We open the week of November 18th, with what has become a familiar trend; the dollar continues to fall. The...
... greenback finished off trading on Friday down against most major currencies as credit and housing worries continue to haunt the US economy.
Figures from the Department of Treasury regarding International Capital, Balance of
Payments, and Industrial numbers hindered any hopes of the greenback gaining on its
progress from early last week. Instead, investors start the week offering the
greenback in bulk. Another hit to the dollar came this weekend as the Gulf
Cooperation Council, made up of the lion's share of the Gulf States, discussed the
possibility of revaluating their currencies away from the greenback. This has become
a developing trend as China leaked several hints that they were doing the same, not
too long ago.
The greenback this week will have to rely more heavily than usual on outside events,
as the shortened Holiday week holds little relevant news in the US economic
schedule. Tuesday will see the release of the FOMC meeting minutes which should
highlight any suspicion about if and when the Fed will intervene once again to
change the economic outlook of the dollar.
US Housing will look to be a notable subject this week with two statements set to be
released. Today at 18:00GMT, we will see the release of the National Association of
Home Builders Housing Market Index, ahead of Tuesday's Housing Starts numbers.
Other than that the Greenback is expected to remain under pressure, as more and more
nations lose faith in the currency that once represented the symbol of economical
robustness, and is now becoming less relevant on a global scale.
* EUR
The Euro ended trading last week in a consistent fashion, rallying late against the
greenback to stay above the 1.46 level. The Euro has become a mainstay in the global
economic world, as some see it as the world's new dominant currency. It seems as if
any gain from the greenback is not substantial enough to deter the overwhelming
strength that the 13 Nation currency has had lately. A quick peek to the week ahead
could see a slight dip in the Euro, most likely in the early parts of the week. This
however will likely be a short lived trend as the Euro has consistently rallied from
falling positions over the last several weeks. This trend has affected the
relationship between the GBP and the EUR as well, as gaps between the two European
currencies are slowly closing.
The G-20 Conference in South Africa this past weekend was surprisingly mum regarding
any serious change in currency policies. Leaders mentioned that the state of the
world's economic slowdown was "difficult to predict", helping not one bit in shoring
up investor concerns.
The week ahead sees little relevant news from the EU economic calendar. This week
will see a speech by ECB President Trichet at the Frankfurt European Banking
Congress on Friday. As the President normally spurs market volatility when he
speaks, this time should be a bit different as his words come late in the week on
Friday. The Euro should continue to progress slowly barring any surprising news
events as investors have come to see it as a strong and stable option when trading.
* JPY
The JPY once again benefited from slumping housing prices as investors shied away
from high-yielding assets funded by the JPY. The Japanese currency was up against 15
of the 16 major currencies to end Friday trading and looks to continue its forward
progress. The presumption is that the upcoming housing numbers from the US this
week, will continue to push the JPY forward. The focus on Japan at the G-20
Conference in South Africa was geared toward structural reform and fiscal
consolidation. The Japanese would ultimately like to contribute more positivity to
the JPY via local events as opposed to being reliant on outside factors. BoJ
Governor Fukui touched upon his concern revolving the rapid appreciation in recent
JPY numbers.
The Japanese economic calendar stays barren of any important news events, as the
Holiday week also corresponds with celebrations in Japan. It will be intriguing to
see how investor behavior develops in regards to carry trading; it is likely we will
see a boost in the JPY as the week begins.
Technical News
* EUR/USD
There is a very distinct triangle forming on the 4 hour chart which appears to be at
a key level before a breach. If a move towards the 1.4620 will occur, it will
probably validate a deeper bearish move into the 1.4570 zone.
* GBP/USD
The cable has been trying to massively correct the intensive bullish move, and is
now trading around 2.0530. The sharp bearish channel is in a high spot at the
moment, and together with a strong bearish cross on the slow stochastic, represents
a very good potential for a short position.
* USD/JPY
The pair is showing a very strong bearish momentum that appears to be overlooking
the normal price movement proportions, and is now trading at the impressive 110.50
level. The direction appears to be down, as both RSI and slow stochastic strengthen
the bearish notion.
* USD/CHF
After touching a base at 1.1155, the pair now consolidates a bit higher at 1.1170.
all oscillators show that the bearish momentum will probably continue, and that a
breach through the next key level of 1.1150 is quite imminent. If the key support
level will hold, we might see a correction back to the 1.1220 levels.
The Wild Card
* Crude Oil
After a failed attempt to breach through the 90.00 level, oil is showing a very
strong bullish comeback, and is steadily heading to the 95.00 level and beyond. This
is a great opportunity for
forex traders, to rejoin the strong trend in its new journey up.
www.forexyard.com
Monday, November 19, 2007
Thursday, November 15, 2007
London Gold Market Report
Gold Holds Steady as World Stock Markets Drop on New Credit Woes; British Pound Falls After Weak Data.SPOT GOLD PRICES...
... ticked lower but held above $801.50 per ounce in Asian trade on Monday, spiking higher in London as world stock markets continued to sell off.
"I'm telling people this is the place to take money off the table and look to rebuy on a pullback," says Robin Wilkin at J.P.Morgan in London.
"Gold is still struggling on the upside after the strong rally and with big resistance just overhead," agrees Phil Smith for Reuters India.
"Support kicks in at $770 to the downside and overhead the very big level is $835 which is the 1980 high," Smith believes.
Gold futures traded at the Tocom in Tokyo today rose 1.6%, playing catch-up with Friday's dramatic $18 gain in the US session. The Nikkei stock index, meantime, dropped by the same proportion.
Financial stocks in the Asia-Pacific region fell nearly 2% after the world's biggest bank – Citigroup – lost its CEO, Chuck Prince, yesterday.
Citigroup now says it may need to write-down a further $11 billion on mortgage-related investments after admitting to a $6.5 billion write-down for the July to Sept. period.
In Hong Kong the Hang Seng index sank by 5%, closing nearly 10% below last Tuesday's new all-time record high. The Hang Seng had previously risen by one-half since the start of April.
European stocks opened the week sharply lower, dropping 0.6% in early trade. Here in London, shares in the UK's second-largest grocery chain, Sainsbury's, dumped one-fifth of their value this morning after an investment fund backed by the government of Qatar walked away from bidding for the supermarket, citing "credit market turbulence".
The Qatar Investment Authority was asked last week to inject an extra £500 million ($1bn) to cover a "potential" shortfall in Sainsbury's pension fund.
"I am sure gold will reach $850 by the end of this year," reckons Yukuji Sonoda at Daiichi Commodities in Tokyo. "Every government is very anxious about the Dollar [and] this will automatically support the Gold Price. There's a strong intention from the Chinese government to sell the Dollar."
"If there's more money flowing into gold, maybe we can even see gold at $900 by the end of this year," says Ronald Leung of Lee Cheong Gold Dealers in Hong Kong, talking to Reuters today.
In India – where the Diwali festival of lights this coming Friday will mark an auspicious time for gold buying on the Hindu calendar – Gold Prices in jewelry shops this weekend reached 10,310 Rupees per 10 grams, an 18-month high according to D.D.News.
"Gold Prices are already more than Rs 1,300 higher than the last Diwali levels," says the newswire. "Besides festival demand, a sharp surge in international prices has also added to the rally in the domestic [Indian gold] markets."
Meantime on the currency markets, the US Dollar crept higher vs. the Euro overnight, bouncing half-a-cent from last Friday's new all-time low.
The British Pound, meanwhile, sank nearly 1¢ from last week's quarter-century highs on news that UK industrial output shrank in the year to Sept. Sterling then dropped to $2.0805 after the PMI of confidence in the services sector fell to 53.1 points in Oct., well below expectations and down from Sept.'s reading of 56.7.
That move on the currency markets pushed the Gold Price in British Pounds back up to last week's closing level, just shy of a new all-time high above £386 per ounce. For Eurozone investors wanting to Buy Gold Today, the price rallied 0.4% from a dip to €553 per ounce.
Over in the energy markets, US crude oil dropped 1.4% overnight to $94.61 per barrel after Kurdish rebels in northern Iraq freed eight Turkish soldiers. PetroChina, newly listed on the Shanghai stock exchange today, meantime bucked the sell-off in world equities to gain more than 160% on its debut.
Now larger than the entire Russian stock market, PetroChina became the world's biggest company by market value at $1 trillion.
But the surging price of oil threatens to push the cost of living sharply higher, according to Alan Greenspan, former head of the US Federal Reserve. "The United States is tremendously vulnerable to oil price shocks," agrees Herb Kelleher, chairman of Southwest Airlines.
"We're headed for a crisis insofar as our consumption of energy is concerned."
"Just since August," says a statement from American Airlines, "average spot market crude oil prices have risen by nearly $14 a barrel. That increase translates into more than $1 billion of additional annual expense for American."
Rising oil prices are also denting profit potential in the gold mining sector. Newmont Mining, the world's second-largest producer, said last week that earnings-per-share doubled between July and Sept. from the same period in 2006. But it raised its cost-per-ounce forecast from $400 to $430.
Oil accounts for 12% of Newmont's costs said CEO Richard O'Brien last week. Newmont's stock has risen by 15% so far this year.
The spot Gold Price, meantime, has risen by 25%.
Adrian Ash
BullionVault
Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2007
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
www.forexrate.co.uk
... ticked lower but held above $801.50 per ounce in Asian trade on Monday, spiking higher in London as world stock markets continued to sell off.
"I'm telling people this is the place to take money off the table and look to rebuy on a pullback," says Robin Wilkin at J.P.Morgan in London.
"Gold is still struggling on the upside after the strong rally and with big resistance just overhead," agrees Phil Smith for Reuters India.
"Support kicks in at $770 to the downside and overhead the very big level is $835 which is the 1980 high," Smith believes.
Gold futures traded at the Tocom in Tokyo today rose 1.6%, playing catch-up with Friday's dramatic $18 gain in the US session. The Nikkei stock index, meantime, dropped by the same proportion.
Financial stocks in the Asia-Pacific region fell nearly 2% after the world's biggest bank – Citigroup – lost its CEO, Chuck Prince, yesterday.
Citigroup now says it may need to write-down a further $11 billion on mortgage-related investments after admitting to a $6.5 billion write-down for the July to Sept. period.
In Hong Kong the Hang Seng index sank by 5%, closing nearly 10% below last Tuesday's new all-time record high. The Hang Seng had previously risen by one-half since the start of April.
European stocks opened the week sharply lower, dropping 0.6% in early trade. Here in London, shares in the UK's second-largest grocery chain, Sainsbury's, dumped one-fifth of their value this morning after an investment fund backed by the government of Qatar walked away from bidding for the supermarket, citing "credit market turbulence".
The Qatar Investment Authority was asked last week to inject an extra £500 million ($1bn) to cover a "potential" shortfall in Sainsbury's pension fund.
"I am sure gold will reach $850 by the end of this year," reckons Yukuji Sonoda at Daiichi Commodities in Tokyo. "Every government is very anxious about the Dollar [and] this will automatically support the Gold Price. There's a strong intention from the Chinese government to sell the Dollar."
"If there's more money flowing into gold, maybe we can even see gold at $900 by the end of this year," says Ronald Leung of Lee Cheong Gold Dealers in Hong Kong, talking to Reuters today.
In India – where the Diwali festival of lights this coming Friday will mark an auspicious time for gold buying on the Hindu calendar – Gold Prices in jewelry shops this weekend reached 10,310 Rupees per 10 grams, an 18-month high according to D.D.News.
"Gold Prices are already more than Rs 1,300 higher than the last Diwali levels," says the newswire. "Besides festival demand, a sharp surge in international prices has also added to the rally in the domestic [Indian gold] markets."
Meantime on the currency markets, the US Dollar crept higher vs. the Euro overnight, bouncing half-a-cent from last Friday's new all-time low.
The British Pound, meanwhile, sank nearly 1¢ from last week's quarter-century highs on news that UK industrial output shrank in the year to Sept. Sterling then dropped to $2.0805 after the PMI of confidence in the services sector fell to 53.1 points in Oct., well below expectations and down from Sept.'s reading of 56.7.
That move on the currency markets pushed the Gold Price in British Pounds back up to last week's closing level, just shy of a new all-time high above £386 per ounce. For Eurozone investors wanting to Buy Gold Today, the price rallied 0.4% from a dip to €553 per ounce.
Over in the energy markets, US crude oil dropped 1.4% overnight to $94.61 per barrel after Kurdish rebels in northern Iraq freed eight Turkish soldiers. PetroChina, newly listed on the Shanghai stock exchange today, meantime bucked the sell-off in world equities to gain more than 160% on its debut.
Now larger than the entire Russian stock market, PetroChina became the world's biggest company by market value at $1 trillion.
But the surging price of oil threatens to push the cost of living sharply higher, according to Alan Greenspan, former head of the US Federal Reserve. "The United States is tremendously vulnerable to oil price shocks," agrees Herb Kelleher, chairman of Southwest Airlines.
"We're headed for a crisis insofar as our consumption of energy is concerned."
"Just since August," says a statement from American Airlines, "average spot market crude oil prices have risen by nearly $14 a barrel. That increase translates into more than $1 billion of additional annual expense for American."
Rising oil prices are also denting profit potential in the gold mining sector. Newmont Mining, the world's second-largest producer, said last week that earnings-per-share doubled between July and Sept. from the same period in 2006. But it raised its cost-per-ounce forecast from $400 to $430.
Oil accounts for 12% of Newmont's costs said CEO Richard O'Brien last week. Newmont's stock has risen by 15% so far this year.
The spot Gold Price, meantime, has risen by 25%.
Adrian Ash
BullionVault
Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – where you can Buy Gold Today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2007
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
www.forexrate.co.uk
Saturday, November 10, 2007
Economic Indicators
We have created a comprehensive glossary of economic indicators from the relevant markets. While these indicators are generally applicable economic terms, some of them are specific for the country of their release.
To access the definitions of the terms listed below, please see "Foreign Exchange Markets: A Practical Guide", an innovative approach to covering FX fundamental and technical analysis.
Auto Sales
Balance of Payments
Balance of Trade (Merchandise Trade Balance)
Beige Book Fed Survey
Business Inventories and Sales
Capital Account (now known as Financial Account)
CBI Surveys
Construction Spending
Consumer Price Index (CPI)
Current Account
Durable Goods Orders
Employment Cost Index (ECI)
Employment Report
Factory Orders and Manufacturing Inventories
Gross Domestic Product (GDP)
HICP (Harmonized Index of Consumer Prices)
Housing Starts/Building Permits
IFO
Implicit Deflator
Index of Leading Economic Indicators (LEI)
The Institute of Supply Management (ISM)
L
M1
M2
M3
New Home Sales
Personal Income and Personal Consumption Expenditures (PCE)
Producer Price Index (PPI)
Productivity
Purchasing Managers' Index (PMI)
Retail Sales
Tankan Survey
ZEW Indicator
Sunday, November 4, 2007
US Jobs Fails to Support Dollar
Markets shrugged off a sharply higher than expected October US non-farm payrolls report, battering the dollar to fresh lows against the euro at 1.4528 and the sterling just beneath the 2.09-level. Lingering jitters over credit conditions in the US continue to plague the greenback.
The October labor report revealed robust growth in non-farm payrolls, sharply exceeding market expectations by twofold at 166k compared with a downwardly revised September reading of 96k. The unemployment rate remained unchanged at 4.7%, while hourly wages increased by 0.3%. Durable goods orders for September were unchanged from the previous month posting another 1.7% decline, while the ex-transports reading improved by 0.4%. Factory orders gained by 0.2% in September compared with a 3.3% drop a month prior.
The dollar initially rallied off the strong jobs data but quickly relinquished its strength as traders bought up the majors on the dip – reaffirming heavily bearish dollar sentiment. Renewing concerns about liquidity conditions were new Fed injections today that resulted in the Fed’s largest infusion of funds since September 2001. The Fed announced repurchases totaling $41 billion, exceeding the $38 billion injected at the height of the credit crunch panic in August.
forexnews.com
The October labor report revealed robust growth in non-farm payrolls, sharply exceeding market expectations by twofold at 166k compared with a downwardly revised September reading of 96k. The unemployment rate remained unchanged at 4.7%, while hourly wages increased by 0.3%. Durable goods orders for September were unchanged from the previous month posting another 1.7% decline, while the ex-transports reading improved by 0.4%. Factory orders gained by 0.2% in September compared with a 3.3% drop a month prior.
The dollar initially rallied off the strong jobs data but quickly relinquished its strength as traders bought up the majors on the dip – reaffirming heavily bearish dollar sentiment. Renewing concerns about liquidity conditions were new Fed injections today that resulted in the Fed’s largest infusion of funds since September 2001. The Fed announced repurchases totaling $41 billion, exceeding the $38 billion injected at the height of the credit crunch panic in August.
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