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, Tuesday September 13 2011

The US dollar (USD) was seen trading only mildly bullish early Tuesday morning as investors remained pessimistic about growth in Europe and Asia. A sudden wave of risk aversion seemed to have lifted the greenback following a move by the Swiss National Bank (SNB) to peg the CHF to the value of the EUR at 1.20, and by central banks to stall any monetary moves.

Data on the American budget today may continue to indicate pessimism that could drive the greenback even higher. Recent news has done little to alter the current direction of the forex market, though news could hold values steady should they come in near forecasts. Inflation is forecast to hold steady in several nations this week, which could have the effect of lifting the value of riskier assets, though this will need further data to be confirmed.

As for today, there will be few US economic releases, with most news focused on British inflation. Liquidity will likely be higher in today’s early trading as these data points are published, though the impact of news on Great Britain alone may not be enough to force a surge in any direction on USD pairs and crosses. Inflation and consumer confidence are in focus this week and traders will want to pay attention to the latter in the case of mounting pessimism and its affect on dollar values.

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 inflation and housing 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 global stocks at the moment has many investors on edge and looking for safety. 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) take losses due to recent moves by their central banks.

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 inflationary reports expected all week and most expecting bullish figures, the GBP is in a position to either continue its recent streak, or take heavy losses should inflation be shown in a downturn.

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 industrial production data out this week, traders are waiting to see what the BOJ will do in the face of a downturn. 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 downtick in global stocks following policies of monetary stagnation being executed by several central banks last week. Data releases out of Europe and the US 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 jump in dollar values due to this week’s risk sensitive environment has helped many investors ram up their short-taking positions on physical assets, but with the USD’s gains levelling off this morning, sentiment appears to have the price of crude oil holding steady near $86 a barrel. 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, Monday July 25 2011

The US dollar (USD) was seen trading bearish 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, but woes regarding the inability of Congress to address the impending debt crisis have begun to drag on the USD.

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. 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. The USD/JPY in particular has fallen below intervention levels and now trades near 78.00.

As for today, the US economy will be absent from the economic calendar and most of the other major economies will be presenting only meagre reports. Risk appetite and market volatility are likely to be at a minimum today as investors gear up for the rollercoaster that lies ahead considering this week is the last before the deadline for a lifting of the US debt ceiling.

The euro (EUR) was seen trading higher this morning following news of pessimistic growth in both the US and European economies. Against the US dollar (USD) the euro was trading somewhat bullish in late trading Friday as shifts away from safe-haven investments pulled money towards the euro and away from stores of value. The EUR/CHF, however, experienced a downturn on Friday, plunging to 1.1715 after a week of gains.

Traders are looking for a way to balance a renewal of risk appetite with continued shakiness in global markets. A show of concern towards investing in the US dollar at the moment due to the debt limit talks taking place in Congress has unsettled many investors who were looking for gains at the start of this week. 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 in several directions, likely bearish across the board.

Sentiment across the euro zone has also 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 bullishness taking hold this morning.

The Australian dollar (AUD) was seen trading moderately lower versus most other currencies this morning after inflationary data this morning caused a stir in Pacific markets. The Aussie has been experiencing several wide swings lately from the various shifts into and away from riskier assets. Traders witnessed a turn towards safety after last Friday’s economic reports, but sentiment appears mixed as of this morning.

The latest moves have helped to lift the AUD as traders turned to its high interest rates in order to seek profits in higher yielding assets like the AUD, NZD and Scandinavian currencies. The producer price index (PPI) published this morning beat forecasts, but so far has pushed down on the Aussie as traders had priced in positive growth ahead of time. The profit-taking could explain part of this recent downtick, but it doesn’t appear that it will last through the day.

The price of Gold found solid 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 June, but traders have been awaiting price resurgence due to the rampant increase in risk aversion due to rising tensions from Greece and faltering debt talks out of the US.

As investors seek safety, the value of gold, which has been seen trading with mixed results, jumped to an all-time high of $1623.95 per troy ounce. 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 gold serves as a traditional store of value. Should risk sentiment hold steady this week, the prices for this precious metal may continue to find support as the week moves ahead.

Jovi Overo

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Tuesday July 19 2011

The US dollar (USD) was seen increasing yesterday as traders began to seek shelter following speculation that growth forecasts across Europe will become further depressed as traders flee risk. The value of safe-haven assets like the greenback and Swiss franc (CHF) have been buoyed by a shift away from higher yielding assets.

The news so far has inched traders into a position of market pessimism which has helped to lift the value of the USD as riskier currencies like the EUR take a dive. With the economies of Europe largely absent from yesterday’s calendar, little news emerged which put a dent in the amount of pessimism surrounding the forex market, particularly in the fragile euro zone.

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 two reports on housing at 13:30 GMT. Should today’s news disappoint, there is a possibility that more investment will get pushed towards the safety of the greenback, driving USD values higher. Traders will also want to keep an eye on euro zone economic news as it may also impact risk sentiment heavily during the morning sessions.

The euro (EUR) has been seen trading lower this week as traders assess the risk sentiment across the region. Against the US dollar (USD) the euro was seen trading bearish in late trading as shifts into safe-haven investments pulled money out of the 17-nation currency and into other stores of value.

News of debt contagion spreading across the euro zone has several economists worried that a toppling of consumer confidence may be up next, followed by additional ratings downgrades that lead into an ever deepening spiral of debt and default. Rising inflation poses a threat in this scenario and the euro zone faces the debacle of lifting interest rates to quell inflation, but gouge their ability to pay off debt; or hold rates steady to allow for more growth while inflation takes off.

On tap today, traders will witness the release of two significant reports on consumer confidence. At 10:00 GMT, the organization known as ZEW will be publishing its economic sentiment reports for Germany and the broader euro zone. Should the figures reveal stagnation in consumer and business optimism, we could see heftier flights to safety in the days and weeks ahead. This would likely push the value of the EUR lower over the long-haul as traders continue to flee risk in larger numbers.

The Australian dollar (AUD) was trading weaker versus most of 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 of a debt contagion spreading from Greece to Italy now factor greatly into global risk assessment, as does the monetary policy of China in regards to the Pacific economies.

 

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). With Australia’s central bank releasing the minutes from its latest monetary policy meeting, there is a chance that speculators will pick up on several cues to adjust their positions in regard to the Aussie. Being linked with commodity prices could also help lift the AUD in the near future, but general risk aversion is likely to push the currency lower as traders flee risk.

Crude Oil prices dropped moderately towards $95.10 a barrel Monday as sentiment appeared to favour a downturn in global industry alongside a slump in demand. 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.

As investors sought safety, the value of crude oil, which has been seen rising since the middle of last week, fell to a weekly low of $95.10 a barrel. A sudden 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. Should Crude Oil sentiment hold steady this week, oil prices may continue to meet resistance.

Jovi Overo

 

Beta 2 News, Jovi Overo, Beta 2 Ltd, Friday July 1 2011

The EUR/USD was seen moving towards a three week high of 1.4570 yesterday after bullish economic reports pushed many investors away from the safe-haven greenback. Yesterday’s bullish PMI data from Chicago helped add to the trend of risk seeking, but the primary source behind the movement was the easing of fears across Europe as Greece passed its austerity budget in parliament.

The US dollar was seen in decline yesterday as traders began to seek riskier assets following several upbeat economic data releases and speculation that Greece would be saved temporarily from a default on its debt. The EUR/USD was seen moving towards a three week high of 1.4570 yesterday after bullish economic reports pushed many investors away from the safe haven greenback.

Yesterday’s bullish PMI data from Chicago helped add to the trend of risk seeking, but the primary source behind the movement was the easing of fears across Europe as Greece passed its austerity budget in parliament. The passed measure allows Greece to obtain the next allotment of funding from the IMF. The EUR, GBP, and AUD were each rising against the US dollar throughout Thursday’s session as a result.

With another heavy news day expected today, traders are sure to see heightened volatility. Most significantly, the US economy will be publishing its ISM Manufacturing PMI figures alongside data on consumer sentiment, construction spending, and total vehicle sales. Most investors continue to focus on the easing of debt woes in Europe and this may continue to push safe havens like the USD lower against its primary currency rivals.

The 17-nation EUR found strength yesterday following news of heightened risk appetite across the embattled region. With Greece voting in favour of the austerity budget, investors began to shift their portfolios to higher yielding. The EUR/USD moved to a 3-week high near 1.4570 while the euro saw similarly strong gains against other safe haven currencies like the Japanese yen and Swiss franc.

An optimistic economic news day Thursday kept volatility heightened as investors attempted to digest the results of the Greek budget vote, which passed amid violent protests around the country’s capitol. The market jubilation at the news of a passed budget helped riskier assets climb throughout the latter half of the day and eased fears that the region may face a severe debt contagion.

With today’s heavy news day ahead, traders will want to pay attention to the shifts in risk sentiment following yesterday’s euphoric highs. Given the relatively fewer economic indicators being published in the euro zone today, the possibility exists for current sentiment to get turned around. On tap this morning in the euro zone will be the 9:00 GMT publication of several minor reports followed by the 10:00 GMT release of the region’s unemployment rate which is expected to hold steady at 9.9%.

The Japanese yen was seen trading with mixed results against most of its currency rivals yesterday as investors moved towards higher yielding assets in Europe and the Pacific. Japan’s economy has published several positive figures over the last week, much of which has helped establish the yen’s recent bullishness. With the recent news of Greece passing its austerity budget, eased tensions are leading investors away from safe havens like the yen.

 

While the yen suffers from its own economic concerns, shifts in consumer sentiment have helped lift yen values against a number of its rivals. Expected today are the highly significant reports on the country’s manufacturing sector, which was seen in heavy decline since the March earthquake and tsunami. If the manufacturing sector can reveal returned growth, the yen’s values could see a bump despite the return of risk appetite.

Crude Oil prices held steady near $94 a barrel Thursday as sentiment appeared to favour a pause in the downturn seen across global industry. Data releases out of Europe and the US yesterday were driving many investors back into riskier assets as most reports suggested a return of steady growth in global inflationary figures and manufacturing.

As investors sought higher yields, the value of crude oil, which was seen plummeting all of last week, rose to a weekly high near $95 a barrel. A sudden jump in EUR values due to yesterday’s risk hungry environment has helped many investors ram up their long-taking positions on physical assets. If Crude Oil sentiment can hold steady this week, oil prices may continue to find support near its current price and beyond.

Jovi Overo

 

 

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Monday June 13 2011

Traders this week are bouncing back and forth between an interest rate differential approach, which favours the EUR, and a debt concern approach which favours the USD. Both carry an ominous overtone for the global economy. Whichever of these approaches wins out will depend on data being released over the next several weeks of summer.

Commentators are beginning to view the potential of a rebound in US dollar values this week after last week’s underwhelming rate statement by the European Central Bank (ECB). So far, the US dollar appears to be gaining from this sentiment.

The Fed’s record low interest rates will likely persist for the foreseeable future, and the ECB may end up lifting rates again this year, but so far investors are paying closer attention to the potential for a meltdown in Greece due to ravaging debt concerns.

The EUR/USD rose to a monthly high last week, reaching towards 1.4750 before settling below 1.4350 Friday. Soft data out of the American economy continues to fuel a slight run-up in the safe-haven Japanese yen and Swiss franc, but the USD has only gained moderately from the shifts in investment.

Traders are bouncing back and forth between an interest rate differential approach, which favours the EUR, and a debt concern approach which favours the USD. Whichever of these approaches wins out will depend on data being released over the next several weeks of summer.

Today, with most of Europe on holiday for Whit Day, the day which follows Pentecost, and with the US posting no news, most traders are withholding their trades until later in the week when these economic giants come back online.

The euro has been experiencing mixed results following last week’s rate statement by the European Central Bank (ECB). Despite a semi-hawkish statement that garnered support for an impending rate hike, traders appeared more concerned with the potential Greece implosion as its economy struggles to make steps to secure another instalment of its financial bailout.

While debt concerns loom in the euro zone, and industrial production still appears to be faltering globally, the higher yielding assets like the GBP and EUR appear positioned to lose value despite hints at growth policies being undertaken shortly by both.

The EUR/USD rose to a monthly high last week, reaching towards 1.4750 before settling moderately lower. Soft data out of the American economy continues to fuel a slight run-up in the safe-haven Japanese yen and Swiss franc, but the USD has only gained moderately from the shifts in investment and the EUR is slowly benefiting less and less from the shifts back into risk.

As for Monday, the euro looks to be anticipating mixed results against the other major currencies as traders are largely absent from the region due to several bank holidays. In observance of Whit Day, Switzerland, France and Germany will be closing, but Italy will still be publishing its industrial production figures at 9:00 GMT. The resulting limited trading volume will likely give cause for a slow opening day.

The USD/JPY has been trading lower recently as investors move sporadically in and out of the greenback. After reaching upwards of 81.00 on Friday, the pair quickly dropped to 80.20 as of this morning. Japan’s economy has published several positive figures over the last week, much of which has helped establish the yen’s recent bullishness. Whether it will be enough to reverse much of the negative sentiment surrounding Japan is yet to be determined.

The yen suffers from its own economic concerns, while shifts in consumer sentiment have helped lift yen values against a number of its rivals. Last week’s data, however, provided a ray of light which caused a secondary shift towards the yen for reasons other than safety. The USD/JPY looks to be continuing this movement for the foreseeable future as a result, especially given the massive shift away from the US dollar which is helping to lift the island currency.

Oil prices held steady this morning with the $102 price level acting as a firm footing for this commodity. US oil stockpiles sunk sharply last week, falling well below expectations and helping to hold the value of Light, Sweet Crude steady near its current mark. The price of black gold has been trading within a consolidation pattern these past several days and traders are beginning to anticipate a breach sometime this week.

The value of the US dollar versus the euro in recent trading has also dropped towards a six-day low of 1.4330, which has helped prevent oil prices from taking off after last week’s surprisingly unhinged OPEC meeting. With today’s steady sideways movement, traders appear likely to see oil reaching a decision point this week. Whether oil traders decide to lift oil prices from a buy-in on physical assets, or pull away from oil out of a perceived glut, is something traders will bear witness to this week.

Jovi Overo

Beta 2 Forex News, Jovi Overo, Beta 2 Ltd, Friday June 10 2011

The US dollar largely experienced mixed results yesterday but with moderately bullish sentiment against the EUR as hints at a future rate hike in the euro zone largely underwhelmed investors. The results so far have been for the value of the USD to increase and then hold versus its currency counterparts; albeit weakly.

The issue of interest rate differentials has generated market tension over the past several weeks and yesterday’s semi-hawkish statement from ECB President Trichet was expected to push the EUR much higher, but the USD ended the day stronger with investors betting on a higher probability for a Greece default. Soft global economic data has led many investors to focus more on debt concerns than future growth potential, which is helping the greenback make strides.

As for today, with the week coming to a close, traders will be focusing their attention on the manufacturing and industrial production figures out of Europe, Britain and the United States. The Chinese trade balance may also come into play, but with less significance for the other major currencies. The Canadian economy will also be publishing several significant reports, which could make today’s trading interesting. Traders should expect an added level of volatility today as investors try to gauge direction ahead of market closing.

The euro felt pressure versus the US dollar this morning, with the pair’s price dropping sharply from its one-month high near 1.4650, reaching as low as 1.4520. Yesterday’s rate statement by the European Central Bank (ECB) was strongly hinting at an impending rate statement which should have shifted some momentum back into the 17-nation common currency. Forex traders appeared underwhelmed by the statement, however, as concerns over a potential Greece default outweighed the hawkish sentiment.

However, with the US economy releasing a series of soft data reports, and President Obama falling in public opinion polls, the euro zone is set to take a major jump against its Atlantic rival should it be capable of harping on yesterday’s hawkish rate announcement.

As for today, the euro zone will be publishing a handful of industrial production and manufacturing data alongside Britain. Most investors appear keen to push bearish on the region considering the damage a Greek default would wreak for the already-present debt woes. The US dollar doesn’t appear poised to capture significant gains against its Atlantic rivals, but a failure by Europe to capitalize on a potential rate increase in the near future could have regional values pushed lower by a resurgent dollar.

The USD/JPY was seen trading somewhat higher this morning, holding steady near 80.40 at today’s opening Asian sessions. Market news released out of Europe today will likely be the driving force behind forex market values and traders would be wise to watch the repercussions of yesterday’s rate statement by the European Central Bank (ECB). The semi-hawkish statement by the ECB hinted at an imminent rate increase, but investors appeared underwhelmed and largely moving towards the safety of the US dollar.

The Japanese yen has been trading recently with largely positive results since Friday as investors turn their focus towards news out of the euro zone. After a week of ups and downs, the Japanese yen appears set to make gains today as investors largely flee risk after yesterday’s rate statements in Europe and Britain.

The price of Crude Oil ended yesterday much higher as traders largely began to anticipate a shortfall in supply in the coming months. A breakdown in talks between OPEC members in Vienna this week generated tension among oil speculators who were anticipating a rapid response to rising oil prices and global demand. The result has been a sudden climb in oil prices since Tuesday, reaching upwards of $102 a barrel as of this morning.

The sudden jump in the value of the US dollar yesterday should have helped halt this sudden rise in oil prices, but the force of global markets speculating a shortfall in production superceded this pressure. The OPEC spat, however, has made the investment environment around oil even less clear. Without some sign of production output agreement by OPEC, many are turning to Saudi Arabia for hints at a unilateral increase to sate global appetite. All eyes are on the Arabian oil giant ahead of this week’s close.

Jovi Overo

Market News, Jovi Overo, Beta 2 Ltd, Tuesday May 24 2011

Yesterday’s gains in the US dollar were not so much a product of dollar strength but rather the result of anti-euro anything and the “risk-off” trade. Boosting appeal for the dollar was weaker than expected Chinese PMI numbers to start this week’s trading on a negative tone. Following the report Asian equities quickly sank into the red as did the Aussie and New Zealand dollar.

The “risk-off” environment carried over from the previous week multiple sovereign debt rating downgrades. On Friday Greece’s sovereign credit rating was cut multiple levels. Saturday saw Italy being moved to a negative watch from stable, and yesterday Belgium’s credit outlook was also moved to negative from stable.

USD fundamentals have not changed over the past month as the US still maintains an extremely loose monetary policy and is not expected to raise interest rates well into 2012. Given the current anti-euro sentiment and poor Chinese economic data the dollar was the natural benefactor from this type of trading environment and may continue to trade higher on the back of further rating downgrades in Europe.

The dollar gained as the euro sold off across the board with the EUR/USD moving as low as 1.3969, a level that coincides with the 100-day moving average. The pair has since come off its lows to trade at 1.4080 but momentum remains to the downside. The next major levels that come into play are between 1.3910 and 1.3860. The former is the 50% retracement level from the January to May move. The latter is a previous support level from mid-March.

A combination of events has driven the declines in the euro, ranging from slower than expected interest rate tightening to a renewal of the European debt crisis. Early in the month the euro saw sharp declines, coming off a 16-month high following the delay in raising European rates. The most recent declines have been a product of geopolitical events, a renewed flair up of the Greek debt crisis and possible contagion effects of Spain.

The debate continues to rage over how to handle the Greek debt crisis and no consensus has emerged. Reportedly Greece only has enough cash on hand to prevent a default until mid-July. This makes it the utmost importance that the indebted nation receives additional funding from previously negotiated agreements with the EU/IMF. The alternative is a restructuring/extension of Greek debt maturities. The objection to this idea by the ECB has been very vocal as the ECB holds roughly 50B euros of Greek debt.

Market focus has now shifted to Spain. Following the weekend losses in municipal Spanish elections by the incumbent Socialist Party the euro began to drop sharply versus the majors. The change in the power structure at the municipal level may cause regional Spanish governments to declare previously unknown financial obligations at the municipal level, thereby bringing the Spanish sovereign credit rating under further scrutiny and the threat of a downgrade.

Previously European regulators have succeeded in creating a fence around Spain as investors chose to focus on the debts of Greece, Ireland, and Portugal. However, yesterday Fitch revised Belgium’s rating outlook to negative from stable. This is one of the first non-peripheral nations to be put on watch by the rating agencies. The timing of the report coincided with the low for the day. Should Spain’s outlook be adjusted the euro will likely come under additional selling pressure.

The firmer dollar environment that is again in evidence early this week pressured sterling, nudging below the 1.61 level against the dollar and only just holding its own against a fairly beleaguered euro. Even some relatively hawkish comments from the BoE’s Chief Economist Dale over the weekend were not sufficient to entice some buyers. He’s been voting for higher rates since February, being the only internal Bank member to side with the two external members (Weale and Sentance) in opting for tighter policy. Whilst he remains concerned about the recovery, he appeared even more concerned with inflation. Still, even though he has been voting for higher rates, he acknowledged that “things will change and the economy will evolve differently”. In other words, it was very unlikely that the Bank’s central scenario would prove to be correct, given the higher than normal level of uncertainty. Sterling though appears to be struggling to get excited by the rate story. This proved to be one of the main drivers during the first quarter, but weak growth and the lack of strength in forward looking indicators undermined the case for a near-term rate increase. The positive reaction to last week’s higher than expected inflation data proved to be rather transitory and there is a perception that the currency market is more worrying about the impact on real incomes and household spending from higher inflation, rather than feeding from the likelihood for higher rates. If this change in emphasis is sustained, then it could prove to be a tough rest of the quarter for the pound.

Despite yesterday’s “risk-off” trading environment the yen failed to make significant gains on the back of safe haven inflows. As tensions escalated in the forex markets and equities declined with the flair up in the European debt crisis the Japanese yen typically sees strong buying pressure as a result of safe have bids. However, yesterday the yen failed to hold a majority of its gains. This highlights the shifting trend in the yen as market forces focus more on Japanese fundamentals.

The USD/JPY fell to a low of 81.32 after beginning the day near the 82 level before closing down slightly at 81.79.

The failure of the yen to keep its safe haven gains shows a shift in the trend of the strengthening yen following deteriorating economic fundamentals. Yesterday the BoJ issued a negative economic assessment. The report for the month of May shows production has fallen and domestic private demand continues to weaken following the earthquake and tsunami on March 11. The Japanese economy contracted by 3.7% on an annualized basis in Q1.

As traders continue to focus on Japanese economic fundamentals and not safe haven inflows the yen could continue to weaken from its early May high. Further USD/JPY targets may be retracement levels from the April to May move at 82.50 followed by 83.25.

The price of spot crude oil fell after weaker than expected Chinese PMI data and a flair up in the European debt crisis. Both events had the same effect of switching to a “risk-off” mode as higher yielding assets such as equities and the Australian dollar traded lower on the day. Spot crude oil traded as low as $96.35 before settling at $98.22.

The HSBC China Manufacturing Purchasing Managers Index dropped to a 10-month low at 51.1 in May from 51.8 in April. The weaker than expected data combined with the increased tensions in Europe helped to drag crude oil prices below the psychological $100 price level.

Crude oil prices have slid from their May highs near $115 but have consolidated in a range between$95 and $104.50. A break below $95 could trigger declines to $93.00 followed by $83. A move higher would test $110 followed by the May high.

Jovi Overo

Market News, Lane Clark, Beta 2 Ltd, Wednesday May 11 2011

The US dollar experienced slightly bearish results yesterday as traders began to seek higher yields for their investments. The result has been for the EUR/USD and GBP/USD to consolidate near Monday’s closing price. Against the euro, the greenback was holding near a 3-week low of 1.4350 while against the pound the buck held close to 1.6360.

The US Bureau of Labour Statistics published its import price report yesterday showing healthy growth in goods purchased domestically and imported thereafter. Expectations were for an inflationary ascent of 1.8%, but the actual results came in at 2.2% signifying healthy demand and inflationary growth. Investor’s Business Daily (IBD) also released its TIPP Economic Optimism report which revealed movement towards an optimistic stance, but still slightly below the 50.0 reading necessary to signify optimism in business outlook.

For today, the US trade balance is set to be released and any movement deeper into deficit could weigh on the USD’s recent downtick, pulling the currency lower against its primary counterparts. The US federal government will also be publishing its budget balance today at 19:00 GMT and like the trade balance figure, a shift deeper into deficit will likely signal a sell-off in the USD later in the day.

Monday’s downgrade of Greece by Standard and Poor’s ratings agency from B to BB- has put significant pressure on the euro zone’s common currency. The euro was holding near a three-week low versus its primary currency counterpart (USD) yesterday with today’s outlook appearing to favour a consolidation movement near the 1.4350 price level.

As for today, the euro zone will be largely absent from the economic calendar aside from two inflationary figures published out of Germany at 7:00 GMT. Germany’s Destatis will be publishing its final CPI reading as well as it wholesale price index (WPI), both of which are forecast to show stable growth. The common currency may gain a little support today, but forex traders are more tuned in to the US federal budget and trade balance.

The Japanese yen (JPY) has been trading with somewhat mixed results since Friday, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to take losses today as investors appear to be seeking higher yields. The dominant stance of risk aversion overarching yesterday’s environment of optimism has many traders moving towards the yen against the higher yielding currencies like the euro, which dropped to a six-week low during yesterday’s afternoon sessions.

However, the yen was slightly lower versus the US dollar as the pair moved up from previous intervention levels near 80.00. The USD/JPY held steady at yesterday’s low, finding support near 80.30 and moving up towards 80.90 by today’s opening Asian sessions. Japan’s leading indicators were published at 6:00 GMT with little surprising information coming out of that report. But in Asian news, most traders will be focused on the slew of reports issued out of China this morning, the industrial production figure foremost among them.

Oil prices rebounded yesterday with the New York Mercantile Exchange session closing just above the $103 price mark. The price for a barrel of Crude Oil felt a sharp sting last week as the US dollar surged against its main currency rival, the euro. The price for a barrel of oil saw its feet pulled out from underneath it and flopped heavily to as low as $94 a barrel by last week’s closing. Today’s bounce in price, however, may see the price returning to a mark approaching last week’s average.

The value of the US dollar versus the euro in recent trading has been holding steady near a three-day high near 1.4350, but oil prices continued to rebound strongly as traders price in an expected boost in consumption as the driving season kicks into high gear in the Northern Hemisphere. Should oil prices persist in their bullish uptick, traders may see some corrective resistance being met near the psychological barrier at $104. Rising USD strength could also help push the value back below $100 a barrel if today’s economic calendar events push the pair lower once more.

Jovi Overo