Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Tuesday November 15 2011

After two weeks of following the European political scene US economic data releases return to the spotlight. Today important data will be released beginning with retail sales, PPI, and the Empire State Manufacturing Index. Markets expect that the positive economic momentum that began in Q3 will likely carry over into Q4. An improvement in market sentiment is forecasted with a sharp pickup in the manufacturing sector. Retail sales numbers are expected to show continued growth in consumption though at a slower pace than in the month of September. Inflation pressures on the producer side (PPI) are forecasted to fall while the headline consumer inflation numbers (CPI) continue to rise to 3.9% y/y in September. CPI data for October will be released on Wednesday.

The Fed expects inflationary pressures to drop and in the worst case scenario a deflationary environment would take hold of the US economy. To avoid the threat of deflation the Fed would likely increase its balance sheet through additional bond purchases (QE3). This puts extra significance on Wednesday’s CPI figures as some economists expect the Fed could announce QE3 as early as its December 13th meeting.

Yesterday the EUR came under pressure as peripheral bond yields began to climb once again. Italy had a successful debt auction of 5-year notes but the bonds were priced at their highest yield since Italy came into the EMU. Yields on the Spanish 10-year note climbed above 6% for the first time since the summer and the spread between the Spanish and German 10-year bond yields widened; an indicator of market stress. Spain is coming back into the picture as the Spaniards will go to the polls on Sunday in a general election.

Today brings euro zone flash GDP data. Consensus estimates are for growth of 0.2% and will likely highlight the struggling European economy. ECB President Mario Draghi said the euro zone economy will slip into a mild recession and previous PMI surveys suggest a slowdown in growth. The German ZEW Economic Sentiment survey should also show a more severe downturn in market sentiment, potentially weighing on the EUR.

With increased pressure on peripheral Europe the EUR has come off of its Friday highs versus both the USD and against the JPY. The EUR/JPY is approaching the key 104.70-105 level with the only support remaining on the charts coming in at the September low of 100.75.

Yesterday Japanese Q3 GDP was released in-line with consensus expectations as the Japanese economy grew by 1.5. However, the report had a negative tone as the revised Q2 data showed the economy contracted by -0.5%, more than the previous results showed which were at -0.3%.

The JPY continues to strengthen despite a Japanese economy that is stalling. Neither the traditional intervention nor the “covert intervention” as discussed in yesterday’s FOREXYARD Daily Analysis has been able to stop the JPY’s appreciation.

Wednesday will bring the BOJ meeting and no new policy measures are expected. This could continue the one way movement in the USD/JPY. Yesterday the pair dipped below its 55-day moving average. There is a lack of supports for the USD/JPY until the all-time low at 75.63. Resistance is back at the October 12th high of 77.50.

Today will bring another letter from BOE Governor Mervyn King to the Chancellor of the Exchequer George Osborne, explaining why the rate of inflation is yet again above the central bank’s target of 3%. However, there are some economists who are of the opinion that UK inflation has peaked and will begin to decline. Certainly King and a majority of the Monetary Policy Committee believes this as the BOE suggested in their previous meeting minutes the BOE could start another round quantitative easing to stave off deflationary pressures. Today’s CPI is expected to come in at 5.1%, down from a peak 5.2% in September. A surprise to the upside will likely support sterling while a reading below market expectations and traders could sell sterling on expectations of additional easing by the BOE.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday November 11 2011

The EUR came off of its lows as Italy pulled back from the brink. Italian 10-year bonds were trading back below the 7% yield, a level considered unsustainable by most fixed income analysts. The turnaround came after a successful Italian bond auction. Italy paid higher than normal rates but the bid-cover was almost 2:1, a modest level of success for the bond auction. Perhaps it may have been the ECB buying a large portion of the Italian bonds though the ECB will only report its bond purchases on Monday.

Both France and Italy released disappointing industrial production data with France reporting a -1.7% contraction on consensus expectations of a -0.7% drop. This highlights the stalling growth problem in the euro zone. To counter the economic slowdown the ECB may cut interest rates again next month to support the economy, a negative for the EUR.

As expected the Bank of England left both its benchmark interest rate steady and did not add to its asset purchase facility. However, the size of the QE program is currently under review. This most likely is a hint at a future policy move to increase the size of the central bank’s balance sheet to support the UK economy. Unlike the Fed or ECB, the BoE does not release an accompanying statement after there is no policy change. To find out additional details economists and traders will have to wait for the release of the meeting minutes which are set to be released on November 23rd.

The BoE has left the door open for additional stimulus to support the struggling UK economy. Typically quantitative easing leads to weakness for a currency though the GBP/USD remains above the level from October 6th when the BoE announced it would purchase an additional GBP 75 bn of government bonds.

The yen gained yesterday in an environment that is typical of USD weakness. The USD/JPY continues to move below 78, a level that is close to its 100-day moving average at 77.65. Japanese core machinery orders dipped -8.2% during the month of September with a strong yen causing corporations to delay large purchases.

Today services data showed declined more than forecasted. Traders will also be eyeing the BoJ meeting next Tuesday. Expectations are low for additional easing of monetary policy given the most recent expansion of the BoJ’s balance sheet, though the BoJ move was hardly noticed as the announcement of the Greek referendum overshadowed the news. The USD/JPY has support at 77.50 from the mid- October lows and resistance from the November 4th high of 78.15.

The AUD has clawed back following Wednesday’s crash as the AUD was pulled lower with other higher yielding currencies. Employment data released yesterday showed a decline in the unemployment rate but new jobs added were in-line with consensus forecasts.

Recent Chinese data has also been supportive of the AUD with Chinese CPI falling to 5.5% in October. The drop in inflationary pressures dispels the theory of a hard landing for the Chinese economy and opens the door to potential easing of Chinese monetary policy. Yesterday’s data showed China’s trade balance widened but was below consensus forecasts which may signal further slowing of the Chinese economy.

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, Wednesday September 14 2011

The US dollar (USD) was seen trading mildly bullish Tuesday as investors weighed the impact bond auctions in Greece and Italy will have on the euro zone. A sudden wave of risk aversion last week seemed to have helped the greenback surge, and pessimism about sovereign debt in Europe is supporting this pressure. The EUR/USD seems to be floating closer to 1.33 as technical pressures also begin to mount.

Data on American economic optimism yesterday also signalled an uptick in outlook from the previous month, as reported by IBD/TIPP. The news has done little to the forex market, however, though it could ripple through longer-term analyses on US financial markets should further dips in industry be reported. Manufacturing has been forecast to slump moderately going into the third quarter as most indicators revealed decreased demand. How this will affect the greenback in the weeks ahead is so far undetermined.

As for today, there will be a heavy string of US economic releases, with most news focused on retail sales and the producer price index (PPI). Liquidity will likely be much higher in today’s afternoon trading as these reports get published. With consumer confidence, inflation, and retail sales in focus this week, the picture on future demand and growth levels is expected to become moderately clarified and this could weigh heavily on currency direction in the short- and mid-term.

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.

A mildly pessimistic sentiment towards investing in the euro at the moment has many investors on edge when considering regional investments. An embattled euro zone is sending financial ripples through its neighbours and some are concerned it could pull growth down across the entire continent. With yesterday’s inflationary data out of Britain, this doesn’t seem to be the case, at least for the island economy north of Western Europe. Housing data seemed a bit pessimistic, but consumer prices are indeed growing at a healthy rate in the UK.

Sentiment across the region may have turned negative, with many analysts and economists expecting moves towards safety by traders this week, but the GBP could see a solid weathering of this financial storm so long as data remains bullish. Great Britain appears positioned for a relatively better quarter than its southerly neighbours. The pound could see some bullish movement this week as a result of this overall sentiment.

The New Zealand dollar (NZD) was seen trading mildly higher versus most other currencies this morning as its value responded to recent challenges with relatively more optimism than some had anticipated. Data in New Zealand has been mixed lately with some indications that inflation is not rising as strongly as in other economies, but perhaps in a good way. Food prices fell 1.3% this month, which could produce bearish pressure on the NZD, but should prove to be a boon for consumers in times of economic stress.

The latest movements of the Kiwi are causing some concerns, however, as many speculators are anticipating a bearish turn following recent surges in risk aversion. With interest rate decisions out later this evening, investors are waiting to see what the Reserve Bank of New Zealand (RBNZ) will do. A strengthening Kiwi has benefits for the buying power of the island economy, though its dependence on exports makes a strong NZD unfavourable for longer-term growth in New Zealand’s economy.

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 spike in dollar values due to this week’s risk sensitive environment has prevented many investors from taking positions on physical assets, creating a consolidation pattern on oil charts, but with the USD’s gains not materializing in large enough numbers early this week, 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 later in the trading 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, 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, 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, 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, Tuesday August 9 2011

The US dollar (USD) was seen struggling to hold its value yesterday amid severe market pessimism due to a downgrade of US debt by S&P’s ratings agency. 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 CHF has seen only mild gains and the JPY was brought to bear by an intervention by Japan’s central bank. The greenback appears to be holding strength despite the downgrade as it remains a central store of value for most investors.

China unleashed a lengthy diatribe against the US on Monday during the emergency G20 summit as a reaction to S&P’s historic move. The talk was aimed at the loss of value China foresees as impending due to what it viewed as fiscal irresponsibility on the part of Congressional leadership. Moody’s Investor Services, however, did defend the AAA rating of US debt yesterday, attempting to forestall a sharper decline on Wall Street and justify the USD and US Treasury notes as stable stores of value in this shaky global market.

With a heavy news day expected today, traders are sure to see heightened volatility with potentially wide swings in value from the plummeting stock market. The US economy will be publishing several reports on productivity, labour costs, and the latest decision on short-term interest rates, known as the Federal Funds Rate. The Federal Funds Rate announcement will be of prime importance today considering its timing in relation to these other historic events. How the Fed portrays itself this week may be key to determining the USD’s value in the weeks and months ahead.

The British pound (GBP) has been seen trading with largely bullish results so far this week as traders assess the risk sentiment across the region. The Cable was seen trading bullish in late trading as shifts away from the greenback, due to uncertainty surrounding US markets after an historic downgrade by S&P of US debt led many to favour sterling in early week trades.

News of debt contagion spreading across the euro zone, however, has also led several economists to worry that a toppling of consumer confidence may be up next. Whether Britain is affected by this regional tug is a matter for speculation at the moment, but one trader should bear in mind considering the wide spill-over effect running through global markets this week. Should today’s reports on industrial and manufacturing output indicate a downturn in productivity, and thus growth, there is a chance that traders will take the news to mean the pound sterling could meet resistance in the near future.

On tap today, traders will witness the release of a highly significant monthly report on manufacturing production in Great Britain at 9:30 GMT, concurrent with the nations less important industrial production and trade balance data. Should the figures reveal stagnation in manufacturing and industry 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 recent downgrade of US debt have made the forex market jittery so far this week, leading 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 further housing reports getting released this morning, forex traders are highly likely to see heavy movement by the Aussie in today’s trading hours. News out of China today is also expected to hike volatility throughout the Pacific countries of Japan, New Zealand and Australia. Pacific traders should be cautious in today’s trading.

Crude Oil prices dropped sharply Monday as sentiment appeared to favour a massive downturn in global stocks following a downgrade of US debt by S&P’s ratings agency this weekend. Data releases out of Europe and the US last week are still driving many investors back into safe-haven assets, but dominating sentiment this week has been the debt downgrade in the US, widening bond yields in Spain and Italy, and a sharp decline in stocks and futures as a result of portfolio shifts and pessimistic forecasts.

An expected dip in dollar values due to market outlook has caused oil futures to plummet, driving many investors away from such physical assets. Should Crude Oil sentiment continue to flop this week, oil prices may fall well into $80 price range. Traders appear weary of the value of oil as its volatility has increased these past several trading weeks. Should the stock market fail to find support in the days ahead, oil futures will likely remain bearish, pulling prices lower over the next few days.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Monday August 8 2011

The US dollar (USD) was seen trading only mildly bearish Monday morning as traders began digesting what impact S&P’s historic downgrade of the US credit rating will have on financial markets. The downgrade from AAA to AA+ was seen as a response to political deadlock in Congress over the nation’s debt, and a view that both political parties were expressing unwillingness to compromise in order to effectively handle the nation’s financial crisis. 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. Another view states that although the rating may reduce the foreign purchase of Treasury notes over time, those investing in such assets have little alternative at the moment which could match the US bills’ implicit and explicit values. As for today, no significant news will hit the economic calendar officially, but emergency sessions of the G7 industrialized nations and central banks worldwide may generate wide shifts in today’s market, and possibly without warning. Statements from world leaders regarding the S&P downgrade, as well as financial turmoil in Europe over Italy and Spain will likely be released today and throughout the week, causing portfolio shifts that traders will want to be on guard against. The euro (EUR) was seen trading with mixed results this morning following news of a downgrade of US debt by S&P’s ratings agency. Against the US dollar (USD) the euro was trading somewhat bullish in early morning hours Monday as the greenback moved bearish against all currency rivals. The euro, however, does not appear in a position to capitalize on the gains being seen elsewhere. Traders are looking for a way to balance a renewal of risk appetite with continued shakiness in global markets. A weakly optimistic 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. 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, despite a moderate sentiment of euro favouring sentiment this morning due to the flight from the US dollar. The Australian dollar (AUD) was seen trading moderately lower versus most other currencies this morning after the S&P downgrade of US debt created a selloff in commodity futures. Being linked to the value of commodities, the Aussie experienced an unexpected downturn during a period when shifts away from the US dollar should have helped drive its values higher. The Aussie has been experiencing several wide swings lately from the various shifts into and away from riskier assets, which could explain the erratic behaviour of this morning. The latest moves have helped to push down on the AUD as traders pulled away from commodity-linked assets as a result of the plummeting Dow Jones index. Data from this morning also showed job advertisements in Australia plummeting 0.7%. Coupled with pessimistic housing data last week, the Australian economy appears to be contracting this quarter. If that is indeed the case, the Aussie will likely continue to take losses this week despite a move away from the US dollar. The price of Gold met resistance over the past week despite 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 Italy and Spain 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, was expected to rise, but a selloff in commodity futures pulled down on precious metals Monday morning. A sudden flop in dollar values due to this week’s uncertain environment is expected to do little to suppress this price movement. 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