Sunday, February 14, 2010

Stock markets fluctuated all around world



The U.S. economy had little to reveal this week, where a lack of fundamentals throughout the week led investors to focus on global issues including Greece’s debt problems, and accordingly pessimism over the outlook for global growth dominated investors, and accordingly equity indexes fluctuated heavily during this past week.
The U.S. Commerce Department released this week the trade balance for the month of December, where the trade deficit widened beyond expectations to highlight the downside effects of the rising dollar, where the U.S. dollar started to gain momentum recently against major currencies, while lower demand levels from all around the globe also weighed down on the trade deficit.
According to this we should expect a lower contribution from net exports to the GDP estimate in the fourth quarter, though the U.S. economy was able to expand by a staggering rate amid the ongoing support from the U.S. government alongside the recent improvement in economic conditions, yet the real question here, will the economy be able to sustain such a staggering growth level over the upcoming period.
The answer to that question is rather clear, the U.S. economy won’t be able to sustain such a staggering rate since elevated unemployment and tightened credit conditions will continue to weigh down on economic growth in the world’s largest economy, and it will probably take a long time before the U.S. economy can go back to meet its long term growth potentials.
Moreover, the U.S. Labor Department released the weekly jobless claims, where the data released indeed signaled some improvement and this comes inline with the recent figures released from the labor market, where conditions started to improve over the past few months, as unemployment dropped to 9.7% and the pace of layoffs seem to be easing noticeably, and as a matter of a fact some employers started to hire new workers again, though the pace of new hiring remains rather weak.
The retail sales index signaled that consumer spending improved amid the holiday season, where retail sales increased in January after falling back in December, where the huge discounts seemingly lured consumers, this indeed signals an improvement in consumer spending, since retail sales accounts for more than 50% of consumer spending.
Spending though remains somehow weak even as it has been improving recently, yet it remains subdued amid elevated unemployment, tightened credit conditions, lower income growth, and diminishing households’ wealth, yet spending should continue to improve gradually over the upcoming period as conditions continue to improve, and accordingly we should expect the U.S. economy to continue to grow over the course of this year unless of course something else happens that changes the course of recovery.
Confidence however retreated in February, where the University of Michigan confidence index signaled that consumer confidence dropped back to 73.7 well below the prior and expected estimates, as even though the economic conditions index improved, yet the outlook for the economy deteriorated, meanwhile, the 1-year inflation expectations index eased to 2.7%, and the 5-year inflation expectations index eased to 2.8%.
Meanwhile, the Federal Reserve Bank’s chairman, Bernanke, signaled that the Feds have several tools that will help withdraw excess liquidity from markets, however, Bernanke still believes that it’s early to undertake such a stance, since he signaled that interest rates will remain at low levels for some time, as the Feds need to make sure that economic conditions are indeed stable before they start to tighten their monetary policy.
The U.S. dollar gained huge momentum against major currencies this past week, where investors focused on Greece’s debt problems, where the swelling budget deficit in several countries including Greece, Portugal, and Spain are perceived as a risk for economic growth in the Euro Zone economy, this indeed led investors to worry over the outlook for global growth and accordingly investors shed their risky assets and opted to invest in lower yielding assets including the dollar, and that provided the dollar with huge momentum to rise against major currencies.
Despite the recent improvement in financial markets, yet confidence remains rather fragile, where investors are still worried that their might be more ramifications from the worst financial crisis since the Great Depression, and we shouldn’t expect investors’ confidence to return back to normal, since they are yet to believe that global economies are out of the woods yet.
Stock markets fluctuated heavily over the course of this week, where U.S. companies continued to report mixed earnings, yet the dominant factor was the rising fears over the outlook for global growth, and investors shed risky assets on concerns related to Greece’s debt problems and China’s decision to tighten its monetary policy, where the latter was seen as a threat to the pace of the recovery.
This article taken by www.fxstreet.com

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Gold finished week higher



FXstreet.com (Córdoba) – The yellow metal ended Friday hovering around $1,090; near the same opening price. For the week, the ounce gained more than $20 and finished with gains after falling in the previous four weeks. 

Gold tested the $1,100 zone on Thursday but failed to break above. On Friday pulled back finding support at $1,077. The value of the ounce continues to move away from the lows of the current year: on February 5, gold tumbled to $1,043 reaching the lowest price in three months. 

EUR/USD (Feb 14 at 21:48 GMT)

1.3609/14 (-0.12%)

H 1.3632 L 1.3598

S3S2S1R1R2R3
1.35281.35621.35961.36061.36401.3674
[?]Trend Index[?]OB/OS Index
Slightly BearishNeutral
Data updated on Feb 14 at 21:42 (15-minute timeframe)

This article take by www.fxstreet.com

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Commodities currencies end week on a strong note



FXstreet.com (Córdoba) – Currencies link to commodities managed to finish the week with important gains despite ending Friday slightly lower. 

AUD/USD rose on a weekly basis after falling in the previous four. The pair tested levels above 0.8900 and then pulled back finding support at 0.8780. 

USD/CAD fell more than 200 pips during the week and momentarily dropped below 1.0500. The pair rallied to the downside 260 pips from Tuesday to Thursday. 

NZD/USD rose for the first week after falling in the last five. The pair recovered after dropping a week ago to 0.6800 reaching the lowest level since September. The pair jumped almost 200 pips and finished on Friday near 0.7000. 

Commodities were helped by an increase in the price of raw materials and beneficiated by problems that European countries are facing. 

AUD/USD (Feb 14 at 21:47 GMT)

0.8875/78 (0.20%)

H 0.8887 L 0.8868

S3S2S1R1R2R3
0.88220.88440.88660.88760.88980.8920
[?]Trend Index[?]OB/OS Index
Slightly BearishNeutral
Data updated on Feb 14 at 21:43 (15-minute timeframe)

This article taken by www.fxstreet.com

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EU to support Greece, if needed



At today’s EU Heads of State summit, the European Union agreed unanimously to the principle of supporting Greece, but no concrete aid steps were announced. Additional details could be unveiled at the Ecofin meeting on Tuesday, February 16. Statements after the summit suggest that there’s no ex-ante decision to rescue, but there’s a strong commitment to do so if and when the need arises. Seemingly, today all possible technical tools were discussed. Some EU sources have been quoted saying that:
1. Support could be structured in stages, depending on the level of need
2. Countries could participate according to their weight in the eurozone
3. Support options could vary from country to country
As expected, the ECB and the IMF will not be involved financially in the plan. The ECB welcomed the EU pledge to take coordinated action if needed, and stated it will work jointly with the EU in defining Greece’s fiscal consolidation path, and in monitoring its implementation. The IMF praised the agreement, and offered its expertise, if needed. FI: Markets are now more confident that Greece will receive support, if needed. Once it was clear that no details would be revealed today, peripheral countries came under moderate pressure, although not enough to erase gains posted earlier in the day. The main message retained by investors is that the outlook for periphery is improving. From yesterday’s closing level, 10Y GGB-Bund spread tightened 9.5bp, and Portugal and Ireland were similarly well supported. FX: The euro was battered again, with investors being ultimately frustrated by the overall lack of details regarding the EU leaders’ decisions and by the general feeling that this move will not be enough to fully dissipate ongoing EMU-related concerns. There is still risk that more selling pressures may hurt the EMU unit in the coming days, with the Ecofin meeting on Tuesday unlikely to offer EUR-USD a lasting support. Actually, a pullback above 1.3840 is needed in order to at least just freeze the intense selling pressure. On the other hand, the risk of a further drop towards 1.34/1.3390 has increased, especially if the 1.35 base also falls.
This article taken by www.fxstreet.com

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US FX FUTURES REPORT



The foreign currency futures collapsed across the board overnight, with the euro and Swiss in the lead. The rout was triggered by disappointing Eurozone economic data, ongoing pressure from Greece and by PBOC's decision to raise bank reserves by 50 basis points to 16.5% from 16%.
The German, Italy, Greece and the Eurozone preliminary GDP reports came in worse than expected in the fourth quarter, the Eurozone industrial production unexpectedly declined, and the French non-farm employment continued to drop in the fourth quarter.
The Asia/Pacific stock markets closed mixed, the European bourses are mixed, while gold and oil are down. The US stock markets are down in pre-open market; remember, further overall weakness is expected. All eyes are on the US economic agenda, which features the retail sales and business inventories reports, and the University of Michigan consumer confidence survey.
The short-term outlook for the foreign currency futures should remain bearish for the balance of the global day ahead of the long weekend. If order restores in FX, the yen should trade the opposite way. My model is short all of the European currencies and long the Aussie, Canadian dollar and yen.
Look for updates on my model’s positions on Twitter: They are free – for now. Then, you will have to subscribe to get the model turns in advance.

Overnight:

  • Australia: No data
  • China: The People's Bank of China raised banks' reserve requirement by 50 basis points to 16.5% from 16%, effective February 25.
  • Japan: Consumer confidence rose to 39.4 in January from 37.9 in the previous month.
  • Germany: The GDP stagnated in the fourth quarter, following a 0.7% rise in the prior quarter. Economists had expected a quarterly growth of 0.2%.
  • France: The GDP rose 0.6% sequentially in the fourth quarter from +0.2% in the third quarter, revised down from 0.3% rise initially estimated.
  • Italy: The GDP unexpectedly contracted a seasonally adjusted 0.2% in the fourth quarter after expanding 0.6% in the third quarter. On a yearly basis, the GDP contracted 2.8%.
  • Eurozone: The GDP rose at a slower pace of 0.1% sequentially in the fourth quarter from 0.4% in the third quarter. On a yearly basis, the GDP fell 2.1%, slower than the -4% in the third quarter.
  • Greece: The GDP contracted 0.8 percent in the fourth quarter after a revised fall of 0.5 percent in the previous quarter.
  • Greece: The International Monetary Fund on Friday joined the European Union in pledging support for Greece in its struggle to bring its ballooning budget deficit under control and contain its debt crisis.
  • Eurozone: Industrial production plunged by a seasonally adjusted 1.7% in December from November’s +1.4%, revised upward from +1%. Year-on-year, industrial output fell 5%, less than the revised -6.9% in November
  • France: Non-farm employment declined 0.4% in the fourth quarter after a 0.5% fall in the third quarter. Year-on-year, non-farm employment dropped 2.5% in the fourth quarter.
  • UK: The Conference Board leading economic index rose to 99.0 in December from 98.6 in the previous month. This is the ninth straight month in which the leading index has risen. The coincident economic index increased to 102.8 from 102.7.

Today’s Economic Calendar:

  • Canada: New motor vehicle sales for December
  • US: Retail sales for January
  • US: Business inventories for December
  • US: University of Michigan consumer confidence survey for February

EUR- March

Luca Model: Short since January 20
The March euro sank for a third day to mark a nine-month low amid nervous trading surrounding the Eurozone effort to help out Greece and regional economic weakness. The short-term outlook turned bearish for the rest of the day. The medium-term outlook remains bearish and my model is short. The target of a medium-term bearish flag is 1.3370 and the target of a short-term bearish flag is 1.3150.
The current low of the downtrend is 1.3531. Below 1.3483, distant support is at 1.3321.
Immediate resistance is at 1.3617. The next cap is 1.3710. Strong resistance is at 1.3818. The 21-day moving average lies at a very distant 1.3924.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bearish
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG - TERM: Bearish 

JPY - March

Luca Model: Long since February 4
The March Japanese yen reversed Asian gains to an over one-week low and tested the bottom of its channel rising since January 8. The yen remains in an inside range. The short-term outlook is sideways. The medium-term outlook remains sideways and my model is long.
The 21-day moving average supports at 110.92 and the bottom of the channel is 110.65. Distant support is at 109.57.
Immediate resistance is at 111.54. Above 111.92, good resistance remains at 112.50. The top of the upmove is 112.95.
INDICATORS
Fast stochastics: Slightly bearish
MACD: Slightly bearish
Ichimoku: Slightly bullish
OUTLOOK
NEAR-TERM: Sideways
MEDIUM-TERM: Sideways
LONG-TERM: Bullish 

GBP - March

Luca Model: Short since January 21
The oversold March pound has been alternating up and down days for four days, and remains under pressure. Basically, cable is consolidating at the bottom of its recent downmove. The short-term outlook is slightly bearish. The medium-term outlook is bearish and my model remains short.
Below 1.5583, the low of the downtrend is 1.5531. Further support is at 1.5469.
Strong resistance is at 1.5697. The next cap is 1.5769. The 21-day moving average resists at a very distant 1.5877.
INDICATORS
Fast stochastics: Sideways
MACD: Bearish
Ichimoku: Sideways
OUTLOOK
NEAR - TERM: Slightly bearish
MEDIUM - TERM: Bearish
LONG - TERM: Bearish 

CHF - March

Luca Model: Short since January 20
The oversold March Swiss franc remained under pressure overnight, when it succumbed to a six-month low. The short-term outlook turned bearish for the rest of the day. The medium-term outlook is bearish and my model is still short.
The new low of the downtrend is .9236. Further support is at .9214 and .9158. Distant support lies at .9116.
Initial resistance is at .9297. Further caps are at .9337 and .9396. The 21-day moving average resists at a distant .9468.
INDICATORS
Fast stochastics: Bearish
MACD: Sideways
Ichimoku: Bearish
OUTLOOK
NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bearish 

CAD – March

Luca Model: Long since February 10 (reversing short since January 20)
The overbought March Canadian dollar slipped on profit taking overnight after rallying for three days to the highest level since January 22, but found a floor from the 21-day moving average. The short-term outlook is bearish early and then slightly bullish. The medium-term outlook is sideways and my model is long.
Initial support is at .9453 from the 21-day moving average. The 100-day moving average follows at .9411. Further support is at .9337. The low for the downtrend is .9274.
Immediate resistance is at .9556. The next cap is at .9586. Distant resistance is at .9680
INDICATORS
Fast stochastics: Bullish (overbought)
MACD: Bearish
Ichimoku: Bullish
OUTLOOK
NEAR-TERM: Bearish early, then slightly bullish
MEDIUM-TERM: Sideways
LONG-TERM: Bullish

AUD – March

Luca Model: Long since February 10
The March Australian dollar opens lower in the US after surging to a two-week high and closing above the 21-day moving average for the first time since January 19. The short-term outlook is bearish early and then slightly bullish. The medium-term outlook is sideways and my model is long.
Initial support is at .8769. Below .8719, distant support is at .8653.
The 100-day moving average resists nearby at .8809. The 21-day moving average lies at .8849. Further resistance is at .8911 and .8967.
INDICATORS
Fast stochastics: Bullish (overbought)
MACD: Slightly bullish
Ichimoku: Slightly bearish
OUTLOOK
NEAR-TERM: Bearish early, then slightly bullish
MEDIUM - TERM: Sideways
LONG - TERM: Bullish

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