Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday September 16 2011

The US dollar (USD) was seen moving lightly bearish late Thursday as investors sought the higher yielding assets from speculation on a minor market uptick following recent releases on inflation. A stronger-than-forecast uptick in US CPI data added to risk appetite for many investors, leading some to await today’s news before entering more strongly.

The downtick seen in the greenback was significantly milder than in other currencies, especially as its safe-haven appeal remains and the economy isn’t out of troubled water just yet. This may be partially due to the USD’s disconnection from some of the market turmoil, but it could also be from some optimistic data emerging from the economy lately.

Most significant on today’s calendar will be the US publication of its TIC Long-Term Purchases data and consumer confidence data. Should today’s news foreshadow a modest growth in the US investments, an assessment that does, however, seem less likely from data released these past few weeks, there is a possibility that more investment will get pushed towards the higher yielding abilities of the European currencies as investors seek to diversify their portfolios, which could also drop the USD in short-term trading.

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading bullish in late trading as shifts away from the greenback, due to optimism about global inflation levels, caused several market participants to opt for other stores of value. The pair was last seen holding near 1.3500 in late trading Thursday.

The euro was recently seen dropping sharply against the USD following last week’s announcement regarding interest rates. Stuttering mildly ahead of the decision, there was an atmosphere of EUR avoidance in the market even prior to the statement by ECB President Jean-Claude Trichet. This week, however, the news appears to be favoring the EUR and today may not be much different, especially if the US TIC investment data beats forecasts.

With nearly every analyst failing to anticipate yesterday’s move, the market appeared set for some upheavals in value, with the EUR suddenly resurging and the greenback taking losses. For now, traders appear to be looking to a strengthening of the EUR through the remainder of the week.

The Japanese yen (JPY) was seen consolidating in an ascendant flat formation these past few days, as market reports showed modest declines across the boards. Despite recent reports on Japan’s shrinking housing sector, yesterday’s publication of Japanese bank lending and machinery orders showed a broadening contraction striking several sectors of the island economy.

 

Expectations for these reports were for modest growth from last month’s reading. The actual figures shrank below forecasts, however, leading to some odd downticks in JPY values amid an environment of risk aversion. National data on housing and manufacturing has somewhat halted the JPY’s ascent as many investors hesitate to move into the once-burgeoning JPY. This data, combined with the recent interventions by the BOJ, has so far caused the yen to weakly move bearish.

Crude Oil prices found support Thursday, moving towards $90 a barrel in late trading as sentiment appeared to shift in favour of a price increase following news that supply in the United States declined by 4 million barrels this week. With supply falling and manufacturing and industry in decline, the balance between supply and demand appear to be reaching agreement as the value of oil seems to be levelling out in recent trading, despite the recent swings in currency values.

As investors seek shelter from recent market uncertainty, the value of crude oil, which was seen holding steady all week, may see additional gains before today’s close. A sudden jump in dollar values due to a sudden return to risk aversion, as was expected following the recent interest rate announcements, could drive many investors into lower investments on physical assets; driving oil prices back downward by the middle of next week.

Jovi Overo

Beta 2 Ltd, Jovi Overo, Beta 2 Ltd, Thursday September 8 2011

The US dollar (USD) was seen trading mildly bearish early Tuesday as investors balanced risk sentiment ahead of this week’s series of interest rate announcements. A sudden wave of risk appetite seemed to have dropped the greenback following a move by the Swiss National Bank (SNB) to peg the CHF to the value of the EUR at 1.20 on Tuesday. Wednesday, however, saw the greenback paring some of those earlier losses and consolidating near 1.4000 against the EUR in late trading.

Optimistic data from the Canadian manufacturing sector yesterday also signalled an uptick in output from the previous month in the North American region. The news has done little to the forex market; however, though it could ripple through longer-term analyses on capital markets should they come into play later on. Most traders seemed to be awaiting further rate decisions, however, prior to making any sizeable bets.

With today’s releases revolving around European and British interest rate decisions, most traders appear to be on edge. The consolidation trends witnessed as forming in the major crosses are part and parcel of this anxiety. Many are anticipating dovish sentiment to emerge from the euro zone following mixed fundamental signals and recent talks about Italy’s austerity budget and Greece’s sovereign debt crisis. The US will also release its trade balance, though that news is likely to be overshadowed by Europe’s news.

The direction of the British pound (GBP) is lacking uniformity among speculators as the Bank of England’s (BOE) rate decision approaches. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals. But the pound has seen some setbacks brought about by poor regional fundamentals and a general atmosphere of risk flight.

Traders are looking for a way to balance a renewal of risk aversion with continued shakiness in global markets. A mildly pessimistic sentiment towards investing in the US dollar at the moment has many investors on edge. An embattled euro zone, fending off market bears amid turmoil in its peripheral nations, Italy flaring up recently, also looks to be losing ground in financial markets. With today’s rate statements on tap, wide swings in value and intense volatility should be anticipated.

Sentiment in Britain appears to have turned negative this week, with many analysts and economists expecting moves towards safety by traders following the BOE’s rate statements. An attitude of dovishness has gained traction and investors are worried that a continuation of low rates, coupled with the possibility of a rate reduction in Europe in 2012, could diminish currency values as we get deeper into the third quarter.

The latest moves of the Japanese yen (JPY) are causing some concerns among investors as many speculators are anticipating another round of intervention by the Bank of Japan (BOJ). With interest rate decisions out yesterday morning, traders appeared to show zero surprise in the announcement that rates would be held near zero. A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavourable for longer-term growth in Japan’s current financial model. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

The yen was indeed seen trading mildly lower versus most other currencies this morning as its value as an international safe haven was being challenged by an air of impending intervention by the BOJ. Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent. The JPY has been experiencing several long strides lately from the various shifts into riskier assets.

Crude Oil prices held steady Wednesday as sentiment appeared to favour a mild uptick in global stocks following reports of monetary moves being made by several central banks. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected dip in dollar values due to this week’s risk sensitive environment has helped many investors ram up their long-taking positions on physical assets, but with the USD’s losses not materializing in large enough numbers, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by mid-week.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Thursday September 1 2011

The US dollar (USD) was seen trading sideways at yesterday’s close after a day of mixed news from the global economy. Mixed sentient towards risk this week was muddled even further as employment data in the United States disappointed traders with oddly bearish results.

Economic news this week has pushed traders into a position of market pessimism; though trading early in the week was acting as though no safe-haven could be found. Little news has emerged which put a dent in the amount of pessimism surrounding the forex market, traders are now eyeing Friday’s NFP report before jumping into more significant investments.

With a heavy news day expected from almost every major economy, traders will be witnessing abnormal volatility combined with reluctance among investors prior to Friday’s ever-important NFP publication. Following yesterday’s pessimistic data from ADP’s Non-Farm Employment Change report on the private sector, today’s unemployment claims will offer another piece of info regarding the employment sector of the US economy. Should it also support pessimism, traders may return mildly to safer assets and away from the USD until more light can be shed.

The euro (EUR) was seen trading with largely mixed results yesterday as traders moved into and away from riskier assets across the region. Against the US dollar (USD) the euro was seen trading sideways in late trading as shifts away from the greenback, due to uncertainty about the US employment sector, caused several market participants to opt for other stores of value.

The mixed reports out of Europe yesterday have appeared to confound traders who were anticipating a string of bearish results. Though debt concerns still loom in the region, optimistic data has had the impact of muting the EUR’s losses against its primary basket of currencies. With a heavy news day expected today, traders should see some added volatility in today’s EUR market.

On tap today, traders will witness the release of a highly significant report from Switzerland and Great Britain, as well as several minor figures from the euro zone. Should the data come in bearish, we could see heftier shifts to safer assets in the days and weeks ahead. This would likely push the value of the EUR lower over the long-haul as traders flee risk.

The Australian dollar (AUD) was weighed down yesterday, as market reports showed contraction across the boards. Piling atop recent reports on Australia’s shrinking housing sector, today’s publication of Australian retail sales show a broadening contraction striking several sectors of Australia’s economy.

Expectations for the retail sales report was for a modest growth of 0.3% from last month’s contraction of 0.1%. The actual report has led many investors to pull away from the Australian dollar (AUD) in recent trading. National data on housing and employment has also driven many investors away from the once-burgeoning AUD. This data, combined with dismal HPI and building approvals reports, has so far dragged the Aussie lower and looks to continue doing so this week.

Crude Oil prices held steady Wednesday as sentiment appeared to favour a downturn in global stocks ahead of a speculated double-dip recession. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and manufacturing demand.

An expected jump in dollar values due to this week’s risk averse environment has helped many investors ram up their short-taking positions on physical assets, but with the USD’s gains not materializing, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by the week’s end.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Tuesday August 16 2011

The US dollar (USD) was experiencing short swings yesterday as investors anticipate what impact this week’s housing data will have on the weakened US economic outlook. The greenback had found moderate strength in the morning hours, but soon pared its gains as investment data turned sour. The value of safe-haven assets like the Swiss franc (CHF) and Japanese yen (JPY) have been buoyed by a shift away from higher yielding assets, though the Swissie’s value was gouged by recent talk of capping its strength.

With the economies of Europe and the US posting little positive news on yesterday’s calendar, the amount of pessimism surrounding the forex market, particularly in the fragile United States and euro zone, appears to have grown, further dampening the strength of the EUR, GBP, and AUD. The dollar has seen mild gains as it tends to do when risk aversion grows, though its value rests on shaky ground considering recent financial manoeuvres currently underway.

With a heavy news day expected today, however, traders are sure to see a return of portfolio adjustment as volatility becomes elevated. The US economy will be publishing several reports on housing and one industrial production figure alongside the capacity utilization rate indicator. Should today’s news disappoint, there is a possibility that more investment will get pushed towards the safety of the Swissie and yen, driving USD values lower in the process.

The Great British pound (GBP) has been seen trading with largely bearish results so far this week as traders assess the risk sentiment across the region. The Cable was seen trading bearish in late trading as shifts into the greenback, due to uncertainty about a recent deal struck over the debt ceiling in the United States and subsequent ratings downgrade, caused a stir in the foreign exchange market.

News of debt contagion spreading across the euro zone also has several economists worried that a toppling of consumer confidence may be up next. Whether Great Britain is affected by this regional tug is a matter for speculation at the moment, however. Should today’s reports on inflation indicate a downturn in growth and thus demand there is a chance that traders will take the news to mean the pound sterling will meet further resistance in the near future.

On tap today, traders will witness the release of moderately significant reports on inflation at the consumer and retail level in the UK at 9:30 GMT. Should the figures reveal stagnation in inflationary growth, we could see heftier flights to safety in the days and weeks ahead. This would likely push the value of the GBP lower over the long-haul as traders continue to flee risk in larger numbers.

The Australian dollar (AUD) was trading mostly weaker versus its currency counterparts yesterday after data releases have begun to shift traders back into safety. The Aussie has been losing momentum these past few weeks as risk aversion becomes predominant in the global market. Fears emanating from the current market environment have led many to seek safety.

This movement has gouged the AUD against all of its currency rivals, especially against safe-havens like the Swiss franc (CHF) and Japanese yen (JPY). With significant reports released this morning, forex traders are highly likely to see heavy movement by the Aussie in today’s trading hours. News out of Japan yesterday is also expected to hike volatility throughout the Pacific countries of China, New Zealand and Australia. Pacific traders should be cautious in today’s trading.

Crude Oil prices held steady Monday as sentiment appeared to favour a mild uptick in global stocks following reports of monetary moves being made by several central banks. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets as many reports suggested a surprise downtick in growth among global industrial output and consumer spending.

An expected dip in dollar values due to this week’s risk sensitive environment has helped many investors ram up their long-taking positions on physical assets, but with the USD’s losses not materializing in large enough numbers, sentiment appears to have the price of crude oil holding steady. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by mid-week.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Monday August 15 2011

The US dollar (USD) may be seen trading mildly bullish Monday morning if traders see the global stock market persist in its decline. Although the value of US credit was downgraded, investors have little place else to move their troubled assets outside of US Treasuries. The downturn in the stock market last week has played into the strength of the US economy: its traditional store of value.

Though analysts view the downgrade as overall bearish for the USD, a sharp downturn was held in check by a continued purchase of bonds by European investors. Similar declines and ratings downgrades of several European peripheral nations have made the USD and gold all the more attractive as valued safe-havens.

As for this week, the US economic releases will focus mostly on housing and consumer inflation. Today’s publication of TIC’s Long-Term Purchases report will coincide with a housing index released an hour later at 15:00 GMT. Liquidity will likely be kept more to a minimum in today’s early trading as several European banks close in observance of Assumption Day. French and Italian liquidity will be absent, but Japanese data may offset the lower volatility. Traders will want to pay close attention to today’s American data.

The euro (EUR) was seen trading with mixed results this morning following pessimistic reports on euro zone debt woes. Against the US dollar (USD) the euro was trading somewhat bearish in early morning hours Monday as the greenback moved upward against all currency rivals. The euro, however, does not appear in a position to capitalize on the gains being seen elsewhere; its structural weaknesses are gouging its value worldwide.

Traders are looking for a way to balance a renewal of risk aversion with continued shakiness in global markets. A mildly pessimistic sentiment towards investing in the US dollar at the moment, due to the S&P downgrade, has many investors on edge. An embattled euro zone, fending off market bears amid turmoil in its peripheral nations, also looks to be losing ground in financial markets as safe haven assets such as the Swiss franc (CHF) and Japanese yen (JPY) make gains; though central bank interventions in Japan may offset the JPY’s gains.

Sentiment across the euro zone has turned negative, with many analysts and economists expecting moves towards safety by traders this week. Any more bearishly-leaning news out of any major global economy will likely pull down on the EUR even further as investors flee risk. With several European nations on holiday today, liquidity will likely be kept to a minimum, helping the EUR stave off intensely deep declines.

The Japanese yen (JPY) was seen trading moderately higher versus most other currencies this morning as its value as an international safe haven continues to push its value bullish. Being linked to international risk sentiment, the yen has experienced an expected uptick during a period when shifts away higher yielding assets became prominent. The JPY has been experiencing several long strides lately from the various shifts into riskier assets.

The latest moves of the JPY are causing some concerns, however, as many speculators are anticipating another round of intervention by the Bank of Japan (BOJ). A strengthening yen has benefits for the buying power of the island economy, though its dependence on exports makes a strong yen unfavourable for longer-term growth in Japan’s current financial model. Another round of intervention may become more necessary if this morning’s GDP figures show a sluggish economy.

The price of Gold found support over the past week amid the plummeting strength of the US dollar, the currency in which such assets are valued. Gold has been trading with rather mild price action since June, but traders have been awaiting price resurgence due to the rampant increase in risk aversion due to rising tensions from the euro zone’s periphery and a recent downgrade of US debt by S&P’s ratings agency.

As investors seek safety, the value of gold, which has been seen trading with mixed results, is expected to rise, but a selloff in commodity futures pulled down on precious metals last week. A sudden rise in dollar values due to this week’s uncertain environment is expected to assist the sentiment favouring gold. Should risk sentiment continue to bounce in sporadic directions this week, the price for this precious metal may continue to experience similar swings in value.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Thursday 21 July 2011

The US dollar (USD) has experienced a rather sudden about face this week. The EUR/USD was seen moving back towards 1.4270 yesterday while the GBP/USD inched just above 1.61. Data from the American economy was largely bullish, which may have helped spark some risk-taking among investors, pulling additional capital away from the greenback.

The potential for the passage of a deficit reduction plan proposed by a bipartisan group called the “Gang of Six” has also helped boost this week’s market optimism. With increased market volatility on today’s forecast this momentum may find additional weight as a long series of reports get published out of Europe and the United States throughout the trading day. Most importantly, the US economy will be publishing a string of reports concerning unemployment, manufacturing, housing, and natural gas storage.

Federal Reserve Board Chairman Ben Bernanke is also due to testify on the implementation of the Dodd-Frank Act today, which was passed to further regulate financial markets. Should today’s news foreshadow a continuation to this week’s bullish outlook, there is a possibility that more investment will get pushed towards the higher yielding assets like the EUR, leading to a weaker USD over the coming days.

The euro (EUR) has been trading bullish these past several trading days on recent shifts in investor risk appetite. The EUR was able to get some relief yesterday after a surge in optimism led investors to begin taking on more risk and expanding their outlook for additional growth this year. The catalyst was strong earnings statements by several large firms, as well as stable growth in the American and Canadian housing markets.

The news has been positive for risk taking, as was much of the data released by the American economy ahead of Bernanke’s testimony later today. The EUR moved above 1.4260 against the USD before the market came to a close yesterday, but it continues to struggle against its regional currency counterparts, particularly the British pound sterling (GBP). With flash manufacturing and service data on tap today, forex traders should receive ample news to fill in part of the growth outlook which is missing for the month of July.

Today’s market should be highly volatile and traders will want to be on guard as they traverse today’s investment landscape. The most impactful news of the day will come from both the United States and Europe which will be publishing a series of reports ranging from manufacturing, services, unemployment claims, housing and natural gas inventories. Bernanke’s testimony will also likely have a heavy impact on forex values today as he is set to speak about legislation regulating the financial markets in the United States.

The Japanese yen (JPY) was seen trading with largely neutral results versus most other currencies yesterday following this morning’s less-than-surprising data reports by the Bank of Japan (BOJ). As was reported this week, regional growth in the Pacific has been only mildly better than forecasts, and in several instances worse. The Australian dollar (AUD) was seen in decline for the past two weeks after several data sets revealed an economic slump was underway; though it has regained some of those losses in the past two days.

This week’s news has so far strengthened the higher yielding Pacific currencies like the Kiwi and Aussie, fuelled by improvements to fundamental data from the world’s leading economies and a general sentiment of risk appetite among investors. With this morning’s release of Japan’s trade balance data, many were expecting the island nation to begin addressing its growth outlook. As the JPY begins to take losses from external factors affecting its value, primarily a return of risk appetite, traders appear to be awaiting further news later today to more accurately gauge the direction that lies ahead for global risk sentiment. The JPY could be set to make gains if today’s reports come out worse than forecast.

Crude Oil prices found support near $97 a barrel Wednesday as sentiment appeared to favour a mild growth in global industry alongside a potential uptick in demand for the black gold. Data releases out of the US and China this week have been driving many investors back into riskier assets as most reports suggested a surprise flattening out in growth among global industrial output and consumer spending.

As investors sought higher yields, the value of crude oil, which has been seen swinging widely all week, in fact rose to a weekly high of $98.35 a barrel. A sudden slump in dollar values due to this week’s earnings reports and housing data has helped lift oil values. The value of oil, therefore, found modest support and began to make strides. If this sentiment can persist, the value of Light, sweet crude may continue to gain through the rest of the week, targeting $100 a barrel.

Jovi Overo

 

 

Beta 2 Forex News, Lane Clark, Beta 2 Ltd, Monday June 13 2011

Commodities in general are beginning to feel the pinch as weak Chinese economic data combined with declines in equity markets and a strengthening dollar have begun to weigh on both spot gold silver prices.

Gold and silver prices continue their slump from last week as weaker than expected Chinese lending and a drop in the Chinese money supply weigh on commodity prices. On Friday spot gold prices dropped by $12 after a report showed increased selling of the yellow metal by the International Monetary Fund. In turn silver prices were also dragged lower by almost $1.50.

The latest CFTC Commitments of Traders Reports indicated that investors increased their long gold positions and may be encroaching on an overextended market positioning, thereby contributing to the sharp declines on Friday.

Equity markets continue to sell-off with the S&P 500 down for the sixth consecutive weak. The SPX has made a firm break of the 1290 and technicals indicate further downside potential. The decline in equity prices has not been supportive of gold prices despite the metal’s use as a safe-haven. One explanation for this may be the strengthening dollar versus the euro.

A strong greenback may have also contributed to the declines as this makes gold more expensive for investors who do not hold US dollars. The greenback could continue to come off its recent lows versus the euro should the EU/IMF/ECB fail to come to an agreement for a medium term financing program for Greece.

One potential catalyst for spot metal prices would be any additional steps taken by the Federal Reserve to support the struggling US economy. The enactment of QEIII would likely offer support to spot gold prices as this would require a readjustment of US inflation expectations. Thus spot gold prices may have scope to test the $1,552 resistance level with spot silver respectively at $37.80. In the near term support is found at $1,518 and $35.00.

Lane Clark

Beta 2 Forex News, Lane Clark, Beta 2 Ltd, Thursday June 9 2011

The ECB hiked interest rates in April to 1.25% from 1.00%. Since the start of the year ECB have ramped up their hawkish stance on policy by dropping the appropriate word to describe rates. In January, they introduced the statement that the see short-term upward pressure on overall inflation, and at the same time “very close monitoring is warranted.” In March, the ECB signalled an April rate hike by announcing that strong vigilance was warranted on upside inflation pressures. Last month, the ECB signalled that they will monitor very closely the upside risk to price developments. The policy stance was described as accommodative.

Going back to the start of the year, the ECB announced that they would monitor very closely in January and February before signalling strong vigilance in March. The monitor very closely statements of the last 2 months imply that if this pattern is to hold, then we would expect a strong vigilance comment. Looking at the recent movements in the short-end of the curve, neither the risk of a strong vigilance or monitor very closely comments have been fully priced in. Therefore, we should expect a good move in either direction today.

Key words to look out for:

Appropriate”- This would suggest that potentially the ECB have had a one off hike and are on a wait and see stance again. The ECB may then put the monitor closely line back in as per their stance in January. This would be a dovish development.

Announcing monitor very closely, with rates remaining accommodative”- same as last month- should see brief relief rally in bonds, and small unwinding of longs in the Euro, i.e. Not as hawkish as feared.

Strong Vigilance - would indicate a hiking of rates next month. Doing so may need the ECB to use the words (very) accommodative to describe interest rates. This should be very hawkish.

Interest rate corridor width:

Currently stands at 150bp. (marginal rate minus deposit rate). The pre-crises width for this corridor was 200bp. whilst the ECB’s liquidity provisions are being implemented (MROs, etc.) widening the corridor to 200bp. should have a limited impact (may initially be taken as a tightening of liquidity). If this is announced alongside the easing out of the liquidity facilities, this would be seen as a further hawkish development. However, would put ECB in difficult position as many peripheral banks need the liquidity facilities to remain solvent.

Today’s side focus for the markets may be on the ECB measures to support peripheral banks. There has been talk of a two tier system where banks in the bailed out nations receive further liquidity provisions than the others.

With regards to the non-standard measures, described as enhanced credit support and the Securities Markets Programme, the ECB stated that these are temporary in nature.

Lane Clark

Beta 2 Forex news, Jovi Overo, Beta 2 Ltd, Monday June 6 2011

The US dollar experienced strongly bearish results since last Friday as traders began to shift away from the greenback following the non-farm employment data released that showed a stagnating American economy. The results so far have been for the value of the USD to drop like a stone versus its currency counterparts, and the euro looks poised to capture much of the beneficial side-effects.

With Friday’s Non-Farm Payroll (NFP) figure revealing surprise stagnation in the US employment sector, traders appear more reluctant to go into the greenback in order to stave off further losses in their portfolios. The euro zone has so far benefited from this shift as a weaker dollar versus the region’s main currency should give Europeans more buying power in the days ahead. The issue of interest rate differentials has generated market tension over the past two weeks and, indeed, the shift in value among the safe-havens and the EUR has made currency forecasting a much more difficult profession.

As for today, traders will focus more attention on Canada given the US economy is not scheduled to publish any significant news or data releases. The Canadian economy will be releasing its latest findings on building permits and its monthly Ivey PMI data. With increased USD aversion since last Friday, traders appear to be anticipating a continuation of the USD’s recent bearishness.

The euro rose versus the US dollar this morning, with the pair’s price reaching a one-month high near 1.4650. Soft data out of the American economy last week forced a revaluation by many investors who went long on the USD following the European Central Bank’s (ECB) cloudy rate statement from a month back, and several grumblings about Greece’s debt woes.

Last Friday’s significantly weaker fundamentals out of the American economy were only one part of the story, however. The euro zone’s advantageous absence from the market last Thursday, and its low data output Friday, helped the regional currency appear more attractive amid the USD’s employment slag.

What little data was published out of the region also showed better growth than was expected. This combination of data from these two economic rivals generated a heightened intrigue in the comparative interest rates as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday’s session, driving the EUR higher versus the USD.

As for today, the euro zone will be publish two less significant data sets, one concerning regional PPI, the other about investor confidence. Most investors are turning their attention on the American economy after last week’s dismal NFP reading and there appears to be a good chance that dollar bears will continue to push the EUR higher as the day wears on.

The Japanese yen (JPY) has been trading with largely positive results since Friday as investors turn their focus towards news out of the United States. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee riskier assets. The low interest rates of the Japanese economy have helped pull many investors into the safety of the yen, as opposed to the USD, following Friday’s American NFP data release.

The USD/JPY was seen trading somewhat lower this morning, holding steady near 80.20 and moving up towards 80.30 at today’s opening Asian sessions. Market news released out of Canada today will likely be the driving force behind forex market values and traders would be wise to watch the Ivey PMI figure scheduled for 15:00 GMT since it has a strong correlation with global economic growth.

The price of Crude Oil ended Friday flat as traders largely began to push back into their investments in physical assets while the US dollar made a rapid plummet. The result has been a steady price movement in oil prices these past several days with lows near $98 and highs of $103 a barrel.

Recent events have made speculating about oil prices more difficult. The plummeting value of the US dollar since Friday should have helped lift oil prices, but the commodity steady fall for the fourth consecutive day as of this morning. Rising stockpiles in the United States, reported Thursday, may have helped fuel the shift away from oil as rising inventory tends to suppress price hikes. As for the rest of today, oil prices also appear flat, with technical support targets near $99.50 a barrel possibly coming into view.

Jovi Overo

Market News, Jovi Overo, Beta 2 Ltd, Thursday may 19 2011

The US dollar was trading with mixed results yesterday after traders began to hedge on their euro positions given the recent economic news vacuum in the euro zone. The Strauss-Kahn affair has overshadowed much of the positive comments coming out of the ECOFIN meetings and for that reason traders have tried to balance between European debt woes and interest rate differentials. This dynamic has generated a range-trading pattern for several major currencies, including the dollar.

Economic figures out of the United States have also been partially behind this flatter movement. Monday’s TIC long-term purchases figure was well below expectations, as were Tuesday’s housing figures. But yesterday’s flattening out in US oil stockpiles may have given a short bump to the greenback as traders assumed higher consumption by industry ahead of today’s manufacturing figure out of Philadelphia. The Fed’s recent policy minutes also signalled healthier growth and relatively hawkish statements about interest rates.

As for today, the euro zone remains absent during the week-long ECOFIN meeting, but the US is scheduled for a heavy news day. To kick things off, the US Department of Labour will publish its weekly unemployment claims figure at 13:30 GMT which may show fewer applications for unemployment benefits than were seen last week.

Shortly thereafter will be the publication of important housing figures followed by the Philly Fed Manufacturing Index and Mortgage Banker Association’s report on mortgage delinquencies. All in all, the USD should see some heavy volatility today, but if traders continue to hedge while awaiting more news out of Europe, the dollar may continue to see mixed results.

The euro rose has been trading flat this week as economic news, mixed with some political drama, has had investors balancing between debt concerns and interest rate differentials. Soft data out of the American economy this week has held many traders leery of seeking safety in the greenback, whereas the current absence of news out of Europe has many others sceptical of healthy movements towards handling the current debt crisis. The result has been this week’s odd range-trading pattern for EUR pairs.

As for today, the euro zone will be absent from the calendar again as the ECOFIN meetings continue. Hawkish statements could hint towards a tightening monetary policy in the near future, but traders should be wary of a return to risk aversion should the meeting produce less-than-stellar commentary. Major housing and manufacturing news out of the United States today may help provide some needed commentary on this week’s soft US data, but any continuation of such weakness may further keep the greenback in a holding pattern.

The Japanese yen (JPY) began trading in a bearish direction against most of its currency rivals yesterday after the Bank of Japan (BOJ) released data which showed the Japanese economy contracting by 0.9% so far this quarter. After a week of ups and downs, the Japanese yen now appears to be in a weaker position and is taking a beating by traders in today’s early hours. The dominant stance of risk aversion overarching this week and last had many traders moving towards the yen until yesterday. The dominant stance now appears to be a flight to other safe-havens like the Swiss franc and, in many instances, the Scandinavian kroner.

As of this morning, the USD/JPY has moved up over 50 pips from 80.00 to 80.53. Japan’s tertiary activity was published yesterday morning and also revealed a severe downturn of approximately 6.0%. This morning’s GDP figure was another bearish marker on the currency and so far traders are moving away from their JPY investments as a result. As with the rest of this week, market news released out of the US today will likely be the driving force behind JPY values, though, and traders will definitely want to consider what effect today’s GDP data will have on the island economy.

Oil prices jumped above $100 a barrel this morning following a report out of the United States which revealed zero growth in their weekly stockpile data. These US oil stockpile reports had shown growth of over 3 million barrels a week for the past two consecutive weeks. The sudden halt of this inventory growth had a sharp effect on the value of Crude Oil as its price jumped above $100 a barrel shortly after the report was published.

Whether oil traders decide to respond with a bearish push on oil prices is yet to be determined, especially considering the strangeness of the inverse relationship to USD values this week. The greenback’s decline yesterday may have a delayed effect today and oil traders may see the price bouncing even higher if that is the case. The Strauss-Kahn affair in the US is also creating some instability in trading as it masks the commentary emerging from the current ECOFIN meetings. Commodity prices may therefore receive a bump in the rest of this week’s trading if this rumour mill doesn’t die out.

Jovi Overo