Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Thursday November 17 2011

Inflationary pressures are declining in the US economy, a phenomenon that could lead the Fed to begin another round of quantitative easing (QE). For the fourth consecutive month headline inflation fell with the October numbers showing a -0.1% m/m contraction. Year-over-year CPI was up 3.5%. Core inflation was in-line with consensus forecasts, climbing by 0.1% in October and up 2.1% y/y. Leading the decline in prices were raw material costs while the cost of food rose only 0.1% for the smallest gain since the beginning of the year.

The decline of inflation is in-line with the most recent Fed forecasts, a topic Bernanke has stressed multiple times. Traders should focus on how the Fed will address a drop in US prices. As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps traders should look to the crude oil markets for a sign of what is to come.

Yesterday spot crude oil prices broke above $100 for the first time since July, adding more than 1/3rd of its value since the October low. During QE2 commodities and the commodity currencies such as the AUD and CAD were some of the strongest performers versus the USD. Dollar bulls should take note.

With yesterday’s BoE Inflation Report the UK central bank took one step closer towards additional quantitative easing. The report suggests near-term growth will be affected by both UK austerity measures and headwinds in the global economy. The central bank forecasts GDP to increase by only 1% throughout 2012. They also expect a reversal of inflationary pressures. CPI currently stands at 5.1% y/y while the BoE forecasts CPI to fall below the 3% target the central bank keeps to 1.3% in 2013.

With the depressing outlook for the UK economy the BoE is likely increasing market expectations for additional easing of UK monetary policy via bond purchase. This would likely weigh on sterling in the near-term. The GBP/USD has support at the October 18th low of 1.5630 with resistance coming in at the bottom of the late October-early November consolidation at 1.5860.

In its Monetary Policy Statement the Bank of Japan reduced its economic assessment of the Japanese economy but also spent a large amount of time devoted to the global economic environment. The interest rate was kept unchanged between 0-0.1%, in-line with consensus expectations.

The USD/JPY was stable yesterday, trading in a tight 30 pip range. However, the pair continues to drift lower towards its all-time low of 75.55. But first the pair will need to close below its 55-day moving average at 76.95. Initial resistance remains at Monday’s low of 76.80 with resistance at 77.50 from the mid-October consolidation, followed by the trend line from the 2007 high which comes in at 79.25.

Spot crude oil prices have peaked above the psychological barrier of $100 and have extended gains following the release of stronger than expected industrial production numbers and inflationary data that showed prices in the US declined more than forecasted. Crude oil prices have been on a tear since the end of October, rising over 33%

The quick appreciation in spot crude oil prices may be based on two assumptions; a recovering US economy and expectations of QE3 from the Fed. Yesterday data showed US industrial production in the month of October rose 0.7% on consensus forecasts of 0.4% growth. This comes on the heels of stronger retail sales data released on Tuesday.

Declining inflationary pressures in the US may also force the Fed to act to curb any threat of deflation. Data released on Wednesday showed consumer prices fell in October with CPI contracting by -0.1% m/m on forecasts for 0.0%. This follows Tuesday’s PPI numbers that showed producer prices declined by -0.3% in October.

As Bernanke said in a speech in Cleveland in late September, the Fed has the tools to act should the risk of falling prices become apparent. This would suggest another round of bond buying (QE3) to support the US economy. While this would likely be a negative for the USD, perhaps the gains in crude oil prices suggest markets are already pricing in QE3.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday September 23 2011

The dollar rallied broadly on Thursday as mounting concerns about the global economy pushed investors to embrace safety while shunning riskier assets, with the euro tumbling to an eight-month low. By yesterday’s close, the dollar rose against the EUR, pushing the oft-traded currency pair to 1.3440. The dollar experienced similar behaviour against the GBP and closed at 1.5350.

The U.S. Federal Reserve said Wednesday it will shift its portfolio toward longer-term debt to bolster the economy, and investors’ unwound leveraged positions funded in dollars in response. The Fed’s program was intended to put more downward pressure on long-term interest rates. One important dollar-positive by-product of the Fed’s program is higher short-term rates. The Fed’s not increasing the money supply supported the dollar.

As for today, the calendar is lacking any major economic data releases for today’s trading. As such, traders will want to follow the movements of the major equity indices as the dollar has recently been trading in an inverse relationship to equities. Weakness in stocks could propel the EUR/USD to its next support line which rests at 1.3200.

The euro fell to a fresh eight month low against the dollar on Thursday a day after the Federal Reserve pointed to significant downside risks for the U.S. economy and stopped short of bold monetary easing. By yesterday’s close, the EUR fell against the USD, pushing the oft-traded currency pair to 1.3440. The EUR experienced similar behaviour against the JPY and closed at 103.00. The 16 nation currency did see some bullishness as well as it gained over 30 points against the GBP and closed at 0.8770.

Analysts questioned whether the move the Fed did make — shifting its portfolio toward longer-term debt would bolster the economy and unwound leveraged positions funded in dollars in response.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.

The Yen experienced a bullish trading session yesterday, as it appreciated against most of its major currency pairs. The JPY extended gains versus the EUR during yesterday trading session and closed at 103.00. The Japanese yen also saw bullishness against the USD as it jumped around 50 pips and closed at 76.30.

The JPY’s trends will be affected by the rallies of its primary currency pairs today. It seems that the USD and EUR are expected to continue a volatile trading session today, especially against the Japanese currency. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today. It is also advisable for traders to follow any unexpected comments coming from key Japanese governmental figures, as this is also likely to lead to further JPY volatility.

Crude oil prices fell more than 4% to 79.80 on Thursday as equity markets in Europe and Asia tumbled after the US Federal Reserve said the economic outlook remained grim, which overshadowed an unexpectedly steep drop in crude supplies in the world’s top oil consumer.

Oil prices had risen in earlier trade after government data showed US crude inventories last week dropped 7.3 million barrels, the biggest one-week drop since December, suggesting supplies were tighter than expected.

But the market turned bearish after the Fed said it would extend the maturity of its treasury holdings but didn’t unveil more aggressive measures to boost a US economy it said faces “significant downside risks”.

Jovi Overo

 

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 Forex News, Jovi Overo, Beta 2 Ltd, Thursday September 15 2011

The US dollar (USD) was still seen trading bullish Wednesday after retail sales reports out of the United States disappointed many investors and drove trades towards safe haven assets. A sudden wave of risk aversion seems to have helped the greenback surge this week and data so far has only reinforced this momentum.

Additionally pessimistic data was released from several other economies as well. Switzerland inflation at the producer level appears to be in decline, industrial production across the euro zone and in Japan is stagnating, and the Australian housing market is contracting. The only optimistic piece of data out yesterday was the employment reports from Great Britain which saw, not necessarily job growth, but a not-as-bad-as-expected rate of unemployment growth.

With another unusually intense news day ahead, traders are anxiously awaiting the large string of reports out of the US which should clear up the picture somewhat in regards to inflation, manufacturing, and industrial production. The Current Account will also be published, though its impact is not expected to be as high as the manufacturing reports out of New York and Philadelphia. Traders should look towards another bullish day on the dollar should news continue to disappoint.

The direction of the Swiss franc (CHF) has been sharply pressured into one of distinct bearishness among investors as the Swiss National Bank (SNB) rate decision approaches. Against the US dollar (USD) the franc has actually been trending mildly flat despite the greenback’s bullish moves against its other currency rivals. But the Swissie has seen some setbacks brought about by poor regional fundamentals and a general atmosphere of risk flight, particularly following the SNB’s move to peg the CHF to the value of the EUR at 1.20.

A mood of deep pessimism is growing in regards to the investment in Europe at the moment. Market bears still seem to be gnawing on the EUR’s strength, sapping its value as its peripheral members struggle with bond auctions and other financial woes. Switzerland was formerly in a position to capitalize on the flight to safety, but saw its exporting capability deeply gouged by an unremitting currency appreciation. The SNB move to peg the currency has so far done its job by keeping the CHF’s rise in check.

Sentiment in Switzerland appears to have turned negative this week as well, with many analysts and economists expecting moves towards safety by traders following the SNB’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 Australian dollar (AUD) is expected to be weighed down this week as market reports continue to show contraction across the boards. Piling atop recent reports on Australia’s shrinking housing sector, recent publications of Australian consumer and business confidence is starting to show a broadening contraction striking several sectors of Australia’s economy, as well as its psyche.

Expectations for these recent reports have been for modest growth, and in some instance, at best, zero movement. The week’s reporting has so far 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 housing starts figures and building approvals reports, has so far dragged the Aussie lower and looks to continue doing so this week.

Crude Oil prices gained mild support Wednesday as sentiment appeared to favour an uptick brought about by a sharp reduction in US stockpiles. The weekly report revealed yesterday that the US has shed roughly 6.7 million barrels from its reserves. This news has so far countered the notion of a sinking price of oil brought about by higher USD values and pushed oil into a bullish posture from supply shortfall speculations.

An expected dip in oil values due to this week’s risk sensitive environment, which saw the greenback climbing sharply, has so far not affected the price of physical assets in any clearly visible way. The stockpile report out Wednesday surprised many investors who had priced in a far milder decline in reserves. With this sentiment grabbing hold among many traders, oil prices could see resurgence above $90 a barrel in the near future.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Wednesday September 7 2011

The US dollar (USD) was seen trading mildly bearish early Tuesday as investors returned to trading following Monday’s holiday break. 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. Heightened stability led to some losses on the USD’s value as traders sought higher yields.

Data from the American manufacturing sector yesterday also signalled an uptick in output from the previous month. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US capital markets. Manufacturing was forecast to slump moderately going into the third quarter as most indicators revealed decreased demand.

As for today, there will be few US economic releases, with most news focused on the Bank of Canada’s (BOC) impending interest rate decision. Liquidity will likely be higher in today’s early trading as the Bank of Japan (BOJ) is also publishing its latest interest rate move, both of which are expected to make no change in monetary policies. Interest rates are in focus this week and traders would do well to follow their releases and subsequent bank statements.

The Great Britain pound (GBP) is expected to be seen trading with bullish results this week ahead of a slew of reports on the country’s manufacturing, housing, and service sectors. Against the US dollar (USD) the pound has actually been trending upwards despite the greenback’s bullish moves against its other currency rivals.

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, 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 the recent pegging of the Swissie to the euro at 1.20 may affect this attitude in days ahead.

Sentiment across the euro zone has turned negative, with many analysts and economists expecting moves towards safety by traders this week. Great Britain, however, appears positioned for a relatively better quarter than its southerly neighbours. With major interest rate decisions expected all week, the nation’s most poised for gains are those whose monetary policies are more stable, like Britain’s. The pound could see some bullish movement this week as a result.

The Japanese yen (JPY) was 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 Bank of Japan (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.

 

The latest moves of the yen are causing some concerns, however, as many speculators are anticipating another round of intervention by the BOJ. With interest rate decisions out this morning, traders are waiting to see what the BOJ will do. 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.

Crude Oil prices held steady Tuesday 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 30 2011

Liquidity will likely be higher in today’s early trading as several events are being published in rapid succession from Britain, Canada and the US. American liquidity will be heightened, and Canada will contribute to today’s movements with its inflationary data and current account (trade balance).

The US dollar (USD) was seen trading mildly bearish early Monday as traders viewed comments by the Fed as a sign of potentially impending hawkish moves on the policy front. The sudden jolt to risk appetite generated by such movement pushed down on the greenback, but seems to have lifted following fears of bank interventions in Japan and a string of reports out of the euro zone today which could reverse much of the markets recently acquired short-term stability.

Data from the American housing market yesterday also signalled a downturn in home sales from the previous month, revealing a slump in housing demand, potentially linked to a string of foreclosures expected in September. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US capital markets.

As for today, the US economic releases will focus mostly on housing and consumer confidence. Today’s publications, however, will mainly be Britain-centric. Liquidity will likely be higher in today’s early trading as several events are being published in rapid succession from Britain, Canada and the US. American liquidity will be heightened, and Canada will contribute to today’s movements with its inflationary data and current account (trade balance).

The euro (EUR) is expected to be seen trading with bullish results this morning ahead of a slew of reports from Great Britain, Canada and the United States. Against the US dollar (USD) the euro has been seen trading somewhat bearish as the greenback moves upward against its currency rivals.

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, 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 a heavy news day ahead, many traders are anticipating significant data releases to move the market. If today’s data continues to reveal negative market directionality, the EUR is likely to remain bearish.

The Japanese yen (JPY) was 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 interventions by the Bank of Japan (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.

The latest moves of the yen are causing some concerns, however, as many speculators are anticipating another round of intervention by the 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. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

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 beginning to generate some risk taking after statements by the Federal Reserve began to cause investors to seek out higher yields.

An expected dip in dollar values due to this week’s risk seeking 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 August 25 2011

The US dollar (USD) was seen trading moderately lower at yesterday’s close after a day of mixed news from the global economy. Weak gains seen on the USD this week was offset yesterday after the stock rebounds led to minor returns of portfolio diversification. So far, this action has pushed investors back into the value of the euro (EUR), sapping safe-haven appeal from the greenback for the time being, though isn’t expected to last much longer.

Economic news over the last few weeks has pushed traders into a position of market pessimism, but trading yesterday behaved less so than many analysts had anticipated. Little news has emerged which put a dent in the amount of pessimism surrounding the forex market, traders are now eyeing the remainder of August news to determine what the third quarter may bring.

With a relatively light news day expected from the US today, traders will want to be on watch for volatility in the USD/CHF pair today with several reports from Switzerland expected in the early morning hours. Following yesterday’s better-than-expected durable goods orders figures; today’s data should help generate some volatility as investors assess unemployment. As the trend persists, any added negativity in today’s news will likely spark heavier aversion from risk. Where the CHF stands in this fight could be the deciding factor in how much the USD gains.

The Swiss franc (CHF) was seen trading with largely bullish results yesterday as traders shifted portfolios on recent outlook from the euro zone. Traders took cue from the SNB announcement over a week back and made a heavy push into the Swissie in the past week’s trading sessions. With no other news of bank interventions in Europe in sight, the CHF looks to be on the rise.

The largely bearish reports out of Europe yesterday have appeared to confirm many fears felt by traders who were anticipating a string of pessimism. Debt concerns remain a priority in the euro zone’s periphery, and the uncertainty in Europe is generating significant bearish shifts as European leaders struggle to contain the spreading crisis. Such moves are acting solely as a fuel to the fire lit beneath the CHF, assisting its meteoric rise.

On tap today, traders will witness the release of a less significant string of news out of the United States, with several moderate reports out of Switzerland and Great Britain. Many analysts are now looking to Germany to shore up much of the euro zone’s economic strength, with added responsibility falling to one of the few nations which has experienced very little economic distress until just recently. Should today’s reports show additional weakness in the US, or Switzerland, there is a good chance traders will purchase more francs.

The Japanese yen (JPY) was pushed back yesterday, as the Bank of Japan (BOJ) unveiled a new fund of approximately $100 billion in order to curb the rising strength of the island currency. Piling atop recent reports on Japan’s shrinking household spending figures, the publication of Japanese trade data has shown a decline in exports consistent with an overly strengthened yen. Despite a meeting between French and German ministers over economic cooperation last week, the Pacific nations appear to be rushing ahead with their bullish endeavours, contrary to market outlook among the European nations.

Japan’s economy has been much worse in its performance than it was expected to be just one month ago. Investors have been piling into the JPY en masse as its strength as a store of value gained appeal. As housing slumps, and as monetary adjustments take place in China and New Zealand, the Japanese and Swiss economies now finds themselves gaining the most from the blows coming down on Europe. With Wednesday’s move by the BOJ, the future of the yen’s strength is as yet undetermined, but will likely adopt a bearish overture in the next few days.

Crude Oil prices held mildly higher Wednesday as traders began to anticipate a US dollar (USD) downturn on speculation of another round of quantitative easing in the US. Data releases out of Europe and the US last week are also driving many investors into and out of safe-haven assets sporadically as market direction became less certain. The recent intervention by the Bank of Japan (BOJ) also upset market forecasters as the status of traditional safe-havens came under scrutiny.

The impact has been a rise in oil values from under $85 a barrel last week to a current price near $86.50 a barrel. 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 Wednesday, sentiment appears to have the price of crude oil holding steady, with gradual gains priced in. Should Crude Oil sentiment continue to flatten this week, oil prices may reach a decision point which forces a wide swing by week’s end; direction is unclear.

Jovi Overo

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Tuesday August 23 2011

The US dollar (USD) was seen trading mildly bearish early Monday as traders viewed comments by the Fed as a sign of potentially impending hawkish moves on the policy front. The sudden jolt to risk appetite generated by such movement pushed down on the greenback, but seems to have lifted following fears of bank interventions in Japan and a string of reports out of the euro zone today which could reverse much of the markets recently acquired short-term stability.

Data from the American housing market yesterday also signalled an uptick in mortgage delinquencies from the previous month, revealing a slump in the number of households able to pay off their mortgages. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US capital markets.

As for today, the US economic releases will focus mostly on housing and manufacturing. Today’s publications, however, will mainly be euro-centric. Liquidity will likely be higher in today’s early trading as several European events are being published in rapid succession. French and German liquidity will be heightened, and Canada will contribute to today’s movements with its retail sales reports. Traders will want to pay close attention to today’s euro zone data.

The euro (EUR) is expected to be seen trading with mixed results this morning ahead of a slew of reports on the euro zone’s major economies’ manufacturing and service sectors. Against the US dollar (USD) the euro has been seen trading somewhat bearish as the greenback moves upward against its currency rivals.

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, 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 a heavy news day ahead, many traders are anticipating significant data releases to move the market. If today’s data continues to reveal negative market directionality, the EUR is likely to remain bearish.

The Japanese yen (JPY) was 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 Bank of Japan (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.

 

The latest moves of the yen are causing some concerns, however, as many speculators are anticipating another round of intervention by the 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. As the island currency remains bullish, the pressure begins to mount for the expected bank move to lower its currency strength.

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, Friday August 19 2011

The US dollar was seen trading moderately higher yesterday as traders began to revaluate the recent dip in stock values. The EUR/USD was seen meeting resistance near 1.4500 yesterday and flopping towards 1.4400 in late trading. The greenback saw similar movements against most other currency pairs as well.

A short series of data released yesterday painted a weaker picture for the US economy’s growth. Weekly unemployment claims saw a worse than forecast rise, hitting 408,000 for the past week. A housing report showed growing sluggishness in mortgage lending growth and the Philly Fed Manufacturing Index dropped from last month’s reading. So far this news has helped drive the USD higher as traders flee risk.

With a relatively lighter news day expected Friday, dollar traders should be anticipating some mild currency movements brought about by average end-of-week liquidity. The economic calendar will be lacking in specific focus with several reports coming from Canada, Great Britain, Japan and the euro zone. The US economy is less in focus, though the safe haven appeal of the greenback is likely to be a point of commentary as this week comes to an end.

The euro was seen trading lower yesterday in light of data releases suggesting stagnation in Germany. The lacklustre performance of global stocks also drove many regional investors away from the EUR despite the relative potential is has for making gains should more investment flee the United States.

While growth variances between the US and Europe came into view this past week, the higher yielding assets like the GBP and EUR appeared positioned to lose as traders turned away from risk. The growth in risk aversion may have many investors choosing to store their value in lower yielding currencies, like the USD and JPY as the week comes to a close, though investments in US Treasuries contradict the idea behind the recent ratings downgrade by S&P, which is now rumoured to be under investigation by the US Department of Justice for the role it played in the mortgage crisis of 2007/08.

As for Friday, the euro looks to be anticipating an evaluation of its recent downturn against the other major currencies with mild bias further leaning to the downside. The euro zone will be publishing few economic events on today’s calendar, though. Traders should try and follow the significant publications emanating from Canada and Great Britain economies today as a mild string of significant reports are expected from both.

The Japanese yen (JPY) was seen trading higher versus most other currencies this week after news began to shift many traders back into safe-haven assets. The yen has been a top performer these past several months considering many traders bank on the Japanese carry trade during times of intense risk appetite and move towards the JPY in times of risk aversion, making it an appealing currency in these recent times of ominous debt talks.

The JPY was in a position to make solid gains yesterday after debt auctions in Italy moved many investors away from the euro zone and into safer assets. Moves toward riskier currencies halted as pessimism took hold and drove much of yesterday’s trading liquidity towards traditional stores of value. As such, traders appear to be anticipating an uptick in the JPY prior to this week’s close.

Crude Oil prices sunk rapidly yesterday, reaching near $81.50 in late trading. Growth differentials between the Atlantic states have risen into view this week while manufacturing output and service data revealed growing weakness in Europe. This has so far led several large investors and analysts to consider a shift away from the EUR and other risky assets in exchange for the safety of the USD and JPY, despite the inherent weakness growing in the American economy due to the recent ratings downgrade.

As investors sought safety, the value of crude oil, which has been seen holding steady through most of the week, suddenly began falling towards $81.50 a barrel. A boom in dollar values due to this week’s risk sensitive environment has helped many investors move hesitantly into assets like gold and silver, with crude oil also appearing to get touched by this sentiment. Oil prices appear to have reached the decision point alluded to all week, with a strong bearish sentiment taking hold.

Jovi Overo