Beta 2 Forex News, Beta 2 Ltd, Jovi Overo November 9 2011

One can only guess of the sheer contempt and disregard for politicians when we see markets initially rally on the back of a resignation of a prime minister. We had Greece and now Italy.

Will a new captain shake his crew and get them earning again or will that capo regime falter, crash and get clipped?

Italian yields touched 7.8% on the 10 year bond, growth has been anaemic for years with averages of 0.7% since the start of the EMU and debt remains 120% of GDP. The lifeboat of the ESFS is inadequate to perform a rescue and in turn these are going to be very, VERY, testing times. The impact on Italian bonds is being overshadowed by the increase in margins from LCH which makes it even more costly to hold Italian debt.

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 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, Wednesday August 31 2011

The US dollar (USD) was seen trading mildly bearish on Tuesday 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 another 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 Monday also signalled a downtick in housing demand from the previous month, contradicting yesterday’s news that housing prices were decreasing at a slower pace. 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 employment and manufacturing. Today’s leading publication of ADP’s Non-Farm Employment Change will likely lead the day’s volatility. Liquidity will likely be higher in today’s mid-day trading as several European events are being published in rapid succession alongside the release of a handful of American events. Look for wide swings in currency values today.

The euro (EUR) has been seen trading with largely bullish results so far this week as traders assess risk appetite across the region. Against the US dollar (USD) the euro was seen trading mildly bullish in late trading as shifts away from the greenback, due to uncertainty about the US employment and housing sectors, caused a stir in the foreign exchange market.

The economic calendar this week has been mostly bearish for the region, however, with housing and manufacturing reports disappointing traders. The manufacturing data across the euro zone and Britain has also shown little change. Italian retail sales contracted this past month, as revealed in yesterday’s data releases, and British news turned almost exclusively bearish.

On tap today, traders will witness the release of regional retail sales reports and employment data, though few consider them to be highly impactful given the series of significant releases out of the US economy a bit later in the day. Focus will undoubtedly be on the US employment and manufacturing sector today as both will be publishing highly relevant reports later in the afternoon. Should news produce bearish results there is a chance that traders will move away from the EUR and back into safe-haven assets.

The Australian dollar (AUD) was trading mostly weaker versus its currency counterparts yesterday after data releases have begun to shift traders into higher yields with solid capital markets. The Aussie has been losing momentum these past few weeks as risk sentiment flutters in the global market. Overriding these concerns, moreover, is a sudden dip in the Australian housing market which saw building permits and new home sales decline.

This movement has gouged the AUD against all of its currency rivals, especially against safe-havens like the US dollar (USD) and Japanese yen (JPY). Being tied to commodity prices could help lift the AUD in the near future, however, as oil prices hold above $86 a barrel, but general risk aversion is likely to push the currency lower as traders flee risk. On tap today, forex traders will see the release of Australia’s private sector credit figure measuring consumer demand of private loans. If negative news arrives, traders may see a heavier move towards risk aversion in early trading today.

Crude Oil prices held steady Tuesday 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 mid-week.

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, Wednesday August 3 2011

The US dollar (USD) was seen trading with mixed results yesterday as investors weighed the finer points of the debt deal struck Sunday night. The value of safe-haven assets have been given a boost by a shift away from higher yielding assets, though the dollar has been receiving fewer of these gains as it tends to in times of uncertainty. Poor economic data in Europe and the US have helped drive this trend and this week appears to have risk aversion gaining in prominence.

Data so far has inched traders into a position of market pessimism which has dropped the value of riskier assets while garnering support for the safe-haven currencies. Little news has emerged which put a dent in the amount of pessimism surrounding the forex market, particularly in the fragile United States and euro zone in spite of calls for such a move to be edging closer.

With a heavy news day expected today, traders are sure to see a surge in portfolio adjustments as volatility becomes elevated. The US economy will be publishing several reports today, most importantly is ADP’s publication of Non-Farm Employment Change for the private sector at 13:15 GMT. The employment data is a foreshadowing of Friday’s Non-Farm Payrolls (NFP) data. The ADP report has a tendency to rapidly change the direction of the USD in trading and given the direction of employment changes this past week there is a chance it will surprise to the upside, helping to push the USD lower as the day progresses.

The euro (EUR) has been seen trading with largely bearish results so far this week as traders assess risk appetite across the region. Against the US dollar (USD) the euro was seen trading mildly bullish in late trading as shifts away from the greenback, due to uncertainty about the US debt deal, caused a stir in the foreign exchange market.

The economic calendar this week has been mostly bearish for the region with housing and manufacturing reports disappointing traders. The employment data across the euro zone and Britain has also shown little change. Switzerland, however, had a bullish trading day yesterday as its retail sales report astonished traders with a 7.4% surge, followed by optimistic growth in the nation’s PMI publication by SVME.

On tap today, traders will witness the release of the region’s retail sales report, though few consider it to be highly impactful given the series of significant releases out of the US economy today. Focus will undoubtedly be on the US employment and manufacturing sector today as both will be publishing highly relevant reports later in the afternoon. Should news produce bearish results there is a chance that more traders will move away from the EUR and into safe-haven assets.

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. Overriding these concerns, moreover, is a sudden dip in the Australian housing market which saw building permits and new home sales decline alongside shrinkage in the nation’s house price index (HPI).

This movement has gouged the AUD against all of its currency rivals, especially against safe-havens like the US dollar (USD) and Japanese yen (JPY). Being tied to commodity prices could help lift the AUD in the near future, however, as oil prices hold above $94 a barrel, but general risk aversion is likely to push the currency lower as traders flee risk. On tap today, forex traders will see the release of Australia’s retail sales figure as well as its trade balance. Both are forecast to show growth. If such is the case, traders may see the return of strength in early trading today.

Crude Oil prices held steady Tuesday as sentiment appeared to favour a downturn in global stocks as the US Senate debates the proposed budget deal. 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 mid-week.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Wednesday July 27 2011

The Congressional Budget Office informed the GOP that the plan presented by Speaker of the House John Boehner would only cut $850 billion from the budget deficit. Boehner himself had pledged to initially cut $1.2 trillion in spending over the next 10 years. In a blow to Republicans the bill will be sent back for rewriting and throw a wrench in a potential solution to raise the US debt ceiling.

While the debt ceiling negotiations takes the limelight US data yesterday showed disappointing data that fed into USD selling. Housing data continues to drag with the S&P Case-Shiller HPI showing a dip in housing prices by -4.5%. New home sales fell short at 312K on expectations of 321K while the Richmond Manufacturing Index declined to -1 from 3. A bright spot in yesterday’s data were increasing consumer confidence numbers but the three previous negative data releases combined with a very public debt ceiling fight had the greenback on its back foot.

Strong gains were booked against the dollar by all of the G7 currencies with significant moves in the dollar block currencies. Pressures in the financial markets are predominantly felt in the USD with the dollar index falling to a low of 73.446. The last time the dollar index traded this low was in May. Despite the USD weakness it appears that real money portfolio managers are expecting a positive outcome from the debt ceiling struggles as the yield on the 10-year note actually fell yesterday back below the 3% level. 30-year Treasuries also strengthened. If markets were forecasting a US default, pressures would be felt in the US government bond yields.

Sterling performed well yesterday after Q2 GDP numbers came in line with consensus forecasts at 0.2%. Traders were largely expecting a more disappointing figure. While growth of 0.2% is nothing to brag home about and does signal a stagnant UK economy, a figure that came in below this level may have supported additional asset purchases by the BOE. The GDP report does not rule out more quantitative easing but sets the bar a bit higher for additional easing of monetary policy. While the British pound is certainly no prize, in a contest of the least ugly with the dollar and the euro, it may just be pulling ahead.

The GDP data helped cable climb to its highest level since mid-June, rising above the previously broken trend line from the May 2010 low. The next resistance for the GBP/USD is found at the end of May high at 1.6550. Support is located at this week’s low at 1.6220.

The dollar block currencies were the strongest performers yesterday versus a weak US dollar. The AUD was supported by both comments from RBA Governor Stevens who suggested the Australian economy is improving and talked down a potential interest rate cut this year. Inflationary pressures also supported the AUD. Q2 inflation climbed 0.9% on consensus forecasts of 0.7%. Following the data release this morning traders pushed the AUD/USD to a 30-year high. The next target for the AUD/USD is the big round number at 1.1100.

 

The Kiwi is also trading at a 30-year high after strong business confidence numbers helped to boost the New Zealand dollar. Tonight the RBNZ is expected to keep the cash rate steady at 2.50% but the accompanying rate statement could contain more hawkish language given the strong GDP the New Zealand economy produced in H1. Any hint of an interest rate increase could boost the NZD/USD to the next big round number at 0.8800.

Spot gold climbed to a new all-time high at $1,625. This is the second consecutive day the price of spot gold has reached a new high as traders worry over the US debt ceiling crisis. Spot gold may also be receiving a bid due to the potential for the US to lose its AAA rating. S&P has warned its highest rating could be in jeopardy if the US doesn’t cut $4 trillion from the debt. On Monday President Obama warned the US could lose its rating for the first time in history. More gains in the commodity could be booked should Congress and the President fail to come to an agreement over the debt ceiling.

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, Jovi Overo, Beta 2 Ltd, Monday July 18 2011

The US dollar was seen trading flat at the start of this week as traders began to view the lacklustre performance of the US economy these past several weeks as a sign that regional economic growth will be limited. The dollar has been primarily gaining from such momentum due to the shift into safer assets.

Though news has been both positive and negative, traders have been predisposed to short the higher yielding assets in general as the US and European economies falter. Assisting this shift was a dismal NFP jobs report out of the American economy which revealed sluggishness in US employment growth that may affect economic and financial outlook for the US and its neighbours over a longer period.

As the August 2 deadline rapidly approaches, we are beginning to see some hedging behaviour with the Swiss franc (CHF) and Japanese yen (JPY) acting as alternate stores of value should the US default on its loans.

As for today, the US economy will largely be absent from the economic calendar, with the exception of the ever-significant TIC Long-Term Purchases report which measures the level of foreign and domestic investment in the US. A minor housing market index from the National Association of Home Builders (NAHB) will also get published, but is not expected to impact market direction.

The euro (EUR) was seen trading lower last Friday following news of pessimistic growth in the US economy. Against the US dollar (USD) the euro was trading somewhat bearish in late trading as shifts into safe-haven investments pulled money out of the euro and into stores of value. The EUR/CHF, however, was more straightforward, with a severe downturn coming Thursday, followed by even more bearishness on Friday. The pair opened this week at a record low of 1.1414 after closing last Friday at 1.1539.

It appears the EUR also moved mildly lower versus the Japanese yen as safe-haven assets across the board experienced a rise due to increased market pessimism. With no news expected out of the euro zone today, much of this sentiment is not likely to be reversed.

Traders are looking for a way to store value, but show concern towards investing in the US dollar at the moment due to the debt limit talks taking place in Congress. A failure to lift the debt ceiling could result in a default by the US government, causing ratings agencies to downgrade US debt and pull the global economy bearish.

Sentiment across the euro zone has also turned negative, with many analysts and economists expecting further moves towards safety by traders this week. Any more bearishly-leaning news out of either economy will likely pull down on the EUR even further as investors flee risk.

The Australian dollar (AUD) was seen trading moderately lower versus most other currencies last Friday after news began to shift many traders back into risk averse assets. The Aussie has been experiencing several wide swings lately from the various shifts into and away from riskier assets. A vote on China’s economic confidence after its latest rate hike also impacted the AUD heavily, causing movements away from the soaring Aussie.

As traders witnessed a turn towards safety after last Friday’s economic reports from the United States. The resultant move into safe-haven assets has helped to push down on the AUD as traders turn away from its high interest rates in order to store value in lower yielding assets like the Japanese yen (JPY) and US dollar (USD). Australia’s economy is publishing a report on motor vehicle sales this morning, which will likely impact the value of the AUD very little. Traders should keep an eye on data out of Europe and the United States for signals on the direction of risk appetite this week.

The price of precious metals like Gold and Silver found support this past week despite the rising strength of the US dollar, the currency in which such assets are valued. Precious metals bear their name as a result of their traditional store of value in times of uncertainty. Gold has been trading with rather mild price action since this past April, but traders have been awaiting price resurgence due to the rampant increase in risk aversion due to rising tensions from Greece and dismal jobs reports out of the US.

As investors seek safety, the value of gold and silver, which have been seen trading with mixed results, jump to a 2-week high of $1594.80 and $39.75 per troy ounce, respectively. A sudden jump in dollar values due to this week’s risk averse environment has so far done little to suppress this price movement as these two assets serve as traditional stores of value. Should risk sentiment hold steady this week, the prices for these precious metals may continue to find support as the week moves ahead.

Jovi Overo

Beta 2 Ltd, Jovi Overo, Beta 2 Ltd, Friday July 8 2011

With the European Central Bank (ECB) hiking interest rates, and private sector employment rising in the US, the value of the USD appears to be taking a dive as riskier currencies like the EUR jumped in yesterday’s afternoon and evening sessions. The US dollar was seen decreasing yesterday as traders began to seek riskier assets following statements by the ECB’s Trichet that Portugal was not in as bad a shape as assumed, and debt and inflation would be taken care of throughout the euro zone.

The EUR/USD was seen moving towards 1.4370 yesterday while the GBP/USD levelled off near 1.6015. An uptick in US private sector employment yesterday added to the risk-taking sentiment by most investors. Should today’s Non-Farm Payroll (NFP) data continue this trend of optimism, we may see the greenback taking severe losses against its rivals as traders seek out higher yields.

Most significant on today’s calendar will be the US publication of its Non-Farm Payrolls (NFP) data. Should today’s news foreshadow a modest growth in the largest economy’s employment sector, an assessment that seemed nigh impossible just days ago, there is a possibility that more investment will get pushed towards the higher yielding EUR, driving USD values lower.

The euro (EUR) was seen trading bullish yesterday after an announced increase to its regional Minimum Bid Rate by 25 basis points to 1.50%. The statement released shortly after the release gave cause for optimism among investors as ECB President Jean-Claude Trichet hinted that the region’s debt concerns were not as dire as many had assumed; specifically mentioning woes regarding Portugal and its recent ratings downgrade by Moody’s.

The EUR/USD was seen moving strongly bullish yesterday as a result of the risk taking sentiment that arose from the rate adjustment. The price moved from its recent low of 1.4250 to as high as 1.4375 before levelling off mildly. The EUR saw similar gains between 0.2% and 0.6% against its other currency rivals.

Europe’s economic calendar today will be significantly lighter than it has been of late. A string of reports on German and French trade and budget balances, respectively, will get published early in the morning. An Italian industrial production figure will be then released shortly thereafter. Most serious investors are focusing their attention on the American release of Non-Farm Payrolls, the most impactful news event affecting this week’s economy.

The Australian economy released strongly bullish news yesterday morning with the publication of an employment indicator that showed the economy adding over 23,000 jobs over the past month. Despite a rate hike in China pulling strongly down on the value of the Aussie Wednesday and Thursday, this morning’s movement appears to favour stronger risk seeking behaviour among investors and yesterday’s surprisingly high growth in Australian employment has many traders moving back towards the Australian dollar (AUD).

Weakening commodity prices may still pull on the nation’s economic growth and the AUD’s meteoric rise has gouged Australia’s exports. While the downturn may look dismal from afar, runaway inflation caused by the Aussie’s rise was expected to cut into the country’s growth projection eventually. As traders adjust their portfolios and risk assessment for the Land Down Under, the possibility exists for a solid uptick later in the year. For now, heightened risk taking is pushing the value of the Aussie higher and today’s US NFP data will either confirm or deny this new momentum.

Crude Oil prices found solid support Thursday, moving towards $100 a barrel in late trading 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 UK and Europe yesterday were driving many investors back into riskier assets as most reports suggested growth among the major industrial nations of the West would be on the rise. If proven accurate, the new outlook would have oil prices rising back into a bullish channel as demand increased.

As investors seek risk, the value of crude oil, which was seen fluctuating wildly all week, may in fact rise to a weekly high above $100 a barrel before today’s close. A sudden drop in dollar values due to this week’s sudden return to risk is expected to drive many investors into higher investments on physical assets; driving oil prices even higher. Should Crude Oil sentiment hold steady today, oil prices may see another meteoric rise similar to the spike that occurred in 2008 just before the global economy crashed.

Jovi Overo

(more at Beta 2)