see how the week will end and if the euro manages to close above 1.29. If it does, it could try for 1.30 or maybe even further next week. However if we see that the pair stalls and closes below 1.28, then it looks like south may be the only way for the euro for now…

Published on  Fri, Feb 6 2009, 18:48 GMT

ECB and BOE Rate Decisions May Show us Where Next?

Wed, Feb 4 2009, 14:57 GMT
by Lena Manousarides

SpikeCharts

Yesterday was a positive day for the markets, with DOW JONES and NIKEI closing on positive territory, amid better than expected economic data out of the US and also corporate earnings results coming out better than forecast. The euro also rose yesterday as the return of risk appetite was obvious and therefore it gave the EUR/USD a push towards 1.3050. However come today, the move was put on temporary halt, as the euro dived against the yen and dollar as renewed worry that the stimulus package wouldn’t be approved by the Senate! Also getting closer is tomorrow's rate decision by the ECB making investors wary of the euro’s direction!

The EUR/USD has traded heavily since the beginning of the week and it seems to be trapped between important support/resistance levels of 1.27 to 1.31. The pair rallied yesterday, but traders were not prepared to commit themselves further before tomorrow’s rate decision by ECB and therefore the move ended abruptly at 1.3060. The euro is still falling against the dollar with the next level to watch being 1.2830 - a good support level which if it gives way then 1.2760 may come back to play.

Today the economic calendar featured news from the UK, where Services PMI came out slightly better than expected. The pound seems to be strong today in contrast with the euro and the EUR/GBP is reaching new lows of 0.8940 at the time of writing. We also had the ADP report out of US which always gives us an idea of what the number of Friday's payroll data may be. The number was -522.000 and market shrugged off the data as it braced for another negative month around that mark. The fact that in a space of three months we have seen jobs quickly evaporating which combined with high unemployment, gives investors jitters and their bullish mood is tough to sustain as risk aversion always prevails! We also have ISM non-manufacturing figures from the US, which are again expected to be negative; however we might be pleasantly surprised by a better number.

Let’s see how the market will react to today's economic data and also how the traders will position themselves for the big day tomorrow! The pound is looking strong so far, but it makes one wonder how investors will react if the BOE cut more than the 50 bps which is widely expected. As I mentioned before, tomorrow will be crucial for the pound's direction as it will show how King and his pals feel about the recent slide of their currency. Many analysts predict that the pound may reach parity against the dollar in the coming months, however let’s be realistic before we start speculating extreme scenarios. The economic conditions continue to look dismal in UK; however as with all situations we might start to see signs of stabilization over the coming months. The latest data shows the recession is deepening further however there is a certain degree of optimism and it will be interesting to see where it all bottoms out!

The dollar and yen seem strong today and the ever growing concern in the market over the stimulus package and the state of the US economy may make investors turn to those assets for safe haven in the current turmoil! The euro is waiting for Trichet’s wise words in his press conference regarding the rates and the continuation of recession throughout 2009, where after traders will decide which way to go…

Published on  Wed, Feb 4 2009, 14:57 GMT

Crucial Week for Euro and Pound!

Mon, Feb 2 2009, 14:08 GMT
by Lena Manousarides

SpikeCharts

Another week is starting with the pound selling in the early European session and taking the GBP/USD down over 300 pips. The reason for another sell off wave in the pound is bad economic data out of UK and speculation that the BOE will cut further this week, all the way to 1% and perhaps even lower. King's words last month that the Bank may cut all the way down to zero rates are still fresh in everyone’s minds and with the economic conditions continuing to deteriorate; the pound is getting hit from all sides!

The EUR/USD is also trading heavily on the downside and a new low took place early today at 1.27. So far the later level worked as support; however a clear break may lead to further losses all the way down to 1.25. The ECB rate decision is weighing heavily on the euro these days and also contracting economic data out of Euro zone doesn’t help investor’s confidence. If the 1.27 holds for now, we might see a relief rally developing towards 1.2830, however the euro bears may be ready to hit those levels once again.

Today's economic calendar has the UK's PMI which was low and together with the downgrade of Barclays’ earning report announcement, made the pound very weak indeed. Today's US data is personal spending, personal income and also ISM Manufacturing which traders are waiting for in order to see how much the sector is suffering after the latest economic woes. The dollar seems to be the leader these days in everyone’s trades, which may continue for the week, ahead of Friday’s payroll data.

The week has many important events, with the ECB and BOE rate decision looming and also ISM non-manufacturing out of the US and non-farm payroll data on Friday. Traders are bracing for yet another negative number and if it reaches -500.000 again, it will be a large number of jobs lost in the space of 3 months. With unemployment rising in the US, it makes it even harder for Obama to tackle the economic crisis with his bail out plans and investors now are wary of this, hence the selloff we've experienced these days.

The oil fell once again in early trading today which mainly has to do with the fears of market participants about the economic future, therefore any rallies towards $50 a barrel could very well be met with sell offs as the fear and uncertainty of the markets are just too high at the moment for traders to be bullish for long period of times.

With Monday being the first trading day of the month, we may experience some high volatility in the currency pairs and therefore some breakouts maybe unavoidable. Watch out for the EUR/USD 1.27 level and how it behaves and also the GBP/USD at 1.40. If the latter level gives way then 1.35 may be in the cards for the coming days. At the moment it is vital to see how BOE will react on Thursday and if they are willing to see their “royal” currency deteriorating further down. With banks and building societies in UK begging Mr. Brown and King not to cut further, but with inflation well elevated and negative economic data, their job will be harder than ever…



Historical Economic Charts
UK PMI
US Personal Income
US ISM Manufacturing

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Published on  Mon, Feb 2 2009, 14:08 GMT

Dollar the Only Way to Go?

Fri, Jan 30 2009, 17:17 GMT
by Lena Manousarides

SpikeCharts

Today is the last trading day of the month and traders are squaring back their profits and positioning themselves for next week. The trading action seen today has been choppy and in light of the US GDP - rather dollar friendly! The euro fell further after this morning's European opening mainly due to interest rate speculations and risk aversion! After the latest FMOC meeting it is clear that Bernanke and his pals are thinking of maintaining low rates but not going below zero, as the deflation dangers are too high to dismiss. As Trichet though commented yesterday, ECB may need rates to fall further. This can be easily seen in the EUR/GBP as the rate plummeted below 0.90.

EUR/USD continues to trade heavily on the downside and so far 1.28 has kept up short term support. However, the fact that pair could not even retrace above 1.2930 shows that more weakness may be in store. A clear break of 1.28 may open the way towards 1.2760 ahead of 1.2730. As today is the last trading day for January we may see more dollar strength and therefore 1.28 not being able to hold for too long.

Today important economic data came out of the US in the form of the GDP, Chicago PMI and consumer confidence. All data contained more bad news with the GDP falling the most since the 80s and the economy continues to deteriorate at a fast pace. The fact that forecasts were predicting an even worse number gave the investors some kind of confidence initially, however it was short lived after the PMI and consumer confidence showed really bad figures. Many speculate that next week’s payroll data will be once again in the -500.000 mark and that it makes market participants wary of any big rallies. The combination of many layoffs from banks and other big corporations together with the daily negative economic numbers in the housing sector and industrial sector, give the impression that the worse is yet to come and no matter how the new Obama administration tries to calm the markets with bail out plans and other stimulus packages, the market sentiment is negative and likely to remain that way.

Futures and equities are down so far after New York's opening, following European and Asian markets and with next week’s important economic data expected to be dismal once again, the downside seems to be the trader's friend at this point. The dollar is the winner for the week and the yen has managed to retrace its earlier losses against other currencies, as investors are pulling out of risky positions and turning their attention to safer assets. In such an uncertain environment, the Euro zone falling and Japan and US the same, the safest bet seems to still be the greenback and the yen, as in times of crisis these are the two currencies that always stay on top! The euro is not a safe bet by far, as many investors are saying, as it holds too many dangers, thanks to several rumours concerning European countries who want to withdraw from the single currency amid the crisis.

Let’s see how markets close today and if the EUR/USD closes below 1.28, indicating that new lows are in store for the pair in the coming days.


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Published on  Fri, Jan 30 2009, 17:17 GMT

Euro and Pound Rally −To be Continued?

Tue, Jan 27 2009, 15:27 GMT
by Lena Manousarides

SpikeCharts

What a start of the week for the euro and the pound, as we saw both currencies aggressively rally over 400 points during the day! The move came on the back of an appetite for risk returning to the markets, following better than expected existing home sales out of the US and news that Barclays bank won’t be needing more funds to sustain its status! Traders were a little bit more positive yesterday, however in such current economic conditions, a bullish day can reverse in matter of minutes.

The EUR/USD broke important resistance levels of 1.3060 yesterday, climbing even higher towards 1.32. This morning's better than expected IFO news saw the euro continue to rally against the buck towards 1.3350, however, the move was not strong enough to sustain further gains and as the pair appreciated more than 500 points in the last two days, a retracement was unavoidable! As long as the pair holds 1.30 for now, there might be further upside in the coming hours. A clear break of 1.30 ahead of 1.2960 may indicate that the party is over for euro bulls and another try on the downside may be in store!

The pound had a good start of the week also, after GBP/USD dropped down to 1.35, which as we said was a good psychological level and also a good support. Better news out of UK boosts the pound immensely, sending the pair towards 1.42 early this morning. As with the euro though, the move was too much too soon and therefore a nice retracement is now underway. The question is if there will be further upside for the UK currency and that depends solely on the next set of economic data and if 1.40 hold for now. A clear break of the later level may put the pound into further pressure towards 1.39.

Today's economic calendar had the German IFO report on Europe, which was slightly better than the previous month, however with current accounts printing a really negative number, many investors are more wary of any good news. CBI retail sales also came out of the UK and again we saw an unexpectedly better number giving the pound a long-awaited boost. Later on today we have the US's consumer confidence report and it will be interesting to watch what the number will be, especially with high unemployment and negative payroll numbers hitting the economy daily.

Later on in the week, traders will concentrate on the FOMC meeting and their decision regarding the interest rates. It will be interesting to hear what Bernanke has to say about deflation dangers in the coming months! The big news this week will be the US GDP and market participants will monitor the outcome for further insight on the deteriorating economy. With the new Obama administration now in motion, we are anticipating new developments in the economic field and if the GDP numbers show bigger contraction than expected, the mission will become nearly impossible over the coming months!

In other markets, we saw the DOW JONES and NIKEI gaining overnight, following by better earnings for banks and corporations, therefore giving investors some kind of reassurance that conditions may start to stabilize. One thing I have noticed though, talking to other traders around the world, is that when markets rally these days, we don’t feel optimistic anymore but feel even more wary and analyse what the rally means and when the sell off will occur! It is difficult to” fall in love” with a market rally and it always feels right to sell on highs until we have solid proof the rally will be justified and sustain itself.

Let’s see how the markets will react after the New York opening and if yesterday's optimism fails to impress traders ahead of tomorrow’s FOMC meeting.

Historical Economic Charts
German IFO
US GDP
US Consumer Confidence
US Interest Rate

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Published on  Tue, Jan 27 2009, 15:27 GMT

Dollar and Yen the Stars of the Week!

Fri, Jan 23 2009, 20:05 GMT
by Lena Manousarides

SpikeCharts

The week has come to an end and the markets are trading heavily with no clear direction amid fears of the latest economic developments. The trading action we experience in currencies these days is choppy and full of whipsaws, however so far the trend remains on the downside as both the euro and pound are suffering losses against the ever-growing dollar. The yen is the clear winner of the week also, after we saw big moves in all yen related pairs, taking EUR/JPY, USD/JPY and GBP/JPY to new multi-week lows!

The EUR/USD has managed to hold 1.30 and keep trading below that level, which makes us think that further downside may be in store! The next level to watch is 1.2765 which so far works as a good support; however a clear break of the latter level can open way to 1.2730 ahead of 1.2680. Today being Friday may allow some profit taking later towards New York's closing and it will be very interesting to see the weekly close of the euro.

The reason for this trading uncertainty lies once again in the negative sentiments that keeps on going in the markets and almost daily news about the bad earnings of banks and other big corporations, most recently being Microsoft who plan 5000 redundancies during the coming months. Investors are still hoping that the new administration will amend things soon; however the damage is quite deep and even Mr. Geithner s new Treasury proposals seemed a little farfetched!

The economic calendar is empty of important releases out of US, with retail sales of from the UK coming out slightly higher than expected, but not really giving investors any kind of joy, as the GDP printed a big contraction, making analysts talk about the worst recession since the 80s. All in all the data was interpreted negatively by markets, sending the pound to new lows at 1.35 which was the short term target! Today we also had the CPI from Canada, which came out lower than previous figures, giving the Canadian dollar a temporary boost!

For the last day of the week, we expect to have big volumes and it will be very interesting to watch the New York closing ahead of the weekend! Traders may do some long awaited profit taking and therefore we may see some weakness in the dollar amid the last days of nonstop gains! The yen is also interesting these days, as it made new highs against many currencies and one wonders if it has reached its short term target for now. The answer is not that simple, as risk aversion has taken over the market and it is very difficult to set limits for all pairs, especially the yen, which seems to enjoy the attention whenever bad news hits the wires.

The markets are in a wait and see mode with the new Obama administration and the FED’s new stimulus plans waiting to be approved by the Congress. The dollar is stronger once again and with next week being the last week of the month we may see some weakness unfolding. Watch out for the gold as well, which soared these days, therefore indicating the euro may follow the move in the coming weeks.

Published on  Fri, Jan 23 2009, 20:05 GMT

Obama Aftermath Fails to Raise Confidence…

Wed, Jan 21 2009, 16:46 GMT
by Lena Manousarides

SpikeCharts

What a week this is turning out to be, with markets still dropping in the aftermath of Obama's inauguration. The prospect of a new era starting in US after 8 years of Bush administration, together with new hope that Obama will tackle the current economic deterioration left traders unfazed, as more bad news hit the wires yesterday about several US bank's earnings! The dollar was and still is the clear winner of this week and together with the yen are showing that traders are exiting all other currencies, especially the euro and pound.

EUR/USD is trading heavily since the beginning of the week, and the break of psychological 1.30 was done and dusted in a matter of minutes! As long as the pair trades below the later level, it may be open for further loses towards 1.2750. The next level to watch is 1.2830 ahead of 1.2780, which may work as support in the short term, however if the move is aggressive and stops get hit, further downside may be in store! On the upside, 1.30 should work as resistance, however if 1.3030 breaks, the pair may try further higher.

The pound has plunged since Monday after a short term rally pushed GBP/USD towards 1.48. However, the move was abruptly stopped when Darling announced the bank's plan towards the current economic crisis. Investors in the UK as well as the US have lost their faith in their policies, something made clear in the case of the pound! The UK government's controversial plans suggest solving the liquidity crisis by throwing billions into the system, a desperate plan necessitating the borrowing of more money giving investors the chills and making them lose even more confidence! Jim Rogers said yesterday he will not buy the pound from now on and that “...the UK is finished”. His predictions are usually spot on and in this environment it looks like the pound may continue to deteriorate. As long as GBP/USD trades below 1.40 we could see another wave of selling towards the next psychological level of 1.35!

The economic calendar has no important releases from the US today, however we has some important data out of the UK. The unemployment figures were a top headline today; as they reached new highs, and also the BOE minutes which saw everyone voting for a 50bps apart from well-known dovish Blanchflower who asked for a whole 100 bps cut! The pound continues to fall on the back of the data and further words by Mr. King that the bank is ready to tackle the recession left traders cold!

Let’s see how the New York opening finds the markets and if futures will have another negative day after yesterday! The Obama euphoria didn’t seem to last long in the markets as right now investors are focusing on the bigger picture: the FED’s monetary policies and deflation prospect plus millions and billions for the stimulus package which in order for Bernanke to find he will have to either print new money or raise the taxes. Both scenarios are as catastrophic as they come! One thing is for sure, volatility in the markets seems to pick up and the best way to go right now is for us traders to either stay aside or sell on rallies…

Published on  Wed, Jan 21 2009, 16:46 GMT