Will the Fed’s action help out the economy and the markets?

Will the Fed’s action help out the economy and the markets?

Markets had a lackluster week as investors shrugged off two pieces of relatively positive news: that Greeks voted a pro-bailout party into office, and that the Fed took additional action to stimulate the economy. Despite a couple of strong trading sessions, markets lost ground for the week; the S&P closed down 0.58%, while the Dow lost 0.99%, and the Nasdaq gained 0.68%.

On a positive note, a few reports released last week indicate the economy could pick up steam again. April housing starts were revised upwards to 744,000, and building permits climbed from 723,000 in April to 780,000 in May, beating economists’expectations and hopefully indicating the housing sector is improving.^[i] Also noteworthy, the Conference Board’s index of leading indicators, a measure of future economic activity, rose to its highest level in four years last month, signaling that the economy should keep growing at a modest pace this year.^[ii]

The biggest news last week was that the Federal Reserve will take additional measures to boost the economy by swapping another $267 billion of short term bonds for long term ones, and extending “Operation Twist” through the end of the year. The idea is to lower the interest rate of the longer bonds, which in turn is supposed to lower interest rates for borrowers on mortgages, cars, and business loans. Fed Chairman Bernanke stated that additional easing would be considered if necessary, but many investors hoped for more from the Fed, particularly in light of its tepid economic forecast for 2012. The Fed now expects GDP growth to range from 1.9% to 2.4%, down from previous estimates of 2.4% to 2.9%, and expects unemployment to remain between 8.0% and 8.2%. Markets responded poorly to the news, highlighting concern that the Fed is running out of bullets and may not be able to respond effectively to further challenges.^[iii]

Coming weeks could be hard on equity markets if the global economy continues to slow, though investors have shown signs of resilience lately, indicating that many negative factors might be priced in. There are a lot of mixed signals right now, and it is simply impossible to predict how the market will respond. In uncertain times like these, it is especially important to stick to a comprehensive, long-term investment strategy.

On a side note, traders will be closely watching Monday’s Supreme Court ruling on President Obama’s healthcare plan; whichever way the vote goes, we will likely see some action in the healthcare sector.^[iv]

ECONOMIC CALENDAR:

Monday: New Home Sales, Dallas Fed Mfg. Survey

Tuesday: S&P Case-Shiller HPI, Consumer Confidence

Wednesday: Durable Goods Orders, Pending Home Sales Index, EIA Petroleum Status Report

Thursday: GDP, Jobless Claims

Friday: Personal Income and Outlays, Chicago PMI, Consumer Sentiment

HEADLINES:

Spanish banks need far less than originally believed. Spanish finance ministers announced Thursday that their struggling banks may only need up to 62 billion euros ($78 billion) to recapitalize, far less than the originally expected 100 billion euros. The requested amount was based on the results of two independent audits, which examined both best case and worst case scenarios before developing the bailout request.^[v]

Housing market tough for many buyers. A combination of low housing stock and wary lenders is creating problems for homebuyers in many cities. First-time homebuyers who rely on financing must compete with cash offers from investors and bidding wars with other buyers, creating upward pressure on housing prices. Rising prices or a cooling economy may increase housing stock, easing the process for buyers.^[vi]

Spanish bonds rally as ECB relaxes lending rules. The European Central Bank will ease its collateral rules, allowing Spain to pledge a wider range of assets, including lower quality ones, in exchange for cash loans to revive its monetary system. Yields on 10-year Spanish bonds fell as investors felt reassured about Spain’s future.^[vii]

Gas prices headed still lower. Amid the economic gloom, a bright spot for consumers is that slower economic demand is resulting in lower gas prices across the country. With oil inventories at 21-year highs, and demand slacking, consumers could see prices as low as $3.00-$3.20 by autumn, pumping a much-needed extra $114 billion into American pocketbooks.^[viii]

QUOTE OF THE WEEK:

"My motto was always to keep swinging. Whether I was in a slump or feeling badly or having trouble off the field, the only thing to do was keep swinging." ~ Hank Aaron

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The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

The Housing Market Index (HMI) is a weighted average of separate diffusion indices based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market. Each resulting index is then seasonally adjusted and weighted to produce the HMI.

The BLS Consumer Price Indexes (CPI) produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services. Survey responses are seasonally adjusted and weighted to produce a composite index.

The Conference Board Leading Economic Index (LEI) is a composite economic index formed by averages of several individual leading economic indicators, which are weighted to produce the complete index.

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^[i] http://biz.yahoo.com/mu/update.html

^[ii] http://www.usatoday.com/money/economy/story/2012-06-21/unemployment-claims-weekly/55731158/1

^[iii] http://money.cnn.com/2012/06/20/news/economy/federal-reserve-decision/index.htm

^[iv] http://in.reuters.com/article/2012/06/22/usa-stocks-weekahead-idINL2E8HM46O20120622

^[v] http://news.yahoo.com/spain-borrowing-rate-soars-bank-rescue-looms-104419568.html

^[vi] http://www.usatoday.com/money/economy/housing/story/2012-06-19/homes-for-sale-chart/55691072/1

^[vii] http://news.yahoo.com/spain-rallies-ecb-collateral-move-provides-relief-155401773--finance.html

^[viii] http://news.yahoo.com/spain-rallies-ecb-collateral-move-provides-relief-155401773--finance.html

Mid-Day Report: Greek Boosts Faded as Spanish Yield Broke 7% again to New Record

The boost from Greece election to market sentiments quickly faded today and Spanish 10 year yield breached 7% again and rose to new euro era high of 7.14%. As the situation in Greece is temporarily stabilized after pro-bailout parties secured majority, the spotlight is back on Spain. Markets were clearly concerned that the EUR 100b bank bailout program will worsen the country's fiscal budget. 7% is a level that is seen as unsustainable by the markets and that eventually led to sovereign bailout of Greece, Ireland and Portugal. Some analysts are expecting that Spain would eventually seek bailout for the country in the next six to nine months. Spain will hold auctions of 12-month, 18-month and 3-year debts later this week and these auctions would be seen as critical test on market confidence. Meanwhile, Italian 10 year yield is also back above 6% level. European stocks pared much of earlier gains and is nearly flat at the time of writing. US futures is indeed pointing to slightly lower open. EUR/USD hit as high as 1.2747 earlier today but is now back below 1.26 level.

Full Report Here...

Daily Report: Risk Markets Jumped as Pro-Bailout Parties Won Greece Elections, Yen and Dollar Pressured

Risk markets opened the week higher on news that Greece would temporarily avoid a Euro exit as the pro-bailout parties won enough seats to secure a majority in the parliament after Sunday's elections. The New Democracy claimed 30.1% of votes or 80 seats, plus 50 seats bonus for victory. Socialist Pasok took 12.6% or 33 seats. Thus, the total for the pro-bailout parties is 163 seats, which was well enough to secure majority in the 300 seats parliament. Anti-austerity Syriza came in second with 71 seats. EUR/USD spiked higher to 1.2747 before treating back below 1.27 level at the time of writing. AUD/USD also dumped to 1.0134 before retreating mildly. One development to note is that the Japanese yen is the weakest one on reaction to the Greek news and was sharply lower across the board. This should reflect reduced expectation and need of immediate and coordinated stimulus from world central banks as the Greek situation stabilized for now.

Full Report Here...

Daily Report: Risk Aversion Back as Markets Reassess Spanish Bailout, Concerns of Greece and Cyrus Weigh

Markets are back into risk averse mode as Spain's banking bailout was reassessed by investors after risk rally. Fitch also downgraded two of Spain's biggest banks as economic outlook worsened. Cyprus, another Eurozone country, hinted yesterday that it may need to apply for an international by month end. Reuters reported that Eurozone officials have discussed the possibility of imposing capital control on Greece exit. All the negative news sent US stocks lower overnight and dragged Asian equities into negative territories. EUR/USD is back trading below 1.25 for the moment while yen is back below 100. The weekly gap open in EUR/USD now look more like a bull trap than anything.

Full Report Here...

Spain To Be The Fourth Country To Ask For Bailout

Over the weekend, the Spanish Finance Minister Luis de Guindos announced that the country would request financial assistance from the EU for recapitalization of the Spanish banking system. While the final amount would be released after the results of 2 independent audits due June 21, the sum is estimated to be 100B euro, covering estimated capital requirements and additional safety margin. Both the EU and the IMF welcomed the request. For investors, the move is expected to lift market sentiment in the near-term. However, it does not resolve the long-term problem in the peripheral European economies that is the lack of growth prospect without which the 17-nation bloc would find it impossible to get out of the crisis.

Read more...

Source : actionforex.com

Almost half way through the year..What’s next for the markets?

Almost half way through the year..What’s next for the markets?


After the sustained selloff in previous trading sessions, the markets rallied Friday to claim a strong gain for the week. The S&P and Dow both booked a 0.8% gain, while the Nasdaq rose 1.0%.[i] With the choppy market performance and gloomy economic sentiment we’ve seen in the past weeks, we wanted to spend some time discussing recent trends and what they might mean for the future.


In short, many of the problems that plagued the markets in 2010 and 2011 - a serious European debt crisis and recession, a slowing Chinese economy, slow domestic growth, and the looming expiration of Bush-era tax cuts - are still with us in 2012. The uncertainty around these issues has dealt investor sentiment a major blow and spurred an exodus from equities into bonds and other "safe haven" investments, pushing Treasury yields to record lows similar to levels seen in the 2008 crisis. There’s a real current of fear underlying these moves that the global economy is slipping back into recession. Whether this fear is realized depends largely on how the credit crisis in Europe develops. Things may be looking up (at least temporarily) as Eurozone leaders have pledged to lend Spain up to 100 billion euros (approx. $125 billion) to recapitalize its banks, pending an audit this month. By pumping more liquidity into the economy, policymakers have bought themselves a bit more time to find a solution.[ii] We hope that markets will react positively to the news this week.


Domestically, many people are worrying about whether 2012 will be a repeat of the last two years, where an initially promising start fizzled out in the spring. Economic data has been patchy at best, and employment growth seems to have lost steam over the past few months, with not nearly enough jobs created to sustain continued growth. At this point, we can't be sure if this is just a temporary slowdown or a sign of continued economic contraction. Based on a number of factors, we currently suspect that this is a temporary, cyclical slowdown and that job growth will pick up in the latter half of the year. Supporting this belief, the Fed’s most recent Beige Book report stated that U.S. economic growth picked up over the last two months, and hiring showed signs of a "modest increase," indicating that the situation is not as grim as many originally feared.[iii]


With respect to equity markets, we know that historically, the market suffers one 10% (or greater) market correction each year. The S&P briefly touched an intraday correction of 10%, so does that mean we can expect solid growth going forward? It’s impossible to know for sure, but it’s rare to see the kind of persistent selling pressure that we’ve seen for the last month, where, for example, the Dow experienced 17 losses in 22 trading sessions. This lingering weakness has resulted in very pessimistic investor sentiment that may set markets up for a positive rebound. Additionally, we’re also under the effect of typical Presidential Election year trends, which historically have called for a peak in April and a decline on June, a script the markets have followed closely this year. If the cyclical trend continues, we can expect a new burst of energy in the second half of the year.

HEADLINES:


Wholesale businesses restocked faster in April, indicating strong sales could push economic growth higher in the second quarter. The Commerce Department report says wholesale stock grew by 0.6% in April, nearly double the March growth. Wholesale sales grew by 1.1% in April, almost triple March sales growth.[iv]



Chinese exports jumped 15.3% in May from May 2011, compared to April’s 4.9% growth. Imports also increased 12.1% compared with March’s insipid 0.3%. Although the positive numbers may ease fears that China’s economy is slowing, the Chinese government will likely take further measures to boost their economy.[v]



Fed survey found that U.S. economy grew moderately in most regions of the country this spring. The report shows growth in each of its 12 bank districts from April 3 through May 25, indicating that despite a poor jobs showing, the economy is still chugging along.[vi]



Unemployment claims dropped by 12,000, according to the latest Labor Department report. Although a one week decline does not indicate a trend, a recent Labor Department report indicates that worker productivity is low, meaning employers will have to hire again if business picks up.[vii]



QUOTE OF THE WEEK:



“The only thing we have to fear is fear itself.” - Franklin D. Roosevelt,


Special Announcement


Ken Mahoney won a Tony Award as one of the Producers of The Best Musical on June 10







.







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Weekly review for: 4 - 8. 06.12

Euro:  During past week the Euro currency was able to turn the previous strong downtrend to the opposite positive direction. On Monday, it traded higher against the background of politicians’ discussions the possible restructuring of the banking sector of euro area as well as the good news from Portugal. The fact that the Vice -President of the European Commission, Mr. Olli Rehn as the European regulator considered the possibility of direct recapitalization of banks through the mechanism of the euro area financial fund of stability provided initial support for the Euro currency. The sellers tried to push the Euro down using the negative news published on Tuesday, the speech of  the Minister of Finance of Spain, Cristobal Montoro who asked the European financial institutions to help Spain in recapitalizing its banking system. Also, the economics reports which were published on the same day came out much worse than expected. Indeed, the Retail Sales in the Euro zone fell to -2.5% versus the forecasted -1.1% and Germany’s Factory Orders fell to -1.9% vs. -1.1% in April in Month to Month term. The EUR / USD pair suffered big intraday loss falling to the area of $ 1.2408 during the European session. On Wednesday the couple jumped above $1.2580 level on the background of the ECB’s decision on interest rate in Euro region. The ECB left the interest rate unchanged at 1% as it was forecasted, however, the speech of the European Central Bank president Mr. Mario Draghi this day where he mentioned the "readiness to act" after leaving the rate on the lowest record low level as well as intentions to extend the control mechanism for unlimited auctions before the end of the year as a measure of support for the European economy provided significant support for the currency. Moreover, Mr. Mario Draghi also said that the financial and credit institutions can rely on the provision of an unlimited liquidity by the ECB. On this positive news the EUR / USD pair rocketed above $ 1.2600 and recorded the new weekly high of $1.2625 mark.

 

 U.S. Dollar: At the beginning of the week, the Dollar rose against a background of falling of World stock markets due to the negative economy statistics from China, Europe and U.S. As it was posted by the Federation of Logistics and Purchasing of China the PMI industry of the country recorded 50.4 points in May, which was the lowest level in the past five months. The unemployment rate in the 17 euro zone countries remained at a highest mark of 11% in April in monthly terms, unchanged from the revised in March. The volume of the Industrial Orders in U.S. in April 2012 decreased by 0.6 % compared to the analysts’ expectation of predicting their growth by 0.2 %. However, the currency started to became cheaper from Tuesday due to decreased demand for “save heaven " assets as well as the turning of the stock markets to the positive direction. The fact that the People's Bank of China lowered the benchmark interest rate by 25 points also put also some pressure on the Dollar. On Thursday, the Dollar strengthened against its competitors on a background of speech of the Federal Reserve chairman Mr. Ben Bernanke who did not mention to provide any additional measures for supporting the U.S. economy.

 

British Pound:  During the Monday the GBP / USD pair was trading between $ 1.5340 -$ 1.5380 in relatively narrow range on the background that the UK financial markets were closed this day due to the National holiday as well as on lack of macroeconomics data. With the positive sentiment which came back to the markets the pound showed a growth against major currencies. The announcement of the Bank of England on the decision to leave the interest rate unchanged at the 0.50 % also provided some support for the sterling. Although, the Bank of England left the bond repurchase program at 325 billion pounds, as it was expected, it did not mention any further additional measures aimed for supporting the national economy in spite of the worsening situation in the British economy and the deepening debt crisis in the euro area. The GBP / USD grew, in contrast, into the region of $ 1.5598.

 

Japanese Yen: The reason that the Dollar strengthened against the yen was the fact that the treasuries’ yields rebounded from a record low for the first time in four days. Also, the statements the of Minister of Finance of Japan Mr. Azumi 's about the readiness to take " decisive action " in order to reduce the "excessive movement" of the national currency which were made by June 1 contributed to correction in USD / JPY pair after the three-day of fall. On Tuesday, the yen fell against the Dollar after the leaders of the G7 group agreed to cooperate for preventing the excessive growth of the currency in the Forex market. The Japanese Finance Minister Mr.Jun Azumi noted that the recent growth of Japanese Yen as well as decline of the Japan’s stock market had a negative impact on the economy. He also mentioned that the G- 7 committee Central banks promised to intervene in the foreign exchange market in case the Japanese currency will excessively grew. In till the end of the week the yen was falling against most of the major currencies on continued growth of the risk appetite among investors as well as on rising World’s stock markets.

 

Australian dollar: The RBA lowered the benchmark interest rate by 0.25 % points - to 3.5 % per annum. Despite the fact, the currency grew up against almost all its competitors. The 3.5% rate which the lowest since 2009 was lowered amid fears that the debt crisis problems in Europe and China's economy slow down will put a negative impact on the Australian economy. The currency continued its uptrend on the background of positive report on GDP in country. In details, the Australian economy grew in the first quarter of 2012 faster than it was predicted by experts. The GDP of the 1-st quarter of 2012 grew to 1.3% versus forecasted values of 0.6%.Together with that, the Australia's economy grew by 4.3% compare with the first quarter of 2011 where the value was only the 2.5%. Unexpectedly high rate of growth of Australian economy reduced the fears of many investors and analytics who thought that the slowdown of the global economy would impact negatively the Australian economy performances. In addition, the currency also got support from the report on the employment situation in country, which improved much better than analysts' expected and resulted in May a rise in the number of jobs in Australia by 38.9K, versus forecasted 0K and compared with the revised increase in April by 7K.
Source : https://forex-metal.com

 

China Cut Interest Rates, The First Time In Over Three Years

The People's Bank of China (PBOC) lowered the 1-year lending and deposit rates by -25 bps, effective June 8. This first rate cut since December 2008 came in with great surprise as the government adopted 'asymmetric' rate change. Slowdown in Chinese economic growth and deterioration in the global environment in recent months have triggered speculations of a reduction in lending rate for some time. However, a cut also in the deposit rate was rather unexpected. Moreover, the PBOC's raise of the ceiling on the deposit rate to 110% from 100% and the lowering of the floor of the lending rate to 80% from 90% have actually reduced the lending rate by more than it announced and increased the deposit rate. We believe the rate cut is generally a positive to the market and marks a small step to interest rate liberalization in China.

Source : actionforex.com

Daily Report: Risk Rebound Lost Steam after Bernanke Disappointment, Fitch Downgraded Spain

Risk rally seemed to have lost much momentum as investors were disappointed by Fed Chairman Bernanke's lack of signal on adding monetary stimulus overnight is his testimony to congress. In addition, Fitch's downgrade of Spain's credit rating also remained investors of the ongoing sovereign and banking crisis in Eurozone. The boost from China's first rate cut in three years was rather brief. DOW ended the day up merely 46 pts at 12460, after jumping to as high as 12555 during initial trading. Meanwhile, Asian equities are all in red. In the currency markets, major currencies are showing sign of reversal against dollar and yen and we'd probably see more upside in the latter two before the week closes.

Source : actionforex.com

Asian and European trading sessions:

Euro: The Euro kept its positive trading dynamics and traded on highs against almost all major currencies on the background of yesterday’s statements of the president of the European Central Bank,Mr. Mario Draghi who said that the financial and credit institutions can rely on the provision of unlimited liquidity by the ECB. The EUR / USD pair even went above $ 1.2600 on that news and recorded the new weekly high of $1.2625 mark.

 

U.S. Dollar: The dollar traded in a range around its weekly lows during the Asian session in anticipation of the today’s speech of the Federal Reserve’s chairman Mr.Ben Bernanke. The market was full of expectations and waited for new signals on easing of the monetary policy for further support of the U.S.economy. The fact that the People's Bank of China lowered the benchmark interest rate by 25 points also put some pressure on the dollar by providing a positive sentiment on markets thus increasing the risk appetite among investors. In details, the benchmark interest rate was lowered for the first time since 2008 to 3.25 % from 3.50%.

 

British Pound: During the Asian session the GBP / USD pair fell to $1.5430 after yesterday's big run. However, the positive sentiment came back during the European session and the pound showed a growth against major currencies. The announcement of the Bank of England on the decision to leave the interest rate unchanged at the 0.50 % provided some support for the sterling during the session. Although, the Bank of England left the bond repurchase program at 325 billion pounds, as it was expected, it did not mention any further additional measures aimed for supporting the national economy in spite of the worsening situation in the British economy and the deepening debt crisis in the euro area. The GBP / USD grew, in contrast, into the region of $ 1.5598.

 

Japanese Yen: The USD / JPY pair grew up into the Y79, 77 areas on the European trading session. The yen fell against most of the major currencies today on continued growth of the risk appetite among investors as well as on rising World’s stock markets.

 

Australian dollar: The Australian dollar continued to strengthen against all its competitors after the yesterday’s publications of positive macroeconomic statistics of the Australian economy’s performance. In addition, it also got support from the today’s report on the employment situation in country, which improved much better than analysts' expected and resulted in May a rise in the number of jobs in Australia by 38.9K, versus forecasted 0% and compared with the revised increase in April by 7K.

 

 

American trading session:

 

U.S. Dollar: The dollar strengthened against its competitors on a background of speech of the Federal Reserve chairman Mr.Ben Bernanke who did not mention any additional measures for supporting the U.S. economy.

 

Japanese Yen: The yen fell against all major currencies after China lowered the benchmark interest rate for the first time since 2008 thus caused decrease in demand for safe heaven assets.

 

Gold: The Gold prices dropped down on the COMEX to $1583 per troy ounce area on the background of the speech of Mr. Ben Bernanke who did not mention any signals on additional measures for stimulating the U.S. economy.

 

Silver: The Silver prices fell by the $1.05 to the $28.40 per troy ounce today.

 

Oil: The Oil fell for the same reason as the Gold. The cost of the WTI July’s futures on the NYMEX today declined to $ 83.51 per barrel.

Source : https://forex-metal.com

Asian and European trading sessions:

Euro: At the beginning of the Asian trading session the euro continued its third-day of rising in anticipation of a result of today’s G7meeting which would have been hold as a conference call between the Finance Ministers and the Central Bank Governors of the ' Group of Seven ". The EUR / USD pair grew up, updating the weekly maximum. However, the Euro resumed its major downtrend amid weak reports which were published today as well as on statements of the Minister of Finance of Spain, Cristobal Montoro who in his speech asked the European financial institutions to help Spain in recapitalizing its banking system. The published macroeconomic data came out much worse than expected. Indeed, the Retail Sales in the Euro zone fell to -2.5% versus the forecasted -1.1% and Germany’s Factory Orders fell to -1.9% vs. -1.1% in April in Month to Month term. The only one, the report on overall Purchasing Manager Index for the euro area went better than expected. The EUR / USD pair suffered big intraday loss falling to the area of $ 1.2408 during the European session.

US Dollar: The dollar became cheaper today relative to most major currencies on the background of decreasing demand for " save heaven " assets as well as the rising of the Asian stock markets.
Australian dollar: The important news of today for the Australian currency was the decision of the Reserve Bank of Australia on interest rate in country. The RBA lowered the benchmark interest rate today by 0.25 % points - to 3.5 % per annum. Despite the fact, the currency grew up today against almost all its competitors. The 3.5% rate which the lowest since 2009 was lowered amid fears that the debt crisis problems in Europe and China's economy slow down will put a negative impact on the Australian economy. Indeed, the Reserve Bank of Australia reduced its benchmark interest rate for a second consecutive month for the reason of supporting the development of the Australian economy which depends on growing of the commodity prices.
 

American trading session:

 

 Japanese Yen: The yen fell against the dollar today after the leaders of the G7 group agreed to cooperate for preventing the excessive growth of the currency in the Forex market. The Japanese Finance Minister Mr.Jun Azumi noted that the recent growth of Japanese Yen as well as decline of the Japan’s stock market had a negative impact on the economy.
Oil: The price of the July futures of WTI on the NYMEX today was kept in the range of $ 83.29 - $ 84.87 per barrel. The Oil traded in range due to the published today positive report on the index of activity in the services sector of U.S which showed an unexpected growth and continued to present the investors' fears that the situation in the European economy would affect demand for Oil.
Gold: Today, the June’s Gold futures on the COMEX traded around $1617, 9 per troy ounce. The Gold was trying to copy the Oil’s trading dynamics and traded mostly flat on the background of discussions of finance ministers and central bankers of the (G7) about the situation with the debt crisis in the euro zone, which threatens the whole World economy.
 

Technical analysis for 6/06

EURUSD
The pair is rolling back to 1.25690.
Resistance:  1.25690, 1.26897, 1.28630
Support:  1.23907, 1.21813, 1.19332

GBPUSD
The pair is aiming to 1.54842.
Resistance:  1.54842, 1.56722, 1.58543
Support:  1.53482, 1.52063, 1.50594

USDCHF
The pair has tested channel line and rolling back to 0.95074.
Resistance:  0.96220, 0.97427, 0.98512
Support:  0.95074, 0.93949, 0.93069

USDJPY
The pair is aiming to 79.070.  Once this level is broken the pair will rise to 79.707.
Resistance: 79.070, 79.707, 80.438
Support:  78.345, 77.539, 76.463

AUDUSD
The pair has risen to 0.98436. If this level is broken the pair will rise to 0.99207.
Resistance:  0.98436, 0.99207, 1.00067
Support: 0.97423, 0.96579, 0.95611

Source : https://forex-metal.com

Asian and European trading sessions:

Date Review : 5/06/2012

Euro: The EUR / USD pair tested the level $ 1.2380 during the Asian session on the background of fears that European leaders would not agree on new measures for overcoming the debt crisis in Euro zone.

U.S. Dollar: The dollar rose against a background of falling of Asian stock markets on the background of negative economy statistics from China and Europe. As it was posted by the Federation of Logistics and Purchasing of China the PMI industry of the country recorded 50.4 points in May, which was the lowest level in the past five months. The unemployment rate in the 17 euro zone countries remained at a highest mark of 11% in April in monthly terms, unchanged from the revised in March.

British Pound: During the Asian and European sessions the GBP / USD pair was trading between $ 1.5340 -$ 1.5380 in relatively narrow range on the background that the UK financial markets were closed today due to National holiday as well as on lack of macroeconomics data for today.

Japanese Yen: The USD / JPY pair was trading around Y78.15 during the Asian session and after breaking the resistance level of Y78.20 moved higher to theY78.34 area. The reason that the dollar strengthened against the yen was the fact that the treasuries’ yields rebounded from a record low for the first time in four days. Also, the statements the of Minister of Finance of Japan Mr. Azumi 's about the readiness to take " decisive action " in order to reduce the "excessive movement" of the national currency which were made by June 1 contributed to correction in USD / JPY pair after the three-day of fall.

Australian dollar: The Australian currency dropped today against its competitors on the early Asian session in anticipation of tomorrow's meeting of the Reserve Bank of Australia, where the RBA would probably reduce interest rate by 25 basis points to 3.5%.

American trading session:

 

Euro: The Euro continued to trade higher throughout the American trading session against the background of politicians’ discussions the possible restructuring of the banking sector of euro area as well as the good news from Portugal. The information that the Vice -President of the European Commission, Mr. Olli Rehn as the European regulator was considering the possibility of direct recapitalization of banks through the mechanism of the euro area financial fund of stability had supported the Euro currency and the EUR/USD pair went to the $1.2500 area.

U.S. Dollar: As it was reported today, the volume of Industrial Orders in the U.S. in April 2012 decreased by 0.6 % compared to the analysts’ expectation of predicting their growth by 0.2 %.This news was not supportive for the Dollar and was the reason of its decline during the session against major traded currencies.

Gold: After the Friday’s monster move by almost 60$ the June’s gold futures traded in a range $1608, 2-$1627, 8 per troy ounce on the COMEX today. The Gold futures rose due to increased investment demand for physical Gold caused by fears of further worsening the debt problems in the euro zone.

Oil: The cost of the WTI July’s futures on the NYMEX today rose to the level of $ 83.82 per barrel. Before this correction the Oil prices hit the lowest level in eight months against the backdrop of weak statistics on Industrial Orders in the U.S. in April as well as negative reports on China’s economy.
 

Technical analysis for 5/06

 

EURUSD
The pair is rolling back to 1.25690.
Resistance:  1.25690, 1.26897, 1.28630
Support:  1.23907, 1.21813, 1.19332

GBPUSD
The pair has reached Fibonacci 23%  1.53482.
Resistance:  1.54842, 1.56722, 1.58543
Support:  1.53482, 1.52063, 1.50594

USDCHF
The pair has tested channel line and rolling back to 0.95074.
Resistance:  0.96220, 0.97427, 0.98512
Support:  0.95074, 0.93949, 0.93069

USDJPY
If the pair stays above 78.345 the pair will rise to 79.070. If the pair stays below 78.345 the pair will decline to 77.539.
Resistance: 79.070, 79.707, 80.438
Support:  78.345, 77.539, 76.463

AUDUSD
The pair is trying to stay above 0.97423, it may bring pair to test 0.98436.
Resistance:  0.98436, 0.99207, 1.00067
Support: 0.97423, 0.96579, 0.95611

Source : https://forex-metal.com

When will the markets start to stabilize?

When will the markets start to stabilize?

 Gloomy economic data disturbed markets last week and set off alarm bells that the U.S. economy may be following Europe and Asia into a slowdown. Friday’s grim jobs report showed that the economy added just 69,000 new jobs in May, far below consensus estimates, and the unemployment rate rose to 8.2% from April’s 8.1%

. Equity markets tumbled on the news, and the Dow showed its worst performance of the year, dropping 2.70%, while the S&P and Nasdaq lost 3.07% and 3.17%, respectively. The Dow Jones Industrial Average has now slipped into negative territory for the first time in 2012, exactly one month after closing at a multi-year high. Meanwhile, the S&P 500 is still up 1.6% year-to-date, and the Nasdaq Composite is up 5.5%.

 Earlier in the week, the first quarter GDP growth estimate was revised downward to 1.9%, from the 2.2% originally reported. Although analysts had initially expected GDP growth of at least 2% in 2012, that number is beginning to look overly optimistic. Revisions to reported estimates are worth paying attention to because they can serve as leading indicators of which direction the economy is going next. The jobs data is troubling and has potential to further stall the economic recovery. Rationalizations that a warm winter artificially shifted job growth earlier in the year appear increasingly thin. The job market is simply not growing enough to ignite a robust recovery. Thankfully, the economy is still resilient in some areas.

 Inflation remains reasonably low, auto sales have continued to grow, and falling energy prices are easing the strain on consumer pocketbooks, opening the door to increased consumer spending. Even so, some analysts believe that we are falling into a familiar pattern where the economy gains traction early in the year only to falter in the second quarter.

 With both perspectives in mind, it would be premature to predict which way things will move next. Interestingly, in 2011, the Dow's first close in negative territory for the year was on August 4th, but the year still ended with a 5.5% gain. While it’s hard to dredge up the fortitude to stay invested when faced with such a slate of bad news, we haven’t yet seen the effects of lowered gas prices on consumer spending, and the U.S. is still much better off than Europe.

We live in a dynamic economic system; when one asset class goes down, another comes up. We can’t predict the future, but we should always continue looking for opportunities!

 ECONOMIC CALENDAR: Monday: Factory Orders Tuesday: ISM Non-Mfg Index Wednesday: Productivity and Costs, EIA Petroleum Status Report, Beige Book Thursday: Jobless Claims, Ben Bernanke Speaks 10:00 AM ET Friday: International Trade .

 HEADLINES: Factory activity growth slows in May. The Institute for Supply’s monthly report indicated that U.S. manufacturing grew at a slower rate in May, pushed lower by weaker hiring and declining production. However, positive new orders data suggest that manufacturing will pick up in June.

 Falling gas prices provide reprieve for consumers. A lengthy plunge in oil prices has pushed gas to prices as low as $2.99 in some areas, while the national average has dropped 30 cents since April to $3.61. The drop could give consumer confidence a much-needed boost as Americans have more discretionary income to spend.

Consumer spending rises 0.3% in April. Although consumer spending edged up from March’s 0.2%, the growth was the slowest in five months, indicating that Americans may have trouble sustaining future spending. Spanish P.M. opens door to unified European fiscal authority.

 In a speech, the Spanish prime minister reiterated a commitment to sticking with austerity plans to usher Spain out of a looming crisis and indicated support for the creation of a single fiscal body to maintain the integrity of the euro.

QUOTE OF THE WEEK: “It is hard to fail, but it is worse never to have tried to succeed.” - Theodore Roosevelt Share the Wealth of Knowledge!

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The unemployment in Germany dropped to 6.7% in April; however, the Euro continued to fall.,,

*


DATE REVIEW : 31.05, 2012

*

* *

*Asian and European trading sessions:*

* *

*Euro*: During the Asian trading session the EUR / USD pair has slightly
recovered from yesterday's big sell off day. There were couple reasons
for this growth as well. First, the Euro strengthened against the
backdrop of conducted in Ireland vote for the budget pact which will
establish the austerity measures for the country within the fiscal pact
of EU. Also, the fact of taking profit on short positions at the end of
the month supported the currency growth. As the result, the EUR / USD
pair rebounded above $ 1.2402. The published today macroeconomic data
from Europe did not provide any significant impact on the Euro currency
trading dynamics. The reports came out with mixed results except the one
on the labor market in Germany which showed a decline in unemployment in
this country in April to 6.7% against the forecasted value of 6.8%.
However, the selling pressure on the Euro currency was still strong; the
EUR / USD pair pulled back towards the yesterday's lows of $1.2370 area.

*U.S. Dollar*: The dollar during the Asian session fell against major
currencies on the background of taking profits on long positions on this
currency as well as on anticipation of the publication of the block of
important macroeconomic statistics on the U.S. economy.

*British Pound*: The Pound was trading lower against all its
competitors. The GBP / USD pair tried to recover during the sessions by
rising up to $ 1.5530 level, however after the new sellers came in the
couple fell sharply and updated new lows by breaking many support levels
on its way down to the $1.5390 area.

* *

*Japanese Yen*: There were more and more investors who began to buy the
Japanese currency against the flow of negative news from the euro zone.
As the result the Yen rose against all major currencies. Indeed, the
demand for the yen as for the safe-haven currency grew today on fears
about the banking problems in Spain as well as on the negative fact of
strengthening yields of the Spanish and Italian bonds to the critically
high level. The USD / JPY pair had slightly dropped to Y78.70 during the
Asian session before getting into a deep intraday sell off during the
European session. The pair reached the Y78. 45 area by the end of the
session.

* *

* *

*American trading session:*

* *

*Gold: *The trading dynamics of the Gold were depended on published US
economy macroeconomics data. The number of Americans who first applied
for unemployment benefits grew to 383K versus the forecasted values of
370K and the number of jobs in non-agricultural sectors of the U.S.
economy grew in May only to 133K positions vs. predicted 150K. The cost
of the June Gold futures was kept in the range of $ 1552.8 - $ 1573.6
per troy ounce today on the COMEX.

* *

*Oil: *After the publication of the report on amount of oil in US
inventories from U.S. Department of Energy the Crude oil futures fell
increasing their previous day's losses. As it was reported, the
stockpiles of Crude oil rose for the week of May 25 by 2.2 million to $
384.7 million thus showing the 10th consecutive weekly increase. This
amount was equal to a 22- year high. Also the Oil fell on speculation
that the debt crisis in Europe will slow down the U.S. economic growth
and therefore reduce demand for fuel. The cost of the July WTI futures
fell to $ 85.84 per barrel on the NYMEX today.

*Silver: *The silver's spot prices (XAGUSD) showed today mixed trading
dynamic and were kept in the range of $27.55 to $28.21per troy ounce.

Source : https://forex-metal.com <https://forex-metal.com/>