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Market Opinion
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Euro falls following Trichet's comments.
Fri, Mar 6 2009, 04:59 GMT
by James Whyte
March 5 - In today’s trading the U.S. markets gave back all of Wednesday‘s gains and then some. Equities slid lower on speculation China will not have a stimulus package to boost the economy. The financials took a hit today on the back of this sell off. Citigroup traded below $1 in today’s trading, Bank of America down 12% and the Auto makers are still on the verge of bankruptcy. On the positive side the U.S. Dollar continues to climb higher as foreign investors keep buying U.S. bonds. All eyes are on tomorrow’s data, tomorrow at 8:30am New York time, the U.S. Bureau of Labor Statistics will release the U.S. most important data-Non-Farm Payrolls. The market is expecting -657k lost jobs; however, ADP did report a lower than expected number on Wednesday.
EUR/USD- Today the Euro felt the downside pressure on speculation the European Central Bank President Jean-Claude Trichet, will continue to reduce the benchmark interest rate in the coming months in effort to battle a deepening recession in the Euro Zone. The European Union's 16th nation economy is contracting faster then the Central Bank expected. Today the Eur/Usd traded as low as 1.2481 after these comments by Trichet. Currently resistance comes in at 1.2620/30 from a downtrend resistance line and we see support at about 1.2440/50, with a target of 1.2400/1.2350 (November '08 levels).
Published on Fri, Mar 6 2009, 04:59 GMT
1
1
U.S. Dollar advances vs. Yen.
Thu, Mar 5 2009, 04:54 GMT
by James Whyte
Markets for March 5, 2009 by James Whyte
In the news: March- 4 Today the U.S. Markets rallied on speculation China will expand efforts to increase growth and U.S. lawmakers will reach an agreement on a plan to stem foreclosures. The S&P 500 rebounded from multi-year lows and some of the Chinese stock markets jumped the most in four months. Treasuries fell, as equity markets moved higher. The Dollar gained versus the Japanese Yen, but did not do well versus other majors, as the uptrend in stocks curved the demand for safe-haven assets. Crude oil jumped $3.53 as crude inventories fell 0.7m barrels, ending the day at $45.17.
USD/JPY-The Dollar continues to gain versus the Japanese Yen as the equity markets rebound from multi-year lows, on the back of a Chinese reassurance to increase efforts to boost growth. The Usd gained 0.48 pips versus the Yen and touching an intra day high of 99.47. We should continue to see the Usd/Jpy heading higher with its next target 100.50/60 highs of November 4th, 2008.
Published on Thu, Mar 5 2009, 04:54 GMT
9
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Dow dips to 12−year lows.
Tue, Mar 3 2009, 06:29 GMT
by James Whyte
Markets for March 3, 2009 by James Whyte
In the news: March 2 – Following the falling markets in Asia and Europe, the Dow Jones fell to the lowest levels since 1997. Trading below 6,900 and closing at 6,763, the U.S. Equity markets closed down an average of 4% on the back of the government’s decision to continue bailing out the insurance giant, AIG. The markets were not battered by bad news all day as consumer spending showed an increase in Personal Spending of 0.6% in the month of January. Personal Income also rose 0.4% versus a -0.2% forecast and a previous of -0.2% in December. Another surprising figure showed an increase in savings rate to 5%, which is the highest level in nearly 14 years. Most of the day in Wall Street, the markets were driven by 90% of down volume and no support levels in the technical side
USD/CHF- In this 4 hour chart we noticed a previous support line acting as a resistance line in the latest trend. Although not defined, the level around this line seems to bring resistance. The next resistance level on this line comes in at 1.1795/1.1800, and support on the current trend touches at 1.1660/50. The resistance line maybe short lived given the continued bid U.S. dollar. Tonight the Swiss will release GDP numbers which are expected to come in at -0.9%. If the actual numbers show contraction in the economy we may see the CHF get sold off.
Published on Tue, Mar 3 2009, 06:29 GMT
5
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Dollar index climbs to new highs.
Sat, Feb 28 2009, 00:49 GMT
by James Whyte
Markets for February 27, 2009 by James Whyte
In the news:
February 27- The U.S. Markets begun the day on a negative note as the GDP report indicated the U.S. economy is shrinking at the fastest pace in 26 years. Prelim GDP q/q came in at -6.2% versus a -5.4% forecast. Although the terrible GDP news kept the markets in the red for most the day, it was not a massive sell off. Stocks did bounce in midday after falling to fresh bear market lows. In the last day of trading for the month, the Dow is on track for its worst February since 1933. Oil prices held up in light of all the negative news and settled around $44 per barrel. The U.S. energy demand fell last year to the lowest levels in 10 years. OPEC is still signaling it will continue cutting production to maintain oil prices from collapsing. Although a bad month for equity the markets, oil was able to capture 15% gain this week alone and 5% for the month of February. The most surprising instrument today was the dollar index, as the dollar continues to firm up to some of the highest levels since November, 2008 and intraday to levels not seen since April 2006.
Published on Sat, Feb 28 2009, 00:49 GMT
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Dollar near 3−month highs.
Mon, Feb 23 2009, 22:50 GMT
by James Whyte
Markets for February 23, 2009 by James Whyte
In the news: February 23, 2009 – The talk today in the U.S. Markets has been the increase stake in Citigroup by the U.S. government. Although the equity markets are not taking this actions by the government well, the dollar has gained ground on the optimism the U.S. Government is staying proactive in stemming the recession more so than other nations. The precious metal-Gold continues to rise as investors demand for safe-haven assets increase. In today’s market Spot Gold touched the eleven month high of $992.30 an ounce. Oil settled below $39 a barrel as the U.S. equity markets continued sliding on bank fears. Although an early rally took the commodity to a high of $41.49, as news by Reuters hit the wires stating that OPEC’s February output should fall near its target for cutting production. At the end of the day the Dow Jones closed at -250.89, hitting 1997 lows.
In focus today:
Today the dollar traded near three month high versus the Japanese Yen, as the Yen devalued on the speculation the U.S. government will increase its holdings in Citigroup. The dollar index rose today to a high of 87.37 today from the open of 86.71, and gaining ground today after Friday’s dollar sell off. The pair reached a high of 94.94 in European session and has been trying to retest this level throughout the day. For now the trend is upward with resistance at 94.90/95.00 level, second resistance is not much higher coming in at 95.15/25. A breakout of this level could take it to mid November levels. Support comes in at 93.20/30 from an uptrend support line from the previous lows of February 12 and 20th.
Published on Mon, Feb 23 2009, 22:50 GMT
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Dow trades at 6 year lows.
Fri, Feb 20 2009, 01:33 GMT
by James Whyte
Markets for February 19, 2009 by James Whyte
In the news: February-19 Today the U.S. stock markets were unable to maintain stability and it sent the Dow to a six year low (7,447.53). Closing at 7,465.95 (-89.68) the Dow was led lower by the financials, including Bank of America and Citigroup which both fell 14% in today’s trading. Bank of America, the U.S. biggest bank lost 64 cents per share bringing it to a 24 year low, and not far behind was Citigroup losing 40 cents per share to end the day at a 17 year low of $2.51. Overnight the European markets did not do as bad as the U.S. markets did, but it is noted that Governments world wide are stepping up to hinder the worst global downturn.
EUR/USD:
Today the Euro found great support and it rebounded from near 3 month lows. The Euro gained ground versus the majors on speculation the German Chancellor Angela Merkel signaled Europe’s largest economy plans to assist in easing the financial distress in Europe. Today the Euro traded at a high of 1.2759 after the Philly Fed Manufacturing Index was released, coming in a -41.3 from a -24.1 forecast. It clearly showed a contraction in manufacturing in the U.S. mid-Atlantic region. The next resistance level for the Eur/Usd comes in at 1.2785/95 level. To the downside it should find some support at 1.2580/90 level.
Published on Fri, Feb 20 2009, 01:33 GMT
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Fed lowers 2009 outlook.
Thu, Feb 19 2009, 00:57 GMT
by James Whyte
In the news: Today U.S. stock markets ended the day basically flat as President Obama discussed his $75 billion relieve to homeowners. During a press release today the President spoke about the details of the economic stimulus package focusing on the housing foreclosure crisis. Also today the Federal Reserve in a press release lowered its GDP outlook for this year and forecasted unemployment to continue increasing. The Fed predicted the U.S. economy should begin picking up in 2010 and 2011. See Fed Minutes.
In focus today:Eur/Usd: Today the Euro traded to a two-month low versus the Dollar on concerns the European bank’s exposure in Eastern Europe is worsening. The softness in global stock markets and the fears on slowing global growth spurred a safe-haven demand for the dollar today. At midday New York trading, the Euro was trading at 1.2599 versus the Dollar. Currently trading at 1.2555 (6:49 pm est.) the Eur/Usd is finding support at 1.2510/20 level, the low of today. A breakthrough of this level could take the Eur/Usd to 1.2420/30, low of November 20, 2008. Looking ahead of tomorrow’s data, we will keep an eye on Producer Price Index (PPI) due out at 8:30am est. for a .2% forecast, anything below this should take the dollar lower.
Published on Thu, Feb 19 2009, 00:57 GMT
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The President signs stimulus bill.
Wed, Feb 18 2009, 03:06 GMT
by James Whyte
In the news: Today U.S. stocks sell off as concerns on the financial sector continue to loom in Wall Street. This morning the manufacturing data continue to show weakness as the numbers came in at -34.7 versus a -23 forecast. Today in Denver, Colorado President Barack Obama signed the $787 billion economic stimulus bill. Oil prices continue to trade lower as energy demand decline worldwide. Crude closed down $2.58 a barren to finish the trading day at $34.93. The Dow Jones closed near November 2008 lows at 7,552.60, down 297.81. On a positive note gold closed the day near seven month highs, as funds move from oil to gold and ETFs continue buying aggressively.
Gbp/Usd: The pound is still feeling the down pressure as the U.K. economy keeps worsening. Currently we can see a downward trend line that may provide resistance at 1.4305/15. The boost in gold today may provide some relieve for the pound and the next solid support level comes in around 1.4120/30.
Published on Wed, Feb 18 2009, 03:06 GMT
1
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Jobless claims, a new record.
Thu, Feb 12 2009, 23:46 GMT
by James Whyte
Markets for February 12, 2009 by James Whyte
In the news: Today the U.S. Markets opened to the downside as numbers from continuing jobless claims climbed to a record and traders speculated the government will have a tough time reviving the U.S. economy. The report released this morning at 8:30am New York time, showed and increase of 623K from a 610K expected. On a positive note Core Retail sales and Retail sales posted an increase of .9% and 1% respectively. Crude oil traded below $34 per barrel on even more concerns about an economic recovery. Oil is down 20% this week alone. The Dow Jones closed -6.77 after being down almost 238 points. The comeback was due to a report from Reuters stating the Obama Administration is considering the possibility of providing more assistance to homeowners who are having trouble making their mortgage payments.
Published on Thu, Feb 12 2009, 23:46 GMT
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Lawmakers agree on a stimulus plan.
Thu, Feb 12 2009, 01:24 GMT
by James Whyte
Markets for February 11, 2009 by James Whyte
In the news: Today’s U.S. Markets were quiet as the Bank CEOS appeared before the house financial services committee. Also lawmakers agreed on a $789 billion stimulus plan today as President Barack Obama noted it was urgent to keep the U.S. Economy from heading into a deeper depression. At the closing bell the Dow posted modest gains of 50.65 or .64 percent. Oil settled below $36 a barrel as inventories increased and demand decline is felt across the country.
Euro vs. Dollar: The dollar is poised to gain versus most major currencies in the coming weeks. We have seen the trend in Eur/Usd since the middle of December last year. The Dollar will continue to gain vs. the Euro as investors gear away from higher-yielding currencies on a continued slowing of the global economy. It is speculated the U.S. domestic product will contract 1.6 percent in 2009 and the Euro zone will also decline an estimated 2 percent. Looking at a 4 hour chart we have several key levels to keep in mind. Currently trading at 1.2870 (6:27pm est.) the next visible support from a rising trend line comes in at 1.2775/85 a break of this level will take the pair to 1.2690/1.2700 (previous lows from February 2, 2009). Currently resistance is seen at 1.3020/30 from a downtrend resistance line.
Published on Thu, Feb 12 2009, 01:24 GMT
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Will the Financial "Rescue" be enough?
Tue, Feb 10 2009, 22:00 GMT
by James Whyte
Overnight the Asian markets opened the trading day mixed with the NIKKE 225 closing down 23.09 points to 7,945.94. However, the Hang Seng Index was able to generate gains of .81%. The European markets did close the day marginally lower, ahead of the U.S Treasury Secretary Tim Geithner’s speech about the financial – rescue plan. Traders are speculating that the plan will not be enough to help a global recession come to and end. The U.S. Markets slid lower at the open and started selling off minutes before the Treasury Secretary’s financial rescue plan was announced. The Dow traded as low as -208 points during the speech and has continued that trend for the remainder of the trading day. Some of the main issues that were addressed during the speech included three new programs, and an overview of how the financial system needs to be addressed. The three new programs were:
First – require banking institutions to undergo a comprehensive stress test.
Second – work with the Federal Reserve, the FDIC and Private sector to establish a public-private investment fund.
Third – working with the Federal Reserve the government is prepared to commit up to a trillion dollars to support consumer and business lending.
Published on Tue, Feb 10 2009, 22:00 GMT
2
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Dollar/Yen under pressure.
Thu, Feb 5 2009, 00:47 GMT
by James Whyte
In the news: In today’s markets the main stories driving the U.S. Markets lower involved the financial sector, as more concerns about the TARP II arise, including the remainder of the toxic assets in the bank’s books. Also adding to the sell off is the fact that companies continue to take down first quarter earning expectations. Oil prices also traded lower today as oil inventories indicated an increase of 7.2m barrels in the last week. Refineries also mentioned they will continue to cut production and will extend the maintenance schedule. At the close the Dow Jones ended down -1.52% and back below 8,000. The economy also continued to shed jobs, as ADP report showed a loss of 522k (lower than expected) in the month of January versus a 659k (revised) in the month of December. Now we look to Non-Farm Payrolls on Friday to give us the accurate number.
USD/JPY: Today dollar/yen got a bit of confidence after the U.S. ADP and ISM data, but that was short lived as the equity markets turned sour for the remaining of the session on concerns about the banking system and the “bad bank” issues looking grim. The change in dollar/yen today was -.06% with a low of 88.83 and a high of 89.78, this pair remains in a tight range. Our chart from yesterday, showed a descending trend line coming in at 89.80/90 level which has shown to be a good level given the high was 89.78. After today’s U.S. Market’s results, we should see a retest to the downside in this pair. The next support level comes in at 88.80/90, just a few pips below the 23.6% Fibonacci retracement.
Published on Thu, Feb 5 2009, 00:47 GMT
6
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Dollar trades lower today.
Wed, Feb 4 2009, 02:42 GMT
by James Whyte
Markets for February 3, 2009 by James Whyte
In the news: Today at the closing bell in New York, stocks closed higher on better than expected pending home sales data, along with positive earnings from Merck-driving health stocks higher. There was also money moving into technology stocks on a positive outlook for the future in this sector. The Dow closed up 1.72% in today’s trading session. The stocks move higher today was due to the continued slide in the dollar at midday. We have also noticed an inverse correlation in the two. Also this morning Republicans introduced a stimulus plan of their own, mentioning; corporate tax cuts and tax credits for home buyers.
In focus today:
USD/JPY: As the dollar weakened against most mayor currencies in today’s session, the dollar/yen was able to hold the bears from a sell off. At the end of the day and most of the trading session the Usd/Jpy was able to pare loses from earlier in the session, as the U.S. equity markets traded to the upside. The Usd/Jpy has been trading between 90.72 and 88.57 - low from today. However, it has recovered from those lows during the New York session and now Asian session. If the data from the U.S. continues to surprise the markets, we should definitely see a come back in the Usd/Jpy back above 90.72 as equity markets take in the good news. On the 1h chart we have seen the 38.2% Fibonacci retracement to be providing good resistance (89.95/90.00) with two tops on February 2nd and the on the 3rd, so that is a level that we would lookout for.
Published on Wed, Feb 4 2009, 02:42 GMT
2
0
U.S. Consumer spending declines.
Tue, Feb 3 2009, 03:39 GMT
by James Whyte
In the news:
At the end of today’s U.S. session stocks ended the day lower, as consumer spending showed a decline to -1.0% from a -0.8% the previous month. Another big factor in today’s sell off was the announcement from Macy’s that it will cut another 7,000 jobs. Oil prices continued sliding today about 4% on more concerns about a slowing economy. Overnight the Asian Markets and European Markets ended their sessions marginally lower.
USD/CHF:
Today’s chart shows us a possible channel formation in the Dollar vs. Swiss. Last week the dollar got a boost from the Fed’s decision to keep interest rates unchanged. The bullish Dollar took the pair to a high of 1.1657 in early New York on Friday, and the trend continued at the Asian open. During the European session the Usd/Chf hit a high of 1.1683 (8:00 GMT). The dollar has been giving up gains since the start of European trading last night, and ahead of the U.S. data this morning. This morning the U.S. released Personal Spending which came in at -1% vs. a -.09%. This has been one the reason why the dollar has given most of its gains from last week back, as investors realize how important consumer expending is to the U.S. economy. Technically we are looking at a 4 hour chart with a channel formation, which has support at 1.1570/80 and resistance at 1.1680/1.1700. On a shorter time plot (1hr) we have support at 1.1545/55 level, and resistance at 1.1635/46 from there next level of resistance is 1.1675/85.
Published on Tue, Feb 3 2009, 03:39 GMT
1
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Fed leaves rate unchanged.
Wed, Jan 28 2009, 22:58 GMT
by James Whyte
Markets for January 28, 2009 by James Whyte
In the news: The Fed met today and left the benchmark rate unchanged at .25%. In the statement the Fed mentioned it would keep rates low for some time. The Fed also noted it will make some changes in policy, including opening to possibilities of buying long term treasuries and more bad mortgages. Today crude oil staged a comeback late in the trading session, due to the rally in stock markets and an unexpected decline in gasoline inventories. Analysts are speculating the price of crude could reach $50 a barrel by the end of this week or early next week. At the end of the day stocks ended higher led by the financial sector and the Dow closed at +200.72. Later tonight (6 pm EST) the house will vote on President Obama’s stimulus package.
In focus today:
GBP/USD: Sterling continued climbing overnight and early this morning in New York. The pair reached a high of 1.4377 in late London, early New York sessions. However, during the fed statement the Cable fell rapidly to 1.4165 where it found temporary support. For now we still believe the pound will continue moving higher at a steady pace, base on the good news from the banking sector in the U.K. last night where it was reassured the UK banks would not have to become nationalized.
Published on Wed, Jan 28 2009, 22:58 GMT
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Tim Geithner−new U.S. Treasury Secretary.
Tue, Jan 27 2009, 21:47 GMT
by James Whyte
In the news Tuesday January 27, 2009:
Yesterday in New York the stock indices closed marginally higher (Dow +38.48), as existing home sales post an unexpected gain, surprising the markets. It appears that investors are beginning to take advantage of the lower mortgage rates and the decline in home prices. This data will need to continue to beat expectations in order for us to see a move from the lows and see a recovery in the real estate markets. In other headlines, Tim Geithner won confirmation from the senate, with a 60-34 vote. As the new U.S. Treasury Secretary, Geithner has a big task ahead of him and plans to take action immediately. On the back of the marginal gains in the U.S. markets, the Asian markets did a little better, with the Nikkei back above 8,000. Overnight the European markets finished the day marginally lower, however. The British pound continued to gain ground against the Dollar in early London hours touching a high of 1.4240-45.
Our focus today:
GBP/USD: Sterling’s rally was capped by a descending support line from November 13, which was visited again in mid and late December. This should cap ahead of HPI tonight, especially as we are closing about 80 pips below that line. With the mixed results vs. expected UK data in the past week, we may have seen a bottom for now. HPI should give us a good hint of the Pound’s direction at least for the week (have we seen the worst?). Depending on the HPI results, we would look to sell rallies to 1.4220-30, with a stop above 14260-65.
Published on Tue, Jan 27 2009, 21:47 GMT
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Market View Jan. 26
Tue, Jan 27 2009, 05:17 GMT
by James Whyte
In the news: Last week was a time of change with the historic inauguration of the 44th President Barack Obama, in the United States. We begin a new week of trading and the last week of January 2009. Today the Asian markets seem a bit quiet with Australia out for a bank holiday. The Nikkei began trading higher at the open and reaching a high of 7,807 at midday, however it was not able to retain its gains ending the day -63.11 to close at 7,682. The British Pound opened lower (1.3735) and after the first hour of trading it traded at the low of 1.3549. The pound has been feeling the pressure after Friday’s Preliminary GDP numbers. European markets end the day on a positive note as its gets a boost by financials. Barclays reassured investors by saying it would work on reporting profits as the price of commodities and precious metals continues to climb. U.S. markets moving higher as December Existing Home Sales rose 6.5% from the previous month. This unexpected rise was due to decrease in inventories. Dow Jones currently trading up; +117.17(10:52am EST).
GBP/USD: The pound recovered after opening lower in Asian markets and touching a low of 1.3542 in London trading. The pound bounce as the FTSE moved higher on news from Barclays' letter to investors, reassuring them that the bank will produce healthy profits in the coming months. This news also pushed financials stocks higher. This news comes in well taken after the pound touched a low of 1.3500 on Friday and as it tried to retest that level in yesterday’s trading. This bit of confidence should bring some support for the pound. However, there is resistance at 1.4020/30 level which is 30 points away from the 100% Fibonacci retracement from the high of 1.3935 on Jan. 20 and the low of 1.3500 on Jan. 23,2009.
Published on Tue, Jan 27 2009, 05:17 GMT
6
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Dollar Swiss Market View.
Tue, Jan 20 2009, 05:42 GMT
by James Whyte
Markets for January 20, 2009
In the news: Today’s U.S markets were closed in observance of the U.S holiday; Martin Luther King, Jr. Most of the focus is on tomorrow's presidential inauguration, where president elect Barack Obama will be sworn into presidency. Overnight we did see that Asian and European markets ended the day marginally flat. For the next couple of days all eyes will be on President Barack Obama and how he will handle his first 100 days in office.
In focus today:
USD/CHF: In the new week of trading the Dollar Swiss started the week on a continuing uptrend. We noticed last week the trend for the Usd/Chf was bullish and that has not changed in the first day of trading this week. Although the rising support trend line did break on the downside, the 61.8% Fibonacci retracement level was able to provide good support as we expected it to. Resistance comes in at 1.1417 from the highs of September 11, 2008. Last night the Swiss reported retail sales which came in at -1.4% from a forecast of 1.5%, thus driving the Swiss lower. The pair should remain in a subtle bullish trend for now and with no U.S data tomorrow, we will keep and eye on the Gbp/Chf and Eur/Chf crosses for some intraday direction. 
Published on Tue, Jan 20 2009, 05:42 GMT
7
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Dollar bullish vs Swiss.
Fri, Jan 16 2009, 06:57 GMT
by James Whyte
In the news:
Today the Dow dipped below 8000 at mid day trading, however it was able to regain its losses and end the day marginally flat. The bounce was loosely based on a technical level. Bank of America will receive $20 billion in aid from the TARP fund. Oil traded lower today and it's poised for a further decline this month, after OPEC comments demand will drop as a global recession is more evident.
USD/CHF:
Our focus today is the Dollar Swiss chart. This pair has been trading in a 160 pip range give or take for the past week. We see a bullish trend developing in the pair, with support on a trend line coming in at 1.1144. The 61.8% Fibonacci retracement has also shown to be supporting the dollar swiss around the 1.1119 level. (Fibonacci parameters are; high of 1.1277 on Jan. 6, 2008 and a low of 1.0863 on Jan. 8, 2008). Resistance is holding at 1.1288, which is slightly above the 100% Fibonacci retracement. We believe the 1.1288 resistance level should hold for the remainder of the week, given the previous bottoms at this level back in mid October 2008. Economic events to lookout for in todays trading for this pair are; Swiss PPI m/m (forecast -.6%), and out of the U.S Core CPI, TIC Long Term Purchases and consumer sentiment in early New York.
Published on Fri, Jan 16 2009, 06:57 GMT
0
0
Yen gains ground vs majors.
Thu, Jan 15 2009, 02:28 GMT
by James Whyte
Market View:
Today the Dow finished down for the sixth day in a row after a decline in retail sales (-2.7%, more than double the forecast). The U.S stock indices are down about 9% over the last six sessions. With all 30 down stocks down the Dow Jones closes at -248.42 for the day and touches lowest level since December 1, 2008. In the news today was the release of the beige book showing; Retail sale remaining weak, particularly during the holiday season-despite the deep discounts. Most residential real estate markets continued to worsen as well. Manufacturing activity decreased (with few exceptions). Energy prices are down across the board, however an increase in raw materials to produce energy has increased. Oil closed lower after a jump in weekly inventories report. Overnight the European markets finished the day lower by about 4.72%.
In focus today:
USD/JPY: Risk aversion has been the driver in leading the Yen higher in the last days of trading. With the US data out this morning below forecast, driving the equity markets lower, the usd/jpy has definitely been affected by these events, touching a low of 88.59 in early NY trading. The pair has been on a steady decline after touching a high of 94.61 on January 6, 2009. Given the worries about the financials back in the markets, we should expect the Yen to gain momentum and take this pair lower. With a previous bottom from this morning, we see first support at 88.59 from there it’s a long way down to the 87.10-20 level last seen on December 17, 2008. On a bounce we see currently a resistance line at 89.50, but do not expect the pair to get there in today’s trading session.
Published on Thu, Jan 15 2009, 02:28 GMT
1
0
All eyes on the ECB.
Mon, Jan 12 2009, 23:23 GMT
by James Whyte
Market View
Another rough day on Wall Street as stocks head lower today, due to the continued weakness in financials. Citigroup closed down nearly 20 percent, leading the Dow Jones lower. Markets also lower on concerns about corporate profits. Oil close the day below $38 per barrel as the demand for the commodity slows down worldwide. Overnight the European markets ended the day marginally lower. The US dollar posted gains against major currencies on speculation the ECB will take the key interest rate lower this Thursday. It is expected the ECB will cut by as much as .50%. Market averages; Dow Jones -1.46%, Nasdaq -2.09%, S&P 500 -2.26%, FTSE -.50% and DAX -1.34%.
In focus today:
EUR/USD: This week all eyes are on the ECB meeting this Thursday. As we have noticed the Euro is feeling some pressure against most currencies and particularly the US dollar. The Eur/Usd has been trending lower since the beginning of the year and much more on the dollar strength ahead of the Non-farm data from last week. Currently trading at levels from December 11/12, 08', the Euro does have some support at 1.3290 and from there at 1.3075 on a trend line. Resistance comes in at 1.3540 on the 23.6% Fibonacci retracement and a resistance trend line a bit higher.
Published on Mon, Jan 12 2009, 23:23 GMT
1
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Unemployment at 16year high.
Fri, Jan 9 2009, 23:18 GMT
by James Whyte
Market View
To wrap up this week of trading the US reported Non-Farm payrolls and unemployment rate. Coming in at -524k from a forecast of 520k and pushing the unemployment rate to 7.2%. Given the importance of this economic data, volumes have been quite low in the equity markets. Energy stocks keep falling as the price of crude oil trades below $40 a barrel. Looking ahead in the coming week, plenty inflationary data out of the US, Canadian trade balance, and Australia's unemployment rate among the most important events.
AUD/USD:
We are looking at support on a rising trend line around .6990-.7000 level. Despite the price of crude, AUD has been able to continue an uptrend for the longer term. Next week on Wednesday Australia will report its unemployment rate which is forecast to increase to 4.5%.
Published on Fri, Jan 9 2009, 23:18 GMT
5
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All eyes on Non−Farm Payrolls.
Fri, Jan 9 2009, 00:48 GMT
by James Whyte
Market View
Today's US markets closed mixed on the back of better than expected jobless claims. The data came in at 467k from a forecast of 545k, surprising the market. This morning President elect Barack Obama spoke about his economic stimulus plans after he takes office. Overnight the BOE kept the official bank rate at 1.50%, which was what the street was expecting. All eyes remain on tomorrow's NFP numbers from the US and the manufacturing data from the UK.
EUR/USD: We are looking at resistance in the Euro at 1.3835/40, which was a series of hourly lows on December 31 and January 2, before its collapse on January 5th. It also happens to be the 50% retracement from this high of December 29th at 1.4360 to the low on January 6th at 1.3315. We would look to be short at 1.3820/30 for a target of 1.3560.
Published on Fri, Jan 9 2009, 00:48 GMT
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ADP Report sets the mood.
Wed, Jan 7 2009, 23:25 GMT
by James Whyte
Market View
The mood in today’s US markets was set by the ADP jobs report which came in at -693k from a -450k forecast. This has been the talk of the trading floors for most of the day. Now all eyes are on Fridays Non-Farm report for an actual number, which is expected to surprise the market once again. Energy stocks also fell as the price of crude tumbled $5.73 to 42.85 (@ close) after crude inventories revealed an increase to 6.70m barrels. All the major indices finished the day in the red; FTSE -131.41, DAX -88.84, CAC 40 -50.13, DOW JONES -244.68, NASDAQ -53.32, and S&P -28.01.
USD/JPY: Dollar Yen broke its uptrend following the performance of the equity markets worldwide. It looks like traders are selling ahead of Fridays numbers starting with Non-farm payrolls and unemployment rate. We see the trend in dollar yen changing to the down side with support at 92.32 and from there at 91.78. We shall see how the Asian markets play this out today and their reaction to the negative data from the US.
AUD/USD: The Aussie has been following the oil trade again and its been quite volatile. After hitting a high of .7266 for the second time in the last two days the Aussie is definitely having trouble breaking out of that resistance level. The trend for the week still remains bullish with great support at .7090 and then .7050-60.
Published on Wed, Jan 7 2009, 23:25 GMT
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Bullish dollar.
Tue, Jan 6 2009, 22:38 GMT
by James Whyte
Market View
Today's equity markets finished the day higher with the Dow Jones closing back above 9,015.20, a gain of .69 percent. The Nasdaq close up 1.50 percent. The markets were able to retain its gains even after the Fed Minutes indicated the December cut was due to the continuing bad economic data. Most of this confidence comes from the proposed Stimulus package by President elect Barak Obama. The market has also noticed a shift of money from US Treasuries into corporate bonds and even stocks for a higher return.
In focus today:
USD/JPY: Dollar Yen has been on an uptrend since the beginning of the New Year and reaching a new high today of 94.61. Most of this move higher is due to the reassurance of the equity markets and the steady rebound we have seen this so far this week. Although the pair did retrace due to the FOMC minutes out today. The minutes indicated that the FED based its cut from last month due to the clear signals from the deteriorating economy. The trend so far is up, with support at 93.50/60 and a possible channel formation on an hourly time plot.
EUR/USD: The Euro too has been hit by a bullish dollar run. The speculation behind this move has been the Obama Stimulus package, and the bad economic data out from the Euro Zone. We are seeing resistance at 1.3540/50 level after a rebound from the low of 1.3313 in early NY late European session. Tonight ECB President Trichet speaks and the German unemployment change will be announced. This data should put additional pressure on the Euro driving it back down to 1.3350 level.
Published on Tue, Jan 6 2009, 22:38 GMT
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Euro − U.S dollar volatility.
Mon, Dec 29 2008, 20:12 GMT
by James Whyte
Market View
As the Israeli strikes on Gaza continues, oil is trading higher up 1.36 currently. The retailers continue to be the center story for this holiday season and end of year. Retailers continue to cut prices to attract last minute buyers to boost net sales for the end of 2008. It is forecast that 73,000 retailers will close their doors in the first half of 2009.
In focus today:
Gbp/Usd: We continued to see weakness overnight in the Pound. The pound has been on a downward trend this week and currently at a new low of 1.4485. We should see supporta at this level but the direction of the Dow Jones is not helping the Pound. The next valid support comes in at 1.4440-50.
Usd/Jpy: Dollar Yen has been trading in downward presure, breaking the support trendline at 90.50 and reaching a low of 89.75. Given the lack of economic data, these have been moves due to the thin markets.
Eur/Usd: The Euro has been very active on overnight trading, reaching a high of 1.4360 and trading back down 300 plus pips soon after that. Right now the Euro sits below the open rate, and we are uncertain of the trend for the rest of the week. As of now 1.4010-20 is holding very well as its first immediate support.
Aud/Usd: Oil has been trading higher today, up 1.36. This move has taken the Assie higher and breaking out of the .6885 resistance levels. In late NY trading we are seeing the currency retrace to open rate. Next valid support is .6830.
Published on Mon, Dec 29 2008, 20:12 GMT
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Market View for December 24, 2008.
Tue, Dec 23 2008, 22:29 GMT
by James Whyte
Stocks ended lower on continued weak economic news. We believe the Yen may be entering a weakening period as the Japanese economy catches up to the rest of the G10+, highlighted by Toyota’s grim news. We are looking for a retracement back to 94.00 over the short term, but don’t expect the market to behave until Jan due to light volume and the possibility of exaggerated moves.
Key levels and Weekly Trends
Eur/Usd:
Support: 1.3910-25 Resistance: 1.4021
Weekly Trend: Downward
Gbp/Usd:
Support: 1.4663 Resistance: 1.4830
Weekly Trend: Downward
Usd/Jpy:
Support: 90.10-25 Resistance: 91.00-91.15
Weekly Trend: Upward
Aud/Usd:
Support: .6760-70 Resistance: .6838
Weekly Trend: Neutral
Published on Tue, Dec 23 2008, 22:29 GMT
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Dollar gains against majors.
Thu, Dec 18 2008, 22:54 GMT
by James Whyte
Market View for Dec 19, 2008
Today we have witnessed spectacular moves in foreign exchange once again. Today’s market has been a dollar positive across the board, with the dollar regaining ground against the Euro and the Pound. It has been mentioned that, there has been some unwinding of long Euro positions, and we should see Euro trading lower. Crude oil has also shown levels not seen in four years, and it has been noted if oil trades below $32 the next technical support is around $25. Oil has also been great barometer of how the world economy is doing and how its demand for fuels has decreased.
Our Focus Today:
GBP: Today the pound has been trading drastically lower against the dollar, after the rally from the Fed’s rate decision, on December 17th the pound reached a high of 1.5716. Last night in European and this morning in the NY session, we saw massive dollar buying and cable trading down to 1.4880 from 1.5520/30 level. We look to be back in the trading range from last week. The next support is 1.4815, a low of December 12th. Later today the UK will report Gfk Consumer confidence and a revision of Business investment early in London open.
JPY: The dollar Yen move higher has also shown that this is merely a stronger dollar move. These couple of days the USD/JPY has not been following the equity markets as they keep moving lower. 90.16 is the next resistance level, with target support of 88.55.
EUR: There has been a change in the Euro trend in yesterday’s trading. Several technical indicators are signaling a change in the trend for this pair as Euro trades close to parity with the pound. A rally in us treasuries also helped the dollar gain some ground, as investor’s demand for safety in principal investments increases. We see support at 1.4210 levels, but a break of this level will take us to 1.4020.Published on Thu, Dec 18 2008, 22:54 GMT
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Federal Reserve cuts to record lows
Tue, Dec 16 2008, 22:39 GMT
by James Whyte
Market View for Dec 17, 2008
The Federal Reserve cut the main U.S. interest rate target to a range of 0 to .25% (record lows), surprising markets and giving traders the green light to sell the U.S. Dollar across the board. The Fed also said it will do anything it can to help the economy employing “all available tools,” to do so. In addition it said, “Weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.” The Dow rallied on this news, closing up 360. Oil was relatively unchanged in the face of the OPEC meeting later today (17th).
Our Focus Today:
Euro: Obviously Euro’s trend higher continues. With the break of 1.4040, we see 1.4160-70 as the 50% retracement from July’s high of 1.6035-40 to October’s low of 1.2330. This also happens to be the high of October 1st, the day after it fell over 400 pips. We were long for this target area, with a tight stop of 1.4035, and took profit at 1.4130. The high we saw was 1.4145 bid, and this may qualify as a test of that 50% retracement. We wait to see reactions from Japan and European sessions.
GBP: In NY session, we bounced off the resistance of 1.5510-20 on first test, dropping to 1.5435 before going through on the top side and touching 1.5645. Given the size of the moves on the way down in late October/early November, next previous high comes in at 1.5700, and we see that target being reached as well soon after Europe sees the FED news. We look to the MPC meeting minutes tonight.
Yen: Our resistance line at 90.72 held well, and at NY close we are right at 88.70. We would like to sell USD/JPY rallies to 89.40, for a retest of last week’s thin Asia market low around 88.10-20, before testing August 1995’s low of 87.75.
AUD: Aussie came close to .7000 and we look to OPEC tomorrow to see how the market reacts to their actions. We suspect the .7030-40 resistance will hold for now. A break of that should see .7200.
Published on Tue, Dec 16 2008, 22:39 GMT
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A down day for equity markets.
Mon, Dec 15 2008, 23:40 GMT
by James Whyte
Market View for December 16, 2008
U.S. Markets finished fractionally lower in today’s NY session. The focus today was the manufacturing index data out of the U.S, which came out negative to forecast. There were also downgrades among today’s news; with Goldman Sachs downgrading Apple to neutral and JP Morgan getting downgraded due to the slow down in the banking sector. Also in today’s market, many firms as well as investors are realizing the impact and the continued pain from the $50B wall street Ponzi scheme by Wall Street’s money manager-Bernard Madoff. Today the dollar took a heavy hit against the major currencies on speculation the fed will cut by another .25% in tomorrow’s meeting.
Our Focus Today:
USD/JPY: The USD/JPY has been trading relatively tight, since last week’s sell off during the Asian Markets to a low of 88.55. Soon after, the USD/JPY traded back to 91.55. The trend continues to be bearish. We currently have a resistance trendline coming in at 90.72, this trend begun from the highs of Dec. 10 and 11. The next visible resistance comes in at 90.98.
EUR/USD: The Euro has definitely changed its course since the beginning of this month, and regaining almost 1,100 points since then. Today’s ranges have been quite wide, with a low of 1.3426 and high of 1.3702. Next resistance is 1.3779, which are previous highs from October 9 and 14. In focus today is the manufacturing data out of the Euro Zone.
GBP/USD: With the Empire State manufacturing index coming in lower than expected and showing signs the economy is worsening, the dollar took a substantial hit against the pound and the euro. Cable gained over 350 points after this announcement and capping out at 1.5374. From here we should see a retest to the 23.6% Fibonacci from the high of September 25 and the low of Nov 4. There should be plenty of resistance at 1.5520-30 level.
Published on Mon, Dec 15 2008, 23:40 GMT
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Markets lower on worries the Auto bailout may not pass.
Thu, Dec 11 2008, 23:14 GMT
by James Whyte
In the U.S., stock markets finished lower as worries mounted that the Auto bailout may not pass the Senate. Stocks were led lower by financials as JP Morgan’s Jamie Dimon indicated in an interview that 2009 was going to continue to be tough, and US Bancorp indicated they still had a lot of bad loans to deal with. There was also some profit taking after recent rallies as participants were reminded that the U.S. still has plenty of problems. The U.S. Dollar Index fell 2.1% today as the U.S. Trade Balance widened and unemployment claims rose higher than expected for the week. The Canadian Trade Balance, in comparison, was better than expected and sent the Canadian Dollar on a rally, especially against the USD. The Dollar showed weakness overall, falling against the Pound, Yen, and more markedly against the Euro. ECB’s Stark indicated today the Board’s reluctance to continue cutting rates aggressively. This made for a strong break of Euro’s recent resistance of 1.3080. Oil finished up 10% as OPEC’s meeting next week draws closer.
Our Focus Today:
EUR: Euro broke through the 1.3080 resistance convincingly. We touched 1.3400 before retracing to 1.3305, and believe that is enough to continue higher, with next resistance of 1.3525 in sight. A break of this level should see us approach 1.3745, which is the 38.2% retracement from July’s high of 1.6035 to October’s low of 1.2745. In our view, if Europe is not easing, it’s a short term buy, but will be a longer term sell if they are seen lagging behind the rest of the G-7.
YEN: Dollar Yen continued its track lower as we predicted yesterday, and didn’t even reach the low 93’s, We will stay short looking to break the 90.88 level on approach to the psychological 90.00. Rallies should be contained to 92.30. Also as mentioned yesterday, we sold GBPYEN in the mid 138’s and managed to capture almost 200 pips before closing a profit.
GBP: Sterling recovered against the Dollar on the Dollar’s own weakness, not because Cable’s suddenly a buy. We retested Dec 2’s high of 1.5075-80, and the pair looks bid at the end of NY day around 1.5035. We do not see it breaking 1.5080, and would short it ahead of that.
CAD: With Canadian Trade Balance coming in much better than expected (and the U.S. TB much worse), and considering everyone was probably long USDCAD (including Yours Truly), we had a bit of a collapse in NY morning, but by day’s end had recovered 200 pips. With oil continuing higher, we see renewed interest in commodity currencies so we could see further Canadian strength. We will sit on the sidelines for now in the CAD.
Published on Thu, Dec 11 2008, 23:14 GMT
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Market View for Dec 11.
Thu, Dec 11 2008, 00:26 GMT
by James Whyte
Stocks finished marginally higher after Europe was more or less unchanged. Financial stocks took a bit of a hit today, along with some retailers. Oil closed above $44 as Iran said it will begin storing oil and Russia begins to talk about output cuts. The U.S. Dollar index fell .6% today. U.S. automakers fell on news that their bailout plan may meet resistance in the Senate. More analysts forecast a 50 basis point cut when the Fed meets on Dec. 16th. The Pound continued its slide against the Euro as the Chancellor of the Exchequer said policy makers should not use interest rates to support the currency. This supports our continued bearish view on Sterling.
Our Focus Today:
GBP: Sterling was held to a 100 point range against the Dollar overnight, but we continue to hold our bearish view, and we expect it to continue its down-trend. Resistance still held in the mid 1.48’s as predicted. We would stay short for 1.4550-1.4600 initially. Darling’s comments should prove to re-energize short selling in Sterling, especially against the Yen.
JPY: The Japanese Yen is still our favorite currency, and although USD/JPY ended marginally higher, and we like the low 93’s as a top. GBP/JPY should be a great sell, and we look to establish shorts ahead of 138.50.
EUR: Euro seems to be holding well above 1.3000, after reaching a high of 1.3070 overnight. Some analysts are calling for continued rebound of EUR/USD, but until we clear November 25/26 highs of 1.3080, we are still sellers on rallies. A good break of the 1.3080-1.3120 level should see us back to 1.3300. Europe is still in trouble, both internally and externally, so we do not see a reason to change our view for now. EUR/GBP moved higher as the markets continue to understand the critical condition of the U.K. economy, even in comparison to Europe.
CAD: The Canadian Dollar rallied late on oil, but we still see it weaker over the short term. We would stay long USD/CAD from yesterday, and would keep our stop below 1.2450, with a target to 1.2730 initially
Published on Thu, Dec 11 2008, 00:26 GMT
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The Dow closed down 2.7% on earnings warnings.
Tue, Dec 9 2008, 22:29 GMT
by James Whyte
The Dow closed down 2.7% on earnings warnings, while investors once again sought the safe haven of treasuries, with 4 week T-Bills yielding 0% (first time ever). Oil also closed down $1.44 as the U.S. Government cut its energy demand forecast due to the global slowdown. Europe opened lower and showed signs of a deepening slump (including 30-year lows in U.K. home sales), causing renewed interest in buying the Dollar and Yen, before the U.S. showed a rebound of monthly pending home sales and buyers emerged for the Euro and Pound. We are encouraged by the U.S. data, but hardly surprised by the U.K. numbers. We should point out that for a change the Euro had a wider range than the Pound.
Our Focus for Today:
EUR/USD: Euro touched 1.30 today after rallying on U.S. pending home sales, and rose just shy of rising trend line resistance going back to November 28th, and coming in around 1.3015. We are bearish (no surprise), and are sellers at 1.2990-1.3000, with a stop above 1.3080. Support comes in at 1.2800-20, below that we see 1.2750 and 1.2625.
USD/JPY: We got a reason to buy the Yen, as the market has poked its head out of Fantasyland and noticed that maybe the recession isn’t over yet – especially in Europe. We see USD/JPY, GBP/JPY, and EUR/JPY all lower, with Dollar Yen retesting October’s lows of 90.60 in the next few days, and Sterling Yen dropping below last week’s low to retest 1995’s low of 129.30-35. Although not all of this will happen in the next 24 hours.
GBP/USD: As mentioned above, no surprise about the U.K. data. We have been bearish the Cable for a couple of months now, and don’t see any reason to change our view. In the short term, we are sellers at 1.4820 with a profit target of 1.4690. In the bigger picture, we would sell 1.4950-1.5000 and look for another test of 1.4470-1.4500.
USD/CAD: The BOC cut their overnight lending rate by 75 basis points to 1.5% (the lowest since 1958), commenting that the Canadian economy is “now entering a recession,” and signaling that more action may be needed. If recession is hitting Canada, at least it held out longer than the other G7. With commodities sinking and Canada being an exporting country (including oil), we see further weakness in the CAD, and we don’t see the BOC minding too much at all. There is some support at 1.2555, and we would like to get long USD/CAD on the way down to 1.2450. Topside, we like the retest of recent highs of 1.3000. Canada/Yen might be a great sell on a break of 72.50 for a target of 70.75.Published on Tue, Dec 9 2008, 22:29 GMT
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Barack Obama commented on plans for investment in infrastructure.
Mon, Dec 8 2008, 23:59 GMT
by James Whyte
Market View for Dec 9, 2008
The Dow continued its rally today after Barack Obama commented about plans for massive investment in infrastructure, spurring hope of economic stimulus and job creation after he takes office. In the U.S. the Big 3 Automakers await comments from Nancy Pelosi about the bailout plan the Democrats want to offer (supposed $15 Bio short term loan), but the White House has expressed concerns over the bill. Oil gained $3.28 to 44.06. Overnight European and Asian exchanges also closed higher (5-9%).
Our Focus Today:
EUR/USD: Euro broke recent resistance overnight, and after a small retracement on the downside, continued its rise in NY session to close near its daily highs. If 1.2970 breaks on the top side, we see 1.3050-60 as next resistance. 1.2844 should be good support for now.
USD/JPY: We see once again a muted range for Dollar Yen, and look for mid 92’s to mid 93’s until there is a good reason to break either side.
GBP/USD: Cable broke 1.4825 resistances during Asia as the Nikkei rose on Obama comments, and European futures soared. We touched just shy of 1.5050 (Dec 2 highs), before UK PPI came out worse than expected, which caused a sell off back to 1.4775. NY closed at 1.4900, and we wait to see if the Pound will bounce again before we sell it. 1.5040-50 is obviously a point to get short with a fairly tight stop. For the UK we have BRC Retail Sales and RICS House Price Balance due out late this afternoon and Manufacturing Production data soon after London open.
AUD/USD: Aussie climbed overnight on speculation about OPEC production cuts and renewed positive global sentiment. RBA Governor Stevens speaks late tonight. .6590-.6600 should provide a bottom for now.
Published on Mon, Dec 8 2008, 23:59 GMT
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Dow staged late session rally once again on Friday.
Sun, Dec 7 2008, 23:31 GMT
by James Whyte
Market View for Dec 8, 2008
The Dow staged late session rally once again on Friday, up better than 3%, after being down significantly on U.S. employment numbers coming out significantly worse than expected (the worst since 1974). Insurance companies outperformed, with banks, retailers and techs all following higher. It appears that Congress will offer the Big 3 Auto makers a short term loan to take them into the New Year and new administration. Oil closed down to a 4.5 year low at 41.74. There are reports that OPEC President Khelil is warning that the markets should expect the possibility of severe production cuts when the cartel meets on December 17th. The U.S. Dollar Index hit its highest point in 2 ½ years on Friday, as investors were once again reminded of the impact of the recession.
Our Focus Today:
EUR/USD: We expect Euro to top out around 1.2765-75 to retest the 1.2640 level, before continuing lower. We would stop out above 1.2850.
USD/JPY: The Japanese Yen continued its stronger bias on the bad U.S. economic news, although USD/JPY was off its lows with the late Dow rally. Of course, we still like this lower and see renewed selling interest in the mid 93’s, and would place a stop above 94.30.
GBP/USD: Sterling dropped over 100 pips on Friday’s U.S. numbers, only to regain along with the Dow (and Euro) later in the day. We are still sellers on rallies to 1.4825, but are not sure we will see that level, so we can look to establish smaller shorts at 1.4760-70 and double up in the low 1.48’s.
AUD/USD: Aussie broke out of the channel support mentioned on Friday, dropping to .6295 before completely retracing to close at .6454. With the OPEC president’s comments, we expect to see further gains, at least temporarily. We see .6535-50 as first resistance ahead of .6605. We will see how the markets react to the comments for now.Published on Sun, Dec 7 2008, 23:31 GMT
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Markets volatile as the big 3 automakers CEO's meet on Capitol Hill.
Fri, Dec 5 2008, 00:15 GMT
by James Whyte
Market View for December 5, 2008
Today the markets were extremely volatile as the big 3 automakers CEO’s met on Capitol Hill for a bailout proposal. U.S. Markets closed lower at the end of the day with the Dow Jones down more than 200 points. Crude oil closed at a 3 year low dropping $3.12 to 43.67, crude is down 54% for the year of 2008. Overnight we saw the BOE cut its rate as expected by 100 bps to 2.00%. Continuing claims showed a lower than expected number, but on the year we are at about 4.5 million jobs lost. The focus for Friday is Non-Farm payrolls, which ADP indicated to be marginally worse than expected earlier this week.
Our Focus Today:
EUR/USD: Early in the European session Eur/Usd marked a new low of 1.2550 no seen since November 21, but only to bounce back and move 250 plus pips to the upside and find resistance at 1,2850 level. We saw this level of resistance back on November 7 and 14, however there is room on the topside. For the last couple of months we have seen a bit of side ways trading with wide ranges. The focus for the Euro today is German factory orders and Non farm payrolls.
USD/JPY: Dollar Yen had been stuck in a range with great support a 92.50-60, however this morning after continuing claims was released this level broke through. 92.06 has been the support for now, but we could see the pair definitely going lower given the condition economy, and the official recession state.
GBP/USD: Cable touched the low of 1.4470 a level last seen in May 2002. There was a sell off in cable in early European session ahead of the interest rate decisions. Due to the currency being oversold as the BOE cut by 100 bps, cable moved higher on this announcement as it was expected. 1.4825-50 has been a great level of resistance and 1.4572 the next support for now. We look to establish shorts around 1.4820 with a target of 1.4640.
AUD/USD: This pair has been on an up trend since the beginning of the month. However we believe that is to be short lived given the prices of commodities especially the price of crude hitting a 3 year low today. We currently have an uptrend channel formation in this pair, but we do believe there could be a break on the downside with the next support at, .6390.
Published on Fri, Dec 5 2008, 00:15 GMT
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After a rollercoaster day, the Dow finished higher.
Thu, Dec 4 2008, 00:39 GMT
by James Whyte
Market View for Dec 4, 2008
After a rollercoaster day, the Dow finished higher by 173 points, shrugging off a dismal Beige Book outlook and a worse than expected ADP employment report, and instead focusing on soaring mortgage applications. As mortgage rates move down, there is talk of the Treasury considering a plan to help home prices by helping mortgage rates move even lower. Oil closed mostly flat for the day. European and Asian stock markets were up marginally. In Europe we look for the Halifax HPI in the U.K. today along with rate announcements from the BOE and ECB.
Our Focus for Today:
EUR/USD: Euro has been ranging between 1.2600 and 1.2740 for the past two days. For now we see 1.2725-30 as good resistance and we are looking to establish a short position around this level. We do not expect the Euro to trade up to 1.2770. However, if it does we expect this level to hold.
USD/JPY: Dollar Yen held the 92.50-60 level to bounce once again against trend line resistance at 93.45. We expect that 93.40-70 recent highs will hold for a retest of the 92.50-60 area, and would place a stop at 93.85. GBP/JPY tested 136.30 overnight, and has been bottoming in the mid 136’s most of the day. These are levels not seen since the spring/summer of 1995, and 136.30-50 seems to be a good pivot point for that time period, in which we saw 129.35 as the absolute low. If the 136.30 level breaks, we could see 134.90 first, then 132.90, and expect several bounces (fairly significant bounces) before we track lower.
GBP/USD: The U.K. will announce Halifax HPI in today’s European session, and expectation for a rate cut range between 1 and 1.5 points. The market may sell off ahead of each of these, as expectations are very low, so be prepared for a possible move higher after the numbers if the market is overly short ahead of them. 1.4655 is the first support level (tested overnight). Below that, Nov 13 low of 1.4555-60 is stronger support. Top side, we could see the low 1.49’s, but expect that to hold for now (unless the U.K. posts any surprises).
AUD/USD: Aussie touched .6510-15 near the end of the session. Although we keep an overall bearish outlook in Aussie, it may retrace further, toward .6550, but we do not expect it to regain .6600. Australian Trade Balance and Building Approvals due out today may lead the way in AUD.Published on Thu, Dec 4 2008, 00:39 GMT
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The Dow staged an across the board rally.
Wed, Dec 3 2008, 02:25 GMT
by James Whyte
Market View for Dec 3, 2008
The Dow staged an across the board rally today, most of which took place in the last hour of trading. We closed up 270, following marginal gains in Europe. Weak U.S. auto sales weighed on market sentiment most of the day, but the markets still ended positive. Financials were up by 8-12%, and commodities finished higher, even though oil was down $1.67. The CEOs of the big three automakers are on their way back to Washington to give revised (hopefully more organized) plans in their requests for funds.
Our Focus for Today:
EUR/USD: Euro has been in consolidation mode for most of NY. We see possible retest of the day’s high of 1.2767, and await the Final Services PMI and Retail Sales Data in Europe for direction.
USD/JPY: Dollar Yen did not break lower as expected, but reaffirmed our contention that we are not going to retest 94.00 again just yet. We still see Dollar Yen drifting lower, and look to resell in the mid-high 93’s. 92.60 still supports for now.
GBP/USD: The U.K. will announce Halifax HPI sometime in the next three days, and this could have a significant impact on the Pound. If it comes in higher than expected, we could see a very good bounce. If it comes in lower, it will probably be limited on the downside to 1.4760-80, as the market does not seem too keen on breaking that level. With expectations already so low, we might see a bounce after data that is marginally worse. Aside from this, 1.4760-1.5060 is a good range for now, and as usual, we would be bearish before bullish.
AUD/USD: Aussie should remain on the defensive along with oil, and we would look to sell rallies to .6500, with a stop at .6575 and a target in the lower .63’s.
Published on Wed, Dec 3 2008, 02:25 GMT
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Economic Reality Check Hits the Markets
Mon, Dec 1 2008, 22:44 GMT
by James Whyte
Market View for Dec 2, 2008
After a week of gains, the U.S. equity markets dropped on recession talk in the U.S. and a slowdown in manufacturing for the U.S. and China, following a European sell off as U.K. housing and manufacturing continued to worsen. The Dow closed down 680 points, led by commodity and financial stocks. Crude oil lost almost 10%, dropping back under $50 per barrel. Paulson spoke today confirming that the Treasury will continue to work on programs, including more flexibility in the TARP. Bernanke also commented that lower rates are feasible, but their efficacy would be limited. The 10 year yield dropped to its lowest rate since 1955.
Our Focus Today:
EUR/USD: Euro dropped, but not as significantly as the Pound. There were more reports about continued squabbling between France and the EU over each other’s stimulus plans, but the Euro did not suffer significantly, and at the close of the U.S. today, we do not see any updates on this. Euro should cap out around 1.2680, and depending on the European sentiment, we would be looking to sell up there.
USD/JPY: Our view of Dollar Yen remains to the downside. We do not see it recovering 94.50 for now, and are looking to sell in the mid 93’s. Yen crosses also look soft, with exaggerated moves in GBP/JPY, due to both components’ directions. There is a BOJ press conference due out today in Asia, and we expect to see further weakness in the Japanese economy.
GBP/USD: The Pound fell apart in European and NY hours, losing at one point 550 pips from its highs, after poor housing and manufacturing data. It did bounce after touching 1.4805. In the short term, we are sellers of rallies to 1.4950 (high after the lows of the day), with a stop at 1.5060. On the downside, we would look at the low of the day as first support, then 1.4755. Our larger outlook continues to see Cable to the mid 1.40’s, and we see a retest of 1.4560 (November low) before too long. Beware of substantial rallies, as we may again be in oversold conditions. Cable has a way of bouncing back lately.
AUD/USD: Aussie did not reach a level where we wanted to sell overnight, and is significantly off its Friday highs. We continue our bearish view, with economic worries back in force and commodities lower. .6330 still provides support for now. Retail sales and RBA rate statements are both due out today, and many are expecting a cut of 75 basis points.
Published on Mon, Dec 1 2008, 22:44 GMT
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Dow continue its climb for the week.
Sun, Nov 30 2008, 23:45 GMT
by James Whyte
Market View for Dec 1, 2008
Friday saw the Dow continue its climb for the week, closing up 1.1% at 8829 in thin post-holiday trade after similar performances overseas. The Euro came off 300 pips in European trade Friday, after CPI came in lower than expected. The ECB had indicated they were less likely to cut rates on inflation fears, but the market took the data on Friday as a sign that a cut was much more likely. There is also talk that the EU is blocking France’s bank rescue plan, with the European Commission has denied…so far. This should place further downward pressure on Euro. Also over the weekend, OPEC decided to defer their decision on production cuts until they meet on Dec. 17th. This may place some downward pressure on commodity currencies over the next session or two. This week is rich with data for Australia, UK, Canada, and the U.S. (Non-Farm Payrolls on Friday).
Our Focus Today:
EUR/USD: Euro went through our support line of 1.2820, significantly so, bouncing off 1.2645 and closing around 1.2690. We are cautiously bearish on the France-EU disagreement. If the EU Commission blocks France’s plan, it would reflect continued discord among the member countries, and may cause further Euro weakness. Below 1.2645, 1.2565 is the next support (low from Nov. 24th). Beyond that, there are more bottoms at 1.2380-1.2420. A test of these levels is not anticipated at this time; however neither was the collapse on Friday.
USD/JPY: We continue to like Dollar Yen lower. There is a daily trend line coming in a round 96.50, so we would sell ahead of that, with a stop above 97.50. We very much like those tops between 97.40 and 97.50 in the past couple of weeks, and don’t see any rallies above there. On the down side, 93.65-70 should be a target for shorts.
GBP/USD: As predicted, Cable tested 1.5510 on Thursday – 1.5530 the 23.6% retracement of the fall from 1.8660 to 1.4560 (Sep 25th – Nov 13th). This is proving to be a great resistance level. Cable ended mixed on Friday. The EUR/GBP level of .8340, which we wrote about last week, was clearly broken on Euro’s collapse. .8195 is the next support for that pair.
AUD/USD: We missed buying AUD on Thursday by a few pips…we like Aussie lower again, and would sell around .6600, with a stop just above .6700, and a target of .6330 over the next week. We look to Aussie data this week and reaction to OPEC to confirm our bearish outlook.
Published on Sun, Nov 30 2008, 23:45 GMT
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U.S. equity markets staged yet another rally
Wed, Nov 26 2008, 22:59 GMT
by James Whyte
Market View for November 27, 2008
The U.S. equity markets staged yet another rally, with the Dow up about 2.9% and the Nasdaq back above 1500. NY morning showed consumer and business spending drastically lower, but markets rallied just the same. Oil was also much higher, up 8% even though oil inventories were unexpectedly higher. The rally was led by techs, and financials were also higher. Tomorrow the U.S. will be on holiday, so very thin markets during the NY session may show exaggerated moves.
Our Focus Today:
EUR/USD: Euro came off yesterday’s highs, retesting lows from Nov 24th and 25th. We think this may be a good place to buy (1.2820), with a stop below 1.2800. European officials introduced a new plan which we think in the near term should take Euro back to 1.3070-1.3100 over the next few sessions as reaction to that plan by the individual countries is measured.
USD/JPY: Dollar Yen saw early sales to 94.65, but rallied in NY. We like the Dollar Yen higher back to retest the 97.20-40 level, where we would go short, but we could continue to stay in a range of 94.70-96.00 for the next 24 hours.
GBP/USD: The Pound was sold off in mid NY session but rebounded quickly. We like a retest of the 1.5530 high of Nov 24th, but are keeping an eye on the Fibonacci level mentioned yesterday, which comes in at that level. Sterling, Euro and Dollar Yen have stopped moving in correlation with each other, and have to be assessed independently. A prime example of this is the EUR/GBP cross, which collapsed overnight, as Euro weakened and the Pound remained strong. A good level to look at in this cross is .8340, which is great support. We would look to buy there with a stop at .8320.
AUD/USD: Aussie is higher in late NY on the back of the oil rally. We have good trend line support on the hourly chart which was visited again today. That now comes in at .6470. We do not expect that to break, and would buy that level with a 25 pip stop.
Published on Wed, Nov 26 2008, 22:59 GMT
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The Fed and treasury introduce new programs.
Wed, Nov 26 2008, 03:12 GMT
by James Whyte
Market View
U.S. equity markets were mixed today – either side of flat after an early morning rally sparked by two new programs from the Fed and Treasury. Both programs were aimed at consumers by helping to ease credit and the mortgage industry. In addition, the Fed said it will increase reserves in the banking system, meaning they will print more money. This caused a U.S. Dollar sell off for most of the NY session. The Nikkei finished up 5%, but European markets were marginally positive. Oil came off $3.73, ending up just above the $50 mark.
Our Focus Today:
EUR/USD: Euro built on yesterday’s gains with the two new bailout plans in NY morning. It ran into a wall at 1.3075-80, even though Cable continued higher. We would sell against this 1.3080-1.3115 resistance for now, but probably reverse on a break of 1.3125 for a target of 1.3300.
USD/JPY: Dollar Yen found support at 94.95, after falling 240 pips from its highs of Monday NY afternoon. 95.05 is the 61.8% retracement of the rise from the Nov 20th low of 93.55 to the Nov 24th high of 97.45. We expect USD/JPY to range trade between 94.95 and 95.75, although our bias is still lower. There are many previous lows on the way down if 94.95 breaks, so we don’t expect it to collapse in any case.
GBP/USD: Cable was on a tear since NY open, rallying 550 pips total (although it didn’t close at the highs). MPC hearings saw a repeat of the BOE’s determination to do what it takes to help the U.K. economy, including continued easing of interest rates. Cable’s bounce was more to do with the Fed news, but we also believe that there was much more short covering here than in other currencies. GBP/USD ran right to the 23.6 % retracement of the drop from the Sep 25th high of 1.8660 to the Nov 13th low of 1.4556. Clearing this should see us back to 1.5700. We have U.K. revised GDP tonight which may help point the direction of the currency.
AUD/USD: Aussie’s reaction to the Fed was more along the lines of the reaction of the Euro, underpinning our idea that GBP had been oversold and needed correction. Aussie continues to be soft overall, especially with oil off again today. Although it had reached a high of .6615 in NY, by the close it was already back below .6500. We would sell highs to the mid .65’s, with a stop above .6620.Published on Wed, Nov 26 2008, 03:12 GMT
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Stocks rallied on the Citigroup rescue.
Tue, Nov 25 2008, 03:28 GMT
by James Whyte
Market View for Nov. 25, 2008
Stocks rallied on the Citigroup rescue (Citi up 55%), and the Dow was led higher by financials and home builders. This is the first two-day rally for U.S. stocks in November. Energy stocks also gained on the rally in oil, up over $4 at $54.48, as OPEC plans more production cuts. It should be noted that the U.S. market did not end on its highs, and even though the financials finished strong, the Dow did have a bit of a sell off in the last few minutes, reminding us that we are still in a bear market. European stocks also closed significantly higher (about 10%). Currency markets also staged a turnaround on this news and the stock market rally. We will sit on the sidelines through Asia and see how things pan out.
Our focus today:
EUR/USD: Euro closed in NY near its highs, at 1.2910. There are two previous highs earlier this month, at 1.2925-30 level (high again today). We will watch this level to see if we have a break higher. We would think that this level holds for now, but with the Nikkei being closed yesterday, it has a lot to react to, and it may draw the Euro higher still. Whether or not it indicates a good break remains to be seen, so we will keep an eye on it for now.
USD/JPY: Dollar Yen also staged a rally, indicating that traders are happy with the Citi deal and open to more risk again. We do not see regaining 98.00, and would look to sell ahead of that, only after analyzing the market sentiment well into Asia. A rally in the Nikkei may give us a good selling opportunity as we enter European trading hours.
GBP/USD: For Cable, there is room on the topside up to around 1.5250-60. This is a previous support level in late October (24th and 27th), and high on Nov 19th. Look for this to cap it for now.
AUD/USD: .6580 should be the short term high, but oil may also drag Aussie higher, so we will wait to see what occurs in Asia before dipping our toes in.
Published on Tue, Nov 25 2008, 03:28 GMT
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Markets soar on Geither headline.
Mon, Nov 24 2008, 02:02 GMT
by James Whyte
Market View for November 24, 2008
The Dow soared on Friday on report that Obama will name Geithner as Secretary of Treasury. Geithner is the president of the NY Fed, and is well respected on Wall Street. This rally did not help Citigroup, which lost 60% for the week. Today is a Japanese holiday, so we expect Asia to be thin, and look toward the German Ifo Business Climate and then U.S. Home Sales.
Our Focus Today:
EUR/USD: Euro rallied with the stock market at the end of the day on Friday to 1.2595. We expect it will initially test 1.2620-40 range (Fridays early NY highs), but do not expect any new highs before Europe, where the direction should be determined by the German Ifo.
USD/JPY: We still like the Yen, and will sell Dollar Yen on rallies to 97.10. Euro Yen should be capped below 122, and Sterling Yen below 145.
GBP/USD: Sterling tested a high of 1.5060 in early NY Friday, before collapsing about 300 points, and then retracing 200 by day’s end. We expect the 1.5060 level to continue to be good resistance for now.
AUD/USD: We like Aussie below .6500, and will look to sell rallies. We will first look at .6325 (close on Friday), as it is the 50% retracement from the most recent drop from .6595 to .6075. The RBA spent much time and money last week defending the Aussie, so if we break down again, expect the drop to be interrupted, if not retraced, meaning: if you are short, use stops to protect yourself. You can always resell higher up.Published on Mon, Nov 24 2008, 02:02 GMT
12
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Lack of confidence continues
Fri, Nov 21 2008, 01:02 GMT
by James Whyte
Market View for November 21, 2008
U.S. Markets continue losses with continued fundamental lack of confidence. Once again, a late day decline was led by financials – Citigroup was down 26%, JP Morgan 18%. The Dow and NASDAQ closed at 5½ year lows, the S&P at 11½ year lows. Oil closed below $50 at 49.62, and energy stocks followed, down 20-25%. The Big 3 auto makers would not have enough votes in the House now to save them, so the Senate will give them a new chance to make their case in early December, giving them another shot at a rescue package. Another interesting note is that Treasury yields also hit historic lows today, driving the Dollar Index higher. The currency markets reacted to the sell off as expected.
Our Focus Today:
EUR/USD: Our short view in Euro was correct from yesterday, and we continue to see some weakness in the Euro over the short term. We would look to sell at the mid 1.25’s, with a stop above 1.2620. There are many targets in the 1.23’s, and a rising trend line that comes in at 1.2410, but we expect that to be broken after a bounce and will assess the market sentiment at that time.
USD/JPY: The Yen did not strengthen as much as we thought initially, but USD/JPY and the Yen crosses did react in mid to late NY session. We look for continued strength in the Yen, and will look to establish shorts at 95.20 – 95.50, with a stop at 96.40 and target today’s low of 93.50 initially. Below this, 92.60 beckon.
GBP/USD: After breaking the 1.4890/1.4900 level convincingly (it took some time as U.K. retail sales were better than expected), Cable reached a low of 1.4690 in NY. We continue to see weakness in the Pound as the global economy continues its slide. We see a break of November 13th low of 1.4560 in the coming sessions, but 1.4530-60 should be a good place for a bounce at first test.
AUD/USD: This pair did not regain the support level at .6335 once it broke in Europe, and slid with oil and the U.S. stock market. .6049 was the low on October 27th, and NY session almost saw that at the close (.6075). With oil continuing to come down, we do not see any reason to buy commodity currencies. We would like to see a bounce to .6180-.6200 to establish a short position, with a stop above .6240.
Published on Fri, Nov 21 2008, 01:02 GMT
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The Dow Jones faces another bad day.
Wed, Nov 19 2008, 23:53 GMT
by James Whyte
Market View for November 20, 2008
The Dow faced another bad day (especially the last 30 minutes), falling 427 points and closing below the 8000 mark. The Fed cut its growth forecast for 2009, and CPI date indicated deflationary concerns. Financials led the way with Citigroup stock falling over 22% to a 13-year low, with exceptionally high volume traded. Commodity stocks were also big losers on the day. Oil closed at 53.13, down 1.26. With Auto Company bankruptcy worries climbing, and market sectors falling dramatically, traders are having a tough time finding a reason to buy. European markets were down comparably, percentage wise (around 5%). The Citigroup news is very troubling on top of everything else, and we see the potential for a significant move lower over the next 24 hours in the currency markets.
EUR/USD:
We will sell any strength to 1.2600, with a target of 1.2400 initially, and a stop at 1.2660. At NY close, we are testing Monday’s low of 1.2515.
USD/JPY:
We believe that Yen buying will return in earnest, and will sell ahead of 96.50, with a stop above 97.10. We see GBP/JPY back to 140 and EUR/JPY back 117.50-118.00 in the coming day.
GBP/USD:
Sterling has had some trouble on the downside below 1.4900, while a good spike on bad U.S. news during NY morning tested 1.5250. Because of the buoyancy of the Pound at the 1.4900 level, we are not as keen to sell unless we see significant breaks to the down side.
AUD/USD:
This has been particularly sensitive to equity market movements, and we will look to sell rallies to .6500. A break of .6335 will confirm a descent to .6195 initially, then .6100…barring any movement by the RBA to stop the drop.
Published on Wed, Nov 19 2008, 23:53 GMT
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Dow Stages Late Session Rally
Tue, Nov 18 2008, 22:00 GMT
by James Whyte
Market View for November 19, 2008
The Dow staged a late session rally to close up 151 points, after showing triple digit gains then losses earlier in the session. The rally was led by tech stocks after HP forecast strong 4th quarter earnings. Energy stocks were also higher, although oil was down once again. Financials were mixed, with Citigroup once again losing 7%. The Nikkei was down 2%, but European stocks ended up about 1%. The focus after hours is on the senate hearings for the big 3 automakers, and whether or not they can get any help from the U.S. government. The fickle currency markets are once again closely following the equity markets.
EUR/USD:
Euro fell in NY after retesting a resistance line, which now comes in at 1.2678. We are looking to sell ahead of that line with a tight stop at 1.2705.
USD/JPY:
Dollar Yen kept a fairly tight range of 96.30-97.40. We look play this range for now.
GBP/USD:
Sterling tested 1.5095 in early London before breaking the 1.4970 old resistance on the downside to test 1.4890. On the back of the Dow rally, cable could retest the high 1.50’s, and we look to 1.5100 to cap it for now.
AUD/USD:
Aussie rose and fell and rose with the Dow, climbing 100 pips in the last hour of trading. .6600 resistance remains intact for now.
Published on Tue, Nov 18 2008, 22:00 GMT
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Slide continues
Tue, Nov 18 2008, 04:33 GMT
by James Whyte
Market View
U.S. volumes were light and volatility was high as investors continue to worry about the global economy. Once again, financials were the weakest sector. Citigroup announced 52,000 jobs will be cut in addition to the original 22,000 announced. This represents 20% of its workforce. The White House announced today that the Treasury will not ask for the additional $350 Billion of the bailout package, and will leave that for the Obama administration to work out. The U.S. auto industry is still waiting for Federal help. The Dow closed down 223 points, and oil was off by $2 to $55 per barrel. The effects of the slowdown (recession) are continuing to be felt in the U.S. and abroad, and until there is a reason to buy, we expect more of the same sentiment going forward. One good day is being followed by several bad ones. On the forex side, we have been convinced in the last few trading sessions that there may be a need for a bounce before continuing lower…but we certainly have not changed our overall view.
EUR/USD:
Euro opened weaker in Asia on the back of the G-20, but rallied into Europe and early NY. Once again, we see a pattern of late U.S. session selloff to match the activity in the U.S. equity markets. We see support at 1.2600-10. Topside, there is a very strong resistance trend line coming in at 1.2770. We do not expect that to be cleared, and would sell at today’s NY highs of 1.2735 with a stop just above 1.2800.
USD/JPY:
Dollar Yen continues to struggle with its direction. As such, we were forming a nice triangle until late in NY, where it broke to the downside, however not very convincingly. First support is at 96.20. We will look to short ahead of 97.00, with a stop at 97.30, or short a break of 95.90 for possible target of 95.15.
GBP/USD:
Sterling finally broke the 1.4970 level to go above 1.5000 for the first time in five days. We will look to see which direction it likes before making any trades. It might be important to note that 1.5050 is the 23.5% retracement from the high of Oct 30, to Thursday’s low. Although we traded to 1.5080 in NY, it’s not a convincing break, so we should look for 1.5050-1.5080 to see if we break above or stay below that level. If we stay above, the next Fibonacci of 38.2% comes in at 1.5350. On the downside, we have a supporting trend line which comes in at 1.4735, and could provide support if the Pound decides to start sliding again.
AUD/USD:
Reports of RBA buying interest continue, so instead of looking for any breaks on the downside, we prefer to sell rallies. We believe .6660 will hold it on the topside, and will look to establish shorts around .6600.
Published on Tue, Nov 18 2008, 04:33 GMT
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G−20 disappoints the markets.
Mon, Nov 17 2008, 04:48 GMT
by James Whyte
Market View for Nov 14, 2008
The Dow finished lower on another wild day Friday, after Thursday’s big rally. All eyes were on the G-20 at the weekend. The meeting, besides bolstering hope for the emerging market countries to be included in all summits, did not do much to bolster hopes of coordinated action. They all agreed to promote trade and pro-growth economic policies, but intend to act domestically as needed, instead of acting together. There was no specific pledge to stimulate growth. This is certainly not what the market was hoping for, and the response will not be positive. We expect to experience selling pressure over the course of the day.
EUR/USD:
We are looking for renewed weakness in the Euro, which came off 200 pips the last two hours of trading on Friday. Rallies preferably to 1.2800 would be ideal, since we have a short term trend line in place at 1.2810. Given the lack of G20 good news, we are definitely bearish in Euro, and may have to settle for a rally to 1.2690. We are looking to the open to set the tone.
USD/JPY:
Dollar Yen should be capped in the high 97’s/low 98’s, and we can look for 96.00 as first target, and then 95.15. Although we do not expect a collapse in USD/JPY, we should see marked movement in GBP/JPY and EUR/JPY to the downside. As the Dollar Yen did not come off like the Euro or Sterling in the last couple of hours on Friday, there may be a better chance to get short than in the others, and with more muted risk expectations.
GBP/USD:
The resistance line at 1.4965-70 held beautifully at the end of the day on Friday, after which we saw a drop of over 200 pips. 1.4697 should provide temporary support from a rising trend line, but that should break very early on given the G-20 statement. We could sell the break of 1.4697, but would prefer to wait for a rally to get short.
AUD/USD:
Aussie followed the others lower on Friday; however the RBA was in buying AUD to slow its descent. From the chart, they only seemed to be able to slow AUD, but there does appear to be a bounce from .6460 back to .6510 – which could reflect their action. Be careful in selling this one, but technically, .6335 attracts.
Published on Mon, Nov 17 2008, 04:48 GMT
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A Turnaround for U.S. Markets
Thu, Nov 13 2008, 22:54 GMT
by James Whyte
Market View for Nov 14, 2008
A turnaround for the markets – at least in the U.S. markets, with the major market indices moving up about 7% on the day, after being significantly lower at the start. Most of the up move up happened in the last hour of trading, and was led by energy and real estate stocks, both of which finished very well on the day. Financial stocks were mixed overall. U.S. jobless claims were worse than expected (the highest in 7 years). Analysts said this rally was sparked by a mix of institutional buying and a short-covering rally ahead of the G-20 meeting which starts Friday. Overnight the Nikkei was down 4%, European markets were mixed. Oil ended up over $3 today. We could see overseas markets heading higher on the back of this positive sentiment, but believe the overall picture remains negative. Oversold conditions caused an exaggerated rally in the currency markets.
EUR/USD:
We were stopped out of our shorts in Euro overnight, and saw an end of day rally to 1.2850(!). We are cautiously bearish, and will sit on the side lines for now, looking to Asia and European markets for guidance.
USD/JPY:
Dollar Yen also extended gains to the topside, rallying 300 pips in the last couple of hours in NY. As mentioned above, we wait to see how the global markets play out.
GBP/USD:
Cable dropped to 1.4560 in early NY, but quickly rallied with the group in late NY. It is interesting to note that the Pound rallied almost 300 pips while Euro’s rally was 400. This leads us to believe that this is the one to sell first on rallies (may not have been as oversold as the others – which is surprising considering its drop over the last few days). 1.4890-1.4900 is the place to look at if we decide to short, with a stop above yesterday’s highs of 1.4970. We do see a resistance line that broke through nicely in the hourly charts that comes in at 1.4770. We could bounce from there in Asia.
AUD/USD:
After the close of the NY day, GBP/USD and EUR/USD came off significantly from their end of day highs, however Aussie did not, and remains bid. We see further upside to .6720 or possibly .6760. We will wait this one out too, for now.
Published on Thu, Nov 13 2008, 22:54 GMT
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Henry Paulson fails to add confidence to markets
Thu, Nov 13 2008, 01:33 GMT
by James Whyte
Market Update
Once again, we see weakness across the board. The Asian and European markets closed down 1-3%, and the Dow followed, closing down 4.6%, led by financials and commodity stocks. Citigroup was down 10%, and that sparked a further sell off in the Dow toward the end of the session. The Nasdaq closed below October’s low, which also helped spark a further sell off. GM was the only Dow component to gain today. More and more analysts are comparing these conditions to the Great Depression, which will only serve to spark more weakness in the days ahead. Oil also continued its slide, down 5% on the day. Henry Paulson did not add any confidence when he announced the diversion of some of the bailout money from financials to consumers, planning to use some of that money to relieve some of the consumer credit market problems. This caused the Yen to strengthen as more investors renewed their selling of higher-yielding assets. BOE’s King indicated the need for further easing; as the U.K. economy continues its slide (unemployment claims hit their highest levels in 7 years). King also commented that he did not expect the Pound to come down as much as it did…this leaves us cautious to short the Pound at these levels.
Our Focus Today:
EUR/USD:
The Euro came off overnight, but not nearly as much as Dollar Yen, or indeed the Pound. We do see continued weakness in the Euro, and would look to sell it in the mid 1.25’s with a stop above 1.2660. At the close of the NY session, Euro is testing the lows of 2006 at 1.2450. A break of these levels leaves room to 1.2030.
USD/JPY:
Dollar Yen finally got off its flat line movement, to drop almost 4 big figures from its highs. We believe it will continue to sell off, and will wait for a retracement to establish shorts. Dollar Yen tested the low of Oct 28 at 94.45, and bounced significantly. We look to those levels to establish a short position ahead of 96.00. A break of the 94.45 level should produce 92.60, before a retest of Oct 24 bottom of 90.80. Through that, we are back to testing the Asia crisis levels (1995), when the USD/JPY hit below 80.00. The EUR/JPY trade we talked about yesterday was nearly perfect (123.50 short to 118.20), and we continue to see Yen strength across the board. GBP/JPY collapsed much more as both components moved in opposite directions for different reasons. GBP/JPY tested 1995 lows, and could drop to historic lows of 129.35 (also in 1995, when USD/JPY was at its lowest point).
GBP/USD:
Sterling easily broke previous lows of 1.5260-80 as mentioned yesterday, due to the BOE, and we are cautiously waiting for a good retracement to 1.5065 (highs from the bounce, so far) before getting short again. We would look to stop out above 1.5160, if we continue to see Cable rise. EUR/GBP reached new highs, as the Euro did not come down nearly as far as the Pound. We are careful about that pair, as it has significant P&L impacts.
AUD/USD
Aussie came off with the Pound, and our call yesterday again proved to be correct. For now, we will watch how the markets in Asia develop, to see how much of a rebound Aussie has in it. We do not expect it to recover above .6465.
Published on Thu, Nov 13 2008, 01:33 GMT
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Henry Paulson fails to add confidence to markets
Wed, Nov 12 2008, 15:01 GMT
by James Whyte
Market Update
Once again, we see weakness across the board. The Asian and European markets closed down 1-3%, and the Dow followed, closing down 4.6%, led by financials and commodity stocks. Citigroup was down 10%, and that sparked a further sell off in the Dow toward the end of the session. The Nasdaq closed below October’s low, which also helped spark a further sell off. GM was the only Dow component to gain today. More and more analysts are comparing these conditions to the Great Depression, which will only serve to spark more weakness in the days ahead. Oil also continued its slide, down 5% on the day. Henry Paulson did not add any confidence when he announced the diversion of some of the bailout money from financials to consumers, planning to use some of that money to relieve some of the consumer credit market problems. This caused the Yen to strengthen as more investors renewed their selling of higher-yielding assets. BOE’s King indicated the need for further easing; as the U.K. economy continues its slide (unemployment claims hit their highest levels in 7 years). King also commented that he did not expect the Pound to come down as much as it did…this leaves us cautious to short the Pound at these levels.
Our Focus Today:
EUR/USD:
The Euro came off overnight, but not nearly as much as Dollar Yen, or indeed the Pound. We do see continued weakness in the Euro, and would look to sell it in the mid 1.25’s with a stop above 1.2660. At the close of the NY session, Euro is testing the lows of 2006 at 1.2450. A break of these levels leaves room to 1.2030.
USD/JPY:
Dollar Yen finally got off its flat line movement, to drop almost 4 big figures from its highs. We believe it will continue to sell off, and will wait for a retracement to establish shorts. Dollar Yen tested the low of Oct 28 at 94.45, and bounced significantly. We look to those levels to establish a short position ahead of 96.00. A break of the 94.45 level should produce 92.60, before a retest of Oct 24 bottom of 90.80. Through that, we are back to testing the Asia crisis levels (1995), when the USD/JPY hit below 80.00. The EUR/JPY trade we talked about yesterday was nearly perfect (123.50 short to 118.20), and we continue to see Yen strength across the board. GBP/JPY collapsed much more as both components moved in opposite directions for different reasons. GBP/JPY tested 1995 lows, and could drop to historic lows of 129.35 (also in 1995, when USD/JPY was at its lowest point).
GBP/USD:
Sterling easily broke previous lows of 1.5260-80 as mentioned yesterday, due to the BOE, and we are cautiously waiting for a good retracement to 1.5065 (highs from the bounce, so far) before getting short again. We would look to stop out above 1.5160, if we continue to see Cable rise. EUR/GBP reached new highs, as the Euro did not come down nearly as far as the Pound. We are careful about that pair, as it has significant P&L impacts.
AUD/USD
Aussie came off with the Pound, and our call yesterday again proved to be correct. For now, we will watch how the markets in Asia develop, to see how much of a rebound Aussie has in it. We do not expect it to recover above .6465, and will establish shorts ahead of it.
Published on Wed, Nov 12 2008, 15:01 GMT
Archive
- Euro falls following Trichet's comments.
Published On Fri, Mar 6 2009, 04:59 GMT - U.S. Dollar advances vs. Yen.
Published On Thu, Mar 5 2009, 04:54 GMT - Dow dips to 12-year lows.
Published On Tue, Mar 3 2009, 06:29 GMT - Dollar index climbs to new highs.
Published On Sat, Feb 28 2009, 00:49 GMT - Dollar near 3-month highs.
Published On Mon, Feb 23 2009, 22:50 GMT
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