Why The Bull Run in Gold Could Just Be Getting Started

Why The Bull Run in Gold Could Just Be Getting Started

U.S. debt is skyrocketing with no end in sight. And while the dollar has recently functioned as a short-term safe haven, its long-term fundamentals are deteriorating.

To put it in perspective, U.S. public debt in 2000 was $3.4 trillion. That has now more than doubled to $8.6 trillion. The rate of increase is skyrocketing, with deficit spending of $1 trillion in 2008 and $1.9 trillion in 2009 alone. Current Congressional Budget Office estimates total debt of $5.8 trillion in 2008 to more than double to $12.6 trillion by 2014. That means in the six years (from 2008 to 2014) the country will borrow and spend as much money as it had since its founding in 1776 all the way up until 2008.

A currency is typically as strong as the economic fundamentals behind it. The Government Accountability Office (the U.S. government's auditor) recently said the United States is on a fiscally "unsustainable" path. This skyrocketing debt will likely cause a devaluation in the dollar, and many are forecasting runaway inflation if we don't get our fiscal house in order.

As a result, many predict the dollar will resume its plunge during last decade when it fell more than -40% against other major currencies.

So if the dollar can't satisfy the world's penchant for safety amongst unprecedented uncertainty, what can?

How about gold?

Gold serves as a safe-haven investment, holding intrinsic value in uncertain economic times and isn't tied to the fortunes of any country or currency.

Gold prices have more than quadrupled since 2001 when it traded for less than $300 per ounce, but this could be just the beginning. Today's uncertain markets are prompting a trickle into gold that could turn into a flood in the months and years ahead. Just this year, the price of gold has risen +23% to about $1200 an ounce from the average monthly price of $972 in 2009.

Recent strength in the price of gold portends well for the future. The last time gold had a sustained bull run, the price increased 40-fold from an average of about $35 an ounce in 1970 to a high of more than $800 an ounce in 1980.



SPDR Gold Shares (NYSE: GLD) is an exchange-traded fund (ETF) that seeks to replicate the performance of the price of gold bullion. The fund is a pure play on the price of gold as it holds the physical metal itself as opposed to equity shares of gold mining companies or other less direct gold plays. Each share represents about one tenth of an ounce of gold bullion at current market prices.

This ETF is a fantastic modern day investment that makes owning gold just as easy as buying a stock or mutual fund. Unlike the old fashioned way of investing in gold which involved taking possession and storing the actual metal, GLD enables investors to own gold through an easy to purchase vehicle with NYSE liquidity. Investors can buy or sell shares at will any time the market is open.

Gold is a great way to hedge a portfolio against inflation and a falling dollar, but it is a tricky investment. It's not necessarily a hedge against down or volatile markets. In fact, gold prices actually fell below the yearly averages in the peak months of the financial crisis in late 2008 and early 2009. As well, gold doesn't necessarily perform badly in up markets. While U.S. and world markets soared in the past decade, before the financial crisis, gold prices rallied at the same time.

More than anything else, gold is a safe haven currency substitute during times of uncertainty or inflation. And these uncertain times are enticing investor appetites. According to The Wall Street Journal, central banks are increasingly shifting money out of euros and into gold. This led to gold hitting an all time record high price of $1243 an ounce on the New York Mercantile Exchange in early July. If uncertainty continues, so could the exodus into gold.

Action to Take --> In the short term, the price of gold can be volatile and unpredictable. But, given the extraordinary degree of uncertainty in today's economy and the possibility of inflation in the future, it's a prudent hedge to have some exposure to gold. GLD is a great way to not only hedge a portfolio, but also gain exposure to a possible massive run in gold in the years ahead.

30 Jul 10 : USD under pressure

U.S. Dollar Trading (USD) risk aversion helped the USD off lows but for most of the day the world's reserve currency was under pressure with EUR/USD leading the market higher. Q2 Company results were a little weaker than expected but Weekly Jobless Claims fell to 457k vs. 464k previously. In US stocks, DJIA -39 points closing at 10497, S&P -7 points closing at 1107 and NASDAQ -23 points closing at 2264. Looking ahead, Weekly Jobless Claims are forecast at 459k vs. 464k previously.

The Euro (EUR) was strong in Europe pushing to month highs above 1.3100. The German Unemployment Rate fell to 7.6% in July with a drop of 20k unemployed. The market stalled above 1.3100 and when stocks turned negative in the US session the pair fell back to 1.3050 supports. EUR/USD traded with a low of 1.2976 and a high of 1.3109 before closing at 1.3070. Looking ahead, June German Retail Sales are forecast at -0.2% vs. 0.4% previously. Also released, July EU CPI forecast at 1.7% vs. 1.4% previously.

The Japanese Yen (JPY) dollar weakness in Europe was compounded in the US session due to stock market weakness to help the Yen perform well on the day. USD/JPY is close to the month support at Y86.30 and a break of this level targets Y85. Overall the USDJPY traded with a low of 86.55 and a high of 87.47 before closing the day around 86.70 in the New York session.

The Sterling (GBP) was strong tracking the Euro higher but the market stalled at 1.5660 twice and this prompted a pullback late in the day towards 1.5580 supports. The GBP/JPY was especially heavy falling near 2 Yen over the past 2 days. July Nationwide July House Prices fell -0.5% m/m. Overall the GBP/USD traded with a low of 1.5578 and a high of 1.5665 before closing the day at 1.5620 in the New York session.

The Australian Dollar (AUD) Broke back above 0.9000 in Europe as the market bought dips on the commodity currency aggressively. Weak US stocks put a lid on gain for now but the market is in a strong uptrend ahead of next Tuesday's RBA decision. Overall the AUD/USD traded with a low of 0.8921 and a high of 0.9045 before closing the US session at 0.9010.

Oil & Gold (XAU) Gold kept to a $10 range inside $1160-70. Overall trading with a low of USD$1159 and high of USD $1170 before ending the New York session at USD$1166 an ounce. Crude rebounded on USD weakness reversing 3 days of losses. WTI Oil Closed +$1.37 at $78.36 a barrel.

29 Jul 10 : Profit Taking Takes Place

Profit taking stalls Rally!

Weak economic data and a further pull back in Oil led the stock markets lower overnight but the selling was subdued and the sentiment remains positive. The USD continued to range trade against most majors with small gains against commodity currencies.


The Euro (EUR) market orbited the 1.3000 level after failing to break resistance forming at 1.3050. German CPI remained low at 1.1% y/y in July but support was seen from a successful 13yr Portuguese Bond Auction. EUR/USD traded with a low of 1.2951 and a high of 1.3047 before closing at 1.2990.


The Sterling (GBP) broke above 1.5600 in Asia and but was quite range bound from then on in with GBP/JPY weakness stopped further gains and the market lacked little news to work with. Overall the GBP/USD traded with a low of 1.5544 and a high of 1.5641 before closing the day at 1.5595 in the New York session.


Oil & Gold (XAU) Gold consolidated recent losses sticking to a $10 range. Overall trading with a low of USD$1156 and high of USD $1166 before ending the New York session at USD$1163 an ounce. Oil struggled with weekly inventory data showing a 7.3m barrel surged. WTI Oil Closed -$0.30 at $78.80 a barrel.
Currency to watch out for: EURUSD & GBPUSD

The EURUSD pivot point is at 1.2965 with a preference to enter into Long positions at 1.2965
The GBPUSD pivot point is at 1.5565 with a preference to enter Long positions 1.5565

28 Jul 10 : Oil and Gold Trading

U.S. Dollar Trading (USD) traders were kept on their toes with resistance met on multiple asset classes and some sharp falls in commodities. July CB Consumer Confidence forecast fell 3 points to 50.4 but May House Prices increased 0.5% m/m. In US stocks, DJIA +12 points closing at 10537, S&P - points closing at 1114 and NASDAQ - points closing at 2288. Looking ahead, June Durable Goods are forecast at 1 vs. -0.6% previously.

The Euro (EUR) the rally continued in Europe but ran out of steam late in the day as Oil losses mounted and stocks failed to extend gains. The EUR/USD closed at the 1.3000 figure with the market trading in a tight range so far this week, EUR/JPY did well but EUR/GBP fell back towards 0.8300. EUR/USD traded with a low of 1.2951 and a high of 1.3047 before closing at 1.2990. Looking ahead, July German CPI forecast at 0.2% vs. 0.1% previously.

The Japanese Yen (JPY) was broadly weaker as the market pushed higher on USD/JPY after growing impatient on the downside. Stable markets and an improving technical outlook for the crosses are both encouraging Yen selling. AUD/JPY is sitting close to the Key Y80 level and is a good barometer of risk appetite in the market. Overall the USDJPY traded with a low of 86.81 and a high of 87.99 before closing the day around 87.75 in the New York session.

The Sterling (GBP) failed above 1.5500 on its first attempt but broke higher later in the day on good EUR/GBP selling and GBP/JPY buying. GBP/JPY broke to multi-month highs above Y136 and is targeting Y140 in the short term. Overall the GBP/USD traded with a low of 1.5441 and a high of 1.5602 before closing the day at 1.5580 in the New York session. Looking ahead, BOE Governor King Speaks.

The Australian Dollar (AUD) was strong, holding above 0.9000 the whole day and testing resistance towards 0.9080 in the US session. AUD/JPY buying was the major catalyst but the market is eagerly awaiting today's CPI figures before pushing higher still. Overall the AUD/USD traded with a low of 0.8998 and a high of 0.9071 before closing the US session at 0.9020. Looking ahead, Q2 CPI forecast at 3.4% vs. 2.9% y/y.

Oil & Gold (XAU) Gold pulled back as demand subsided given the multiple failures at $1200. Overall trading with a low of USD$1187 and high of USD $1157 before ending the New York session at USD$1164 an ounce. Oil slid towards $77 on the drop in US consumer confidence. WTI Oil Closed -$0.30 at $78.80 a barrel.

Profiting from Fundamental Analysis

The forex market is by far the most suitable investment medium for realizing the full potential of fundamental analysis. We know that currencies tend to reflect the underlying long-term trends that dominate economic activity at the macro-level. And while technical tools may tell us how something happens in the marketplace, only fundamental methods will give us to confidence to exploit it for the long term, with compounded profits. Let`s take a look at how this is done.

Adapt your trade plan to the dynamics of the era

The first step that a trader must take while planning to exploit a forex price event is defining the nature of the era that a nation`s economy is going through. As national economies across the world become strongly integrated in response to advances in the communication technologies, the correlation between economic trends in individual countries also increases, and in turn, the era, the cycle, however we define it, becomes more of a general theme across nations, depending on the level of integration with the global system as a whole. This is both an advantage, and a disadvantage for the forex trader. It means, first of all, that we can predict, on a general level, the direction of types of cuyrrencies merely on the basis of their interaction with the system as a whole, or in other words, by identifying the role that they play in the wider framework of international economics. This makes identifying and exploiting opportunities easier. But also, this means that one can never think of a truely safe currency that will be totally isolated from trends on a global scale, and will provide the perfect hedging options to protect one`s protfolio from sudden, and general shocks that may influence nations across the board. In sum, in a globalized world, no hedge is a real hedge, and your only protection against speculative losses is lower leverage.

Examine and understand the cycle

Beyond understanding the general characteristics of an era, to create successful and feasible fundamenal scenarios we must examine and understand the business cycle, the phase it is going through, and the role of politics and technology in creating them. Just by understanding the cycle, and creating a solid trading strategy on the basis of that understanding we may able to trade currencies with great results on the longer term. Inquisitive traders will hardly fail to notice the years-long uptrend of the Euro after the 2001 recession, for example, or the rise of the dollar during the dot.com bubble years, or the recent phase of USD strength, each of which lasted for many years, and created low risk opportunities for those who were aware of the causes behind them, and confident enough to trade them.

In another example, we can add that it is nearly impossible to carry trade any currency pair over the long term without an understanding of what leads to the appreciation of carry pairs. The cause, of course, is to be sought in the boom-bust cycle, and the liquidity cycle as global interest rate policies become synchronized, with generalized implications for all. One of the most important consequences of the dynamics creating economic cycles, for example, relates to the role played by speculative capital. At times of tight credit (which implies general political, and social unrest, and economic uncertainty), speculators are unlikely to create bubbles in the real economy. We do not expect speculative capital, or banks (which may be playing this role), to finance a lot of new factories, or to create lots of new trading corporations at a time when there is great uncertainty with regard to the profitability of any long term endeavor. Thus, any bubbles that arise are destroyed quickly (as adverse conditions do not allow the spreading of positive rumors, barring fraud). On the other hand, when the world economy is going through a growth phase, with good employment prospects, and ample credit available to investors, good news are everywhere. At such times, it is hard to find any asset class that does not somehow constitute a bubble. A perfect example of this was experienced during the 2007-2008 economic collapse when almost every major asset class depreciated violently, as multiple bubbles burst.

What use this is knowledge? In short, during busts assets tend to be undervalued, and during boom times, just about everything is overvalued (except for the fear factor). By being aware of the phase of the cycle, forex traders can adjust leverage, risk, and the average lifetime of a trade with greater safety and confidence.

Exploit the main trends by analyzing fundamental news and data

In order to be profitable in forex trading, it is not enough to be aware of the main trends, the overarching economic currents that drive trends in economic life for two reasons. One is that economic trends tend to turn to bubbles over the long term, and an understanding of long term dynamics rarely helps one in identifying when to exit a trade before the destructive stage of the bubble begins. The other is that, since we want to build positions gradually, we need to have some idea of how prices oscillate as they trend, so that we can enter a position at a favorable price, and exit, if we desire, with sizable profits. The knowledge necessary for making this type of decision is acquired through the analysis of data and news. For example, we may know, by our analysis of the cycle, and the other major factors contributing to it, that interest rates around the world will come down over the next six, twelve, eighteen months. In other words, we may be anticipating a recession, or a slowdown at the international scale. But by being aware of high frequency data, such as commidity prices, employment data, or consumer demands, we may be able to identify a particular nation where the central bank is likely to raise rates, even as this course of action goes against the powerful background trend directing policy action in all nations of the world. We can then use this divergence in local and general trends to create a new trade, where we take a counter-trend position in the short term, anticipating that the nation`s economy will, in some time, return to become in harmony with the rest of the wolrd. In our example, for instance, we`d be believing that the central bank is committing a policy error and will have to reverse course in some short time, creating an excellent opportunity for a short position on the currency.

Choose the currency pair to trade by reading the big picture, and time your trade through analysis of news and data

We can now combine the two items above to reach a general strategy that can be applied at different zoom levels, and timeframes. In order to successfully to trade any currency pair, we must understand its interaction with the global markets. What makes it appreciate? And what reduces its appeal? Is it a liquid pair, and if it is not, how sensitive is it to market shocks? How volatile is it in comparison to a benchmark (such as the S&P 500, but much better, an anchor pair such as the EURUSD)? Within the context of volatility, is it a range pair, or a trending pair? And how long do you, as the trader, intend to hold to pair?

These questions are of great importance in determining the profitability, and safety of your trade scenarios, and they can only be determined completely through fundamental analysis. Let us see give some examples.

What makes a pair appreciate/depreciate?

A commodity pair will tend to appreciate in the boom phase of the cycle, and will be even more attractive if the main export commodity is in high demand due to certain technological innovations. For example, we would anticipate copper to appreciate as the global downturn of the 70s came to an end, but with the advent of the information revolution we would be even more bullish on the commodity, and currencies of nations exporting it. In consequence, we would be willing to invest in currencies of copper exporting nations.

Is it a liquid or illiquid pair? How sensitive is it to liquidity shocks?

Both NOKUSD, and AUDUSD are carry trade currencies, and both nations export commodities (Norway has oil, while Australia produces gold, iron, and many otherraw materials.) But because Norway is a relatively small European country, with much of its economic relations focused on the Eurozone, the NOKUSD tends to be a lot less liquid than the AUDUSD pair, which is traded around the world. Similarly, the USDJPY pair is less sensitive to market shocks than the AUDJPY pair, even though both are Yen pairs, because markets regard AUD as a riskier currency (the USD is a reserve currency, and many international loans are dollar-denominated, while AUD has no such advantage.)

How volatile is the pair?

We can measure the volatility of a currency pair by comparing it to the most liquid pair of an era. At our time, EURUSD is the pair that is in greatest demand. Thus, we can compare our favored currency pair to the EURUSD to gauge the risk that we take as a function of volatility.

What kind of patterns does the pair demonstrate?

Each trader has a desired timeframe, and strategy, and will prefer to trade currency pairs that suit best to such a strategy. Understanding and analyzing the movements of currency pairs from this perspective would make long-term decision making easier, increasing our profitability, and reducing the level of uncertainty that we have to deal with during times of volatility.

Conclusion

Fundamental analysis is the most effective tool in trading currencies for a few simple reasons. It gives trader confidence that he knows what he is doing, so surviving volatility becomes a lot easier. It makes long-term planning much more efficient, and increases profitability. Better yet, by engaging in a smaller number of long-term transactions, the broker`s fee is reduced too. Although it can be somewhat more complicated and difficult to understand at times, fundamental analysis gives us the greatest clarity, perspective and decisiveness in trade decisions, and can hardly by neglected without cost, even if you desire to be a purely technical trader.

27 Jul 10 : Stocks Continue Rally, AUD Shines

•The Euro (EUR) traders were nervous ahead of the European open but investors there embraced the bank stress tests and pushed the Euro higher back above 1.3000 before settling just below the figure. Risk appetite and EUR/JPY flows will provide the next direction although many banks are reversing parity calls and instead focusing on the topside over the next 6 months. EUR/USD traded with a low of 1.2888 and a high of 1.3007 before closing at 1.2990.


•The Sterling (GBP) resistance was found above 1.5500 with the market stalling above the key figure. Further gains are likely but the Pound has failed to make straight-line gains in recent weeks so expect volatility. EUR/GBP has resumed its medium term downtrend with 0.8300 the first target. Overall the GBP/USD traded with a low of 1.5416 and a high of 1.5523 before closing the day at 1.5490 in the New York session.


•The Australian Dollar (AUD) broke above the key 0.9000 level riding the recent rally in US stocks. The market is once again turning bullish on the AUD and further targets include 0.9080 and 0.9150. AUD/JPY is stalling at the Y78 level but Y80 is the bull's target. Overall the AUD/USD traded with a low of 0.8940 and a high of 0.9038 before closing the US session at 0.9010.


•Subsiding Eurozone fears have led to a further pullback in Gold with the market settling into an 1175-1200 range waiting for a further catalyst. Overall trading with a low of USD$1200 and high of USD $1185 before ending the New York session at USD$1190 an ounce.
Currency to watch out for: EURUSD & GBPUSD

•The EURUSD pivot point is at 1.2955 with a preference to enter into Long positions at 1.2975
•The GBPUSD pivot point is at 1.5450 with a preference to enter Long positions 1.5450
Today's calendar and market movers:

•EUR Money Supply y/y expected to drop -0.1%
•US CB Consumer Confidence expected at 51.3
•US Richmond Manufacturing Index expected at 14•US S&P / CS Composite - 20 HPI y/y estimated at 3.9%•GBP CBI Realized Sales (index) expected to increase by 2 Equity Markets:

•US equities closed positive yesterday with the DJIA and the SP500 closing 0.97%% and 1.12% respectively. The European bourses were also positive with the FTSE closing 0.72% the DAX and the CAC closing up at 0.45% and 0.81%. The NIKKEI and the HSI at the time of writing is -0.07% and 0.12% respectively.

26 Jul 10 : Euro Banks Stress Test

EU Morning Report - Euro Bank Stress Tests Released!

•The USD continued to struggle in the 'risk on' environment with US stocks extending the week's gains to over 4%. The release of the EU bank stress results did not fault the good mood with most of the action seen in the hours beforehand. In US stocks.


•The Euro was sharply lower in Europe on concerns the Bank stress tests were not tough enough. Helping support though was the release of strong German July IFO at 106 vs. 101 forecast. When the release of the bank stress tests caused little alarm (7/91 failed) and US stocks rallied the Euro was bought up back above 1.2900. EUR/USD traded with a low of 1.2794 and a high of 1.2967 before closing at 1.2909.


•The Sterling had a very strong day on the back of surprisingly strong Q2 GDP figures. Expectations were poor after the Greece Debt Crisis in May but the figures of 1.1% vs. 0.6% forecast were well received. EUR/GBP dropped below 0.8400 and Cable broke to near month highs above 1.5400. Overall the GBP/USD traded with a low of 1.5255 and a high of 1.5449 before closing the day at 1.5420 in the New York session.


•Gold Fell back after failing to hold above the $1200 level but found support at under $1190 to finish in familiar territory. Overall trading with a low of USD$1200 and high of USD $1185 before ending the New York session at USD$1190 an ounce.
Currency to watch out for: EURUSD & USDJPY

•The EURUSD pivot point is at 1.2860 with a preference to enter into Long positions at 1.2860
•The GBPUSD pivot point is at 1.5345 with a preference to enter Long positions 1.5345
Today's calendar and market movers:

•US New Home Sales expected at 0.31 million
Equity Markets:

•US equities closed positive on Friday with the DJIA and the SP500 closing 0.99%% and 0.82% respectively. The European bourses were mixed with the FTSE closing -0.02% the DAX and the CAC closing up at 0.39% and 0.18%. The NIKKEI and the HSI at the time of writing is 0.72% and 0.21% respectively.

23 Jul 10 : Risk Back On ?

U.S. Dollar Trading (USD) was sold across the board as demand for the safe haven eased and the market bought stocks and commodities aggressively. Company Earnings were strong but economic data was a little weak with Weekly Jobless Claims at 464k vs. 449k previously. In US stocks, DJIA +201 points closing at 10322, S&P +24 points closing at 1093 and NASDAQ +58 points closing at 2245.

The Euro (EUR) rallied aggressively after some strong economic data and improvement in sentiment helped lift the pair back to the 1.2900 level. The market is eagerly awaiting the European stress tests released at 1400 GMT. July EU Manufacturing PMI jumped 56.5 vs. 55.2. EUR/USD traded with a low of 1.2736 and a high of 1.2934 before closing at 1.2890. Looking ahead, German July IFO forecast at 101.5 vs. 101.8 previously.

The Japanese Yen (JPY) had a volatile day with the market testing Y110 support on the EUR/JPY and month lows on the USD/JPY at Y86.30 before profit taking and a reversal of stock market direction ignited a fierce short covering rally. Overall the USDJPY traded with a low of 86.32 and a high of 87.25 before closing the day around 87.10 in the New York session.

The Sterling (GBP) led the market higher in Europe after solid June Retail Sales at 0.7% vs. 0.5% forecast. Resistance at 1.5200 was broken and the pair rallied to 1.5300 before running out of steam. Overall the GBP/USD traded with a low of 1.5148 and a high of 1.5299 before closing the day at 1.5280 in the New York session. Looking ahead, Q2 GDP 0.6% vs. 0.3% previously.

The Australian Dollar (AUD) was the strongest currency on the day after breaking above 2 month resistance at 0.8860 to close above 0.8900. RBA Rate hike speculation and surging commodities combined to provide the perfect environment for the Aussie to break higher. Overall the AUD/USD traded with a low of 0.8735 and a high of 0.8955 before closing the US session at 0.8930.

Oil & Gold (XAU) Gold rallied in sympathy with Oil testing $1200 but failing to break the key psychological level. Overall trading with a low of USD$1180 and high of USD $1201 before ending the New York session at USD$1195 an ounce. Oil surged with the change in investor mood with $80 a barrel now the bulls target. WTI Oil Closed +$2.80 at $79.20 a barrel.

21 Jul 10 : Markets brace themselves ahead of Ben Bernanke's speech

The EURUSD yesterday started the session strong as speculation mounted on Ben Bernanke's testimony today. The talk on the street was of a dovish Ben and a downplay on US economic growth. This helped spark a selloff in the USD and the EURUSD traded to 1.3029 making a 2 month high. Part of the move was on the back of stop hunting however with no follow through. Asian supply came in at these levels and capped the gains in the pair gunned more stops on the downside below 1.2900 despite positive comments from the ECB on the EU and the stress test due on Friday. From the data front yesterday we had a very disappointing Housing starts report dropping over -5% for the month relative to the expectation of -2.7%. USDJPY price action on the day was between 87.56 - 86.72.



In the EU we had the weekly ECB refinancing auction which indicated an increased appetite for ECB financing ahead of the stress tests on Friday. Spanish, Irish and Greek auction this week and last went without incident and the Greek T-Bill yields are trading below the IMF 5% benchmark. Focus is firmly fixed on Friday's stress test results and the reaction of the market in terms of realism or not. We already know the Hypo Real Estate bank in Germany has failed the tests however Germany has promised to bail them out if needed. EURUSD price action on the day was between 1.3029 - 1.2840.



In the UK yesterday we saw a widening Public sector borrowing figure which disappointed the markets and reacted by selling the GBP from 1.5300. We also saw MPC member Posen made dovish comments and that there is a 50% chance of further policy loosening. By the end of the session the GBPUSD recovered back above 1.5300 on the back of a weak dollar. Ahead today we have MPC minutes and Retail sales.

The EURUSD pivot point is at 1.2835 with a preference to enter into Long positions at 1.2835
The USDJPY pivot point is at 86.90 with a preference to enter Long positions at 86.50
Today's calendar and market movers:

US equities closed positively yesterday with the S&P500 at 1.14% and the DJIA at 0.74%. The European bourses were negative with the FTSE down -0.17% the DAX and the CAC closing at -0.69% and -0.53% respectively. The NIKKEI and the HSI at the time of writing is -0.23% and 0.55% respectively

21 Jul 10 : Euro traded slightly above 1.3 and briefly anyway

U.S. Dollar Trading (USD) volatility was evident in a wide range of markets yesterday with sentiment turning from very negative to extremely positive over the trading day. Weak results from IBM and Housing data missing expectations sent the Dow Jones Index down at the start of trade for a test of the key 10000 level before rebounding aggressively for the rest of the day. In US stocks, DJIA +75 points closing at 10230, S&P +12 points closing at 1083 and NASDAQ +24 points closing at 2222. Looking ahead, Ben Bernanke Speaks before Congress.

The Euro (EUR) broke above 1.3000 in Early Europe on speculation the US FED may expand its easing operations to help a faltering recovery. This was played down and the Euro fell heavily on fresh worries the Eurozone bank tests were not be tough enough. EUR/USD traded with a low of 1.2838 and a high of 1.3030 before closing at 1.2890.

The Japanese Yen (JPY) was quiet at the start of the day but found solid selling on the mood change in the US session to rally above Y87 and test Y87.50 before easing slightly into the close. Crosses were well bid and the AUD/JPY led the risk currencies to day highs at the new York close. Overall the USDJPY traded with a low of 86.71 and a high of 87.59 before closing the day around 87.40 in the New York session. Update BOJ Policy Minutes - Concern H2 will slow down with withdrawal of stimulus.

The Sterling (GBP) once again weak economic data led to Cable selling at the start of Europe but strong Stocks in the US helped the market to rally above 1.5300. EUR/GBP found solid resistance at 0.8520 and slumped to 0.8430 on Euro weakness. June Public Sector Net Borrowing forecast at 13.1bn came in at 15.4bn. Overall the GBP/USD traded with a low of 1.5150 and a high of 1.5313 before closing the day at 1.5275 in the New York session. Looking ahead, June Retail Sales are forecast at 0.5% vs. 0.6% m/m.

The Australian Dollar (AUD) tracked the stocks markets for a rally in Asia, dip in Euro and rally again in the US finishing at day highs. RBA minutes offered little new with the market focused squarely on the CPI numbers next Wednesday as the decider of August's Rate decision. AUD/JPY was the most active cross up near 2 yen on the day. Overall the AUD/USD traded with a low of 0.8681 and a high of 0.8849 before closing the US session at 0.8825.

Oil & Gold (XAU) rallied on USD weakness with support being found under the $1180 level. Overall trading with a low of USD$1175 and high of USD$1194 before ending the New York session at USD$1191 an ounce. Oil traded higher after dipping in Europe. WTI Oil Closed +$0.90 at $77.44 a barrel.

20 Jul 10 : Moody Downgrade Ireland

•The EURUSD initially traded from 1.2860 to 1.2992 following strong demand that emerged from Asian central banks and sovereign buyers. This rally took place despite a Moody's downgrade of Ireland which gave opportunity for many to buy the dips. As the session went on however we saw fierce protection at the 1.3000 levels as some large option barriers remain. Later in the session we saw Hungary and the IMF fail to agree on some terms regarding their loan agreement which rattled the markets for a while and the 1.30000 barrier looked increasingly difficult to break. Focus this week will remain on the upcoming stress tests due on Friday. Already we know the Hypo Real Estate Bank in Germany is the first to fail the banking stress tests as it does not have enough capital to withstand another slowdown.
•In the US yesterday we saw stocks gain 0.6% on the day as bargain hunting took hold. Corporate earnings both in the US and in Europe were fairly positive at first, however as the session went on IBM released its earnings which disappointed the markets and stocks failed to sustain their gains and closed at 0.6% on the day. The next significant USD event will be Fed Chairman Bernanke's semiannual report to congress tomorrow. The expectation is that he will be rather dovish on the US economic outlook which could significantly weigh on the USD and it maybe the event risk that can push the EURUSD above the 1.3000-1.3020 barriers. Overall price action for the USDJPY on the day was between 87.20 - 86.61.
Currency to watch out for: EURUSD & USDJPY

•The EURUSD pivot point is at 1.293 with a preference to enter into Long positions at 1.294
•The USDJPY pivot point is at 86.65 with a preference to enter Lomg positions at 86.75

19 Jul 10 : Market Disappointed by USA Growth

EU Morning Report - Consumer sentiment disappoints, US growth in doubt!

The USD weakened on Friday as disappointing economic reports and Q3 earnings caused investors to dump the dollar and look for higher yielding assets elsewhere. University of Michigan Consumer sentiment disappointed coming well below expectations at 66.5, we also had a weaker than expected CPI for the month coming in at -0.1%. From the equity side of things we saw Citigroup disappoint by printing earnings of 38 cents per share lower profits. Bank of America fell 7.6% also after releasing disappointing earnings for the quarter. Overall growth prospects for the US have faded and interest rate hike expectations have been pushed to late 2011. Overall price action on the day for USDJPY was between 86.26 - 86.84.
In Europe all eyes remain on the upcoming stress test results, the dilemma here is whether or not the results will be realistic or not. Some banks will need to fail otherwise the markets will not take them seriously and risk aversion may grip the markets again. When comparing the EU stress tests to the US we note that the US tested 19 banks whilst the EU is testing 91 banks. In the US the decisiveness and swiftness of the tests indicated the control the Fed had over the situation. In the EU however with its fragmented leadership may find it hard to agree on any one uniform approach. This can only increase fear of unsatisfactory results. Overall the Euro continued to gain on Friday on the back of Chinese comments saying that the Euro will be one of Chinas foreign reserve markets in the future which caused a massive gain in the EURUSD from 1.2700 all the way up to 1.3006.

Currency to watch out for: EURUSD & USDJPY

The EURUSD pivot point is at 1.286 with a preference to enter into Long positions at 1.287
The USDJPY pivot point is at 87.00 with a preference to enter Short positions at 86.90

Today's calendar and market movers:

EUR Current Account for June is expected at -3.0Bn from-5.1Bn last month
Federal Reserve Governor Elizabeth Duke to speak today at 12:30 PM GMT
NAHB Housing Market Index expected at 16 from 17 last month

Equity Markets:

US equities closed negatively on Friday with the S&P500 at -2.88% and the DJIA at -2.52%. The European bourses were also negative with the FTSE down -1.01% the DAX and the CAC closing at -1.77% and -2.28% respectively. The NIKKEI and the HSI at the time of writing is -2.86% and -0.98% respectively.

19 Jul 10 : Singapore Market Round Up

Singapore stock market and companies daily report


M1 Lifts Q2 Earnings 10% To $40.8m; Declares Higher Dividend

M1 registered a 10% rise in net profit to $40.8m for 2Q10 due to improved operating revenue and larger customer base. M1 also increased its dividend slightly, with a declared interim cash dividend of 6.3 cents a share, to be paid in August, up from 6.2 cents a year back. For the first six months of the year, net profit increased to $80.1m, up 1.5% from the same period last year – or 9.2% if a tax credit adjustment that boosted earnings in the earlier period was excluded. Operating revenue at $472.1m increased 25.3% y-o-y due to higher service revenue and handset sales. Segmentally, service revenue rose 4.8% to S$364.0m, benefiting from an enlarged customer base.

Significance: Judging from the current outlook as well as the impending launch of new fibre-optic broadband highway, earnings for FY10 is likely to improve, compared to FY09.


Jackspeed Buys 80% Of Mil-Com Aerospace For $6.3m

Jackspeed Corporation has entered into a sale and purchase agreement with Mil-Com Investments to purchase 800,000 Mil-Com Aerospace shares representing an 80% stake for $6.3m. Mil-Com Aerospace is in the business of the provision of aerospace engineering support services, aviation training and consultancy services. Jackspeed is currently engaged in the business of manufacturing, upholstering and designing customised quality leather products and accessories for the automotive, marine and aviation sectors.

Significance: In view of the generally competitive business environment and challenging economic conditions, the acquisition will provide a new business opportunity to the Group and serve as a new engine of growth for the Group, so as to enhance long term shareholder value.


Australand Establishes A$1.3b Unsecured Debt Facility

CapitaLand’s Australian unit, Australand, has established a A$1.3b unsecured debt facility. This replaces existing secured facilities totalling A$1.15b. ‘We are pleased to have achieved this first step in moving to a totally unsecured borrowing platform,’ said Australand’s chief financial officer Kieran Pryke. The new facility comprises three tranches: A$325m that expires in Jun-12, A$650m expiring in Jun-13 and A$325m expiring in Jun-14. The former secured facilities were: an A$750m multi-option facility that was going to expire in Aug-11, and three secured bank bilateral facilities of A$248m, A$100m and A$48m expiring in Apr, Jun and Nov-12. The facility reduces the amount of debt expiring in any one year and extends Australand’s debt maturity profile to 2.6 years.

Significance: The new facility is expected to improve Australand’s liquidity position. Coupled with the medium-term euro note programme, this will help the company further diversify its sources of debt capital and improve its access to longer-dated funding.


Tat Hong To Buy The Rest Of Tutt Bryant

Tat Hong Holdings’s subsidiary, Tat Hong International, has agreed to buy all the remaining shares of Tutt Bryant Group (TBG) that it does not already own at 92 Aussie cents ($1.12) a share. Tat Hong Holdings, which already owns 70.36% of Tutt Bryant Group (TBG), offer a price represents a premium of 46% to TBG’s closing price of A$0.63 on the Australian Securities Exchange yesterday. The offer values the ASX-listed construction equipment sales and industrial equipment hire service provider in Australia at A$132m. The directors of TBG unanimously recommend that all holders of TBG shares should accept the offer in the absence of a superior proposal. They intend to accept the offer in respect of TBG shares owned or controlled by them.

Significance: The acquisition is in line with Tat Hong’s plan to extend its presence in Australia. In particular, Australia’s resilient oil and gas and resources sectors will continue to fuel its planned strategic expansion for heavy lifting and haulage services.

16 Jul 10 : Rate Hikes not expected

Rate Hikes not expected until late 2011

The USD weakened across the board yesterday as risk appetite picked up in Europe and economic data continued to be weak in the US. Philly Fed manufacturing failed to meet expectations as well as the Empire state manufacturing survey. Disappointing economic data out of the US is causing interest rate hike expectations to shift to late 2011 and encourages investors to sell USD and buy higher yielding assets such as stocks or risk correlated currencies. A tier one bank released its earnings results yesterday which managed to beat expectations and added to the global risk appetite theme that took hold. The price action in the EURUSD yesterday was phenomenal; as the pair rallied from 1.2705 to 1.2937. Investors shunned fears of Greek defaults as well as reassessed US rate hike expectations, the EUR also benefited from large speculative trades in the EURAUD pair which is thought to have based at 1.4327.
There was little economic news from the Euro zone yesterday despite the single currency's impressive rally. The Euro received its boost from Q2 earnings, from fading EZ debt crisis and from weaker US economic data. Large option structures are said to be placed at 1.3000 with the market expecting a test of these levels with fierce supply coming in. EURJPY price action yesterday was between 113.40 and 112.25.

Currency to watch out for: EURUSD & USDJPY

The EURUSD pivot point is at 1.2830 with a preference to enter into Long positions at 1.284
The USDJPY pivot point is at 87.40 with a preference to enter Short positions at 87.35
Today's calendar and market movers:

EUR Trade Balance for May expected to fall to 0.8Bn from its prior 1.6Bn surplus.
US Core Consumer Price Index m/m expected to remain at 0.1%
Preliminary Consumer Sentiment expected to fall to 74.2


Equity Markets:

US equities closed yesterday with the S&P500 at 0.00% and the DJIA closed at -0.07%. The European bourses were negative yesterday with the FTSE down -0.80% the DAX and the CAC closing at -0.97% and -1.41% respectively. The NIKKEI and the HSI at the time of writing is -2.86% and -0.07% respectively.

15 Jul 10 : Disappointing USA news

Disappointing US retail sales fail to meet expectations!

* The USD traded mixed yesterday with the currency initially losing again most majors on speculation the FED maybe dovish in the ensuing FOMC minutes and that a possible discussion on renewing Quantitative easing. However the FOMC minutes did not indicate a bearish Fed with minimal downwards growth projections of 3.5% - 4.2% for 2011. Following the minutes the USD was bid and the EURUSD reversed its daily gains trading back down to 1.2700. From the financial calendar we had a disappointing retail sales failing to meet expectations and printing a 0.5% decline. US equities were flat despite rallying at the open and then trading in negative territory just ahead of the FOMC. Overall USDJPY price action for the day was between 89.10 - 88.00.

* In Europe yesterday we saw the release of the June CPI data which was as expected at 1.4%. Industrial production came in weaker than expected at 0.9% however still indicating growth in manufacturing. Europe's rescue fund is facing some issues at the moment with Germany's participation not quite certain as yet. Overall the EURUSD traded in a tight range with large option structures been protected at 1.2750 as well as at 1.2700 leaving the pair to trade in a tight range for most of the day.


Currency to watch out for: EURUSD & USDJPY

* The EURUSD pivot point is at 1.2700 with a preference to enter into Long positions at 1.2710

* The USDJPY pivot point is at 88.40 with a preference to enter Short positions at 88.35


Today's calendar and market movers:

* US Producer Price Index for June expected to fall by -0.2%

* US Unemployment Claims are estimated to reach 448 thousand

* US Industrial Production for June expected to remain at 0%

* CAD Manufacturing Sales for June to increase by 0.3%


Equity Markets:

* In US equities yesterday the S&P500 closed at -0.02% and the DJIA closed at 0.04%. The European bourses were negative yesterday with the FTSE down -0.33% the DAX and the CAC closing at 0.30% and -0.13% respectively. The NIKKEI and the HSI at the time of writing is -1.11% and -0.28% respectively.

13 Jul 10 : Focus on Earnings Again

U.S. Dollar Trading (USD) the market remained cautious but optimistic Monday ahead of the start of US company earning releases. Alcoa was in focus after hours in New York and strong numbers help lift US futures to fresh month highs. Risk appetite may be tempered however as Eurozone concerns still linger and important Chinese data is slated for release later in the week. In US stocks, DJIA +18 points closing at 10216, S&P +1 points closing at 1078 and NASDAQ +2 points closing at 2198. Looking ahead, May trade Balance is forecast at -39bn vs. -40bn previously.

The Euro (EUR) fell below the 1.2600 figure in Asia as the markets tested for support. The more noted level at 1.2550 held and the pair was able to trade in a quiet range for the rest of the day. Risk appetite remains strong but the recent rally may have been a little overdone. EUR/JPY is a key cross with bulls targeting a break of Y113. EUR/USD traded with a low of 1.2550 and a high of 1.2648 before closing at 1.2595. Looking ahead, July German ZEW forecast at 25 vs. 28 previously.

The Japanese Yen (JPY) Broke above Y89 in Asian trading on news the leading DPJ government had suffered a defeat in the weekend elections. Resistance above the figure proved to strong however and as crosses remained sluggish the pair slipped back to the mid Y88 region. AUD/JPY remains well supported on dips and could provide direction for the major if stock markets can continue to rally. Overall the USDJPY traded with a low of 88.38 and a high of 89.18 before closing the day around 88.60 in the New York session.

The Sterling (GBP) broke below 1.5000 in Early Europe as the market went after stops and searched for support. At the 1.4950 level support found and the pair surged back 1.5000 before settling into a tight range for the rest of the day. S&P hurt sentiment in New York stating "UK's net general government debt burden may approach a level incompatible with the "AAA" rating; Medium term economic forecasts for UK are less optimistic than assumptions underlying the budget." Overall the GBP/USD traded with a low of 1.4947 and a high of 1.5030 before closing the day at 1.5030 in the New York session.

The Australian Dollar (AUD) was not immune to the profit taking across the market but held up better then most finding support at 0.8700 before rebounding on the strong Alcoa numbers and continued strength in US stock markets. Overall the AUD/USD traded with a low of 0.8700 and a high of 0.8779 before closing the US session at 0.8755. Looking ahead, NAB Business Confidence previously at 5.

Oil & Gold (XAU) fell back under $1200 as the Dollar strengthened and investor demand for alternative investments dropped in favor of stocks. Overall trading with a low of USD$1195 and high of USD$1213 before ending the New York session at USD$1198 an ounce. Oil Came under pressure as profit taking pushed the pair back to $75. WTI Oil Closed -$1.14 at $74.95 a barrel.

12 Jul 10 : Market Risk On

The Dollar was under broad based pressure last week as stocks staged a 4 day rally the biggest since May and the Euro and risk currencies surged. Oil Rallied $4 a barrel and the Dow Jones Index reclaimed the key 10000 level on Wednesday with an impressive 300 point gain. US June Services PMI slipped to 53.8 vs. 55.4 previously and confirmed that the speed of the US recovery is stalling. One positive note however was the drop in Weekly Jobless Claims to 454k vs. 475k previously. The Euro was able to move higher on easing Eurozone crisis concerns and talk of solid bank stress tests to be released on July 23. CDS spreads dropped considerable on European banks and Greece adding to the Euro Rally. The ECB held at 1.0% on Thursday and President Trichet commented that some investors were too pessimistic about the future of the EU. The EUR/USD gained +0.59% closing at 1.2640, after opening the week at 1.2565.

The Japanese Yen positive sentiment and aggressive cross buying made the yen the weakest currency in the market last week with USD/JPY rebounding off Y87 to end above Y88.50. AUD/JPY in particular helped the major push above Y88 on Thursday and large stops above the figure continued the move. The GBP was surprisingly weak as the pound lost its appeal and came under profit taking to stay in an upper range for most of the week. Resistance above 1.5200 proved formidable and the pair eventually fell back back below 1.5100 after multiple failures. The outlook is mixed with UK Government Debt concerns still lingering and cross buying faltering. The BoE held at 0.5% as widely expected. The GBP/USD fell -0.86% closing at 1.5062 after opening at 1.5192. The AUD traded in stark contrast to the previous week with the fortunes of the risk currency changed dramatically by strong economic data and large equity rallies. June Employment Change jumped +45k vs. +15k forecast and the Unemployment rate fell to 5.1% vs. 5.2% previously. The RBA met and held at 4.5% but was relatively upbeat on Asia growth and the Australian economy. The AUD/USD gained +4.09% closing at 0.8773 after opening at 0.8414.

The forex trading week preview

In the States; On Monday, Fed Members Bernanke and Lacker are due to speak. On Tuesday, May Trade Balance is forecast at -39bn vs. -40.3bn previously. On Wednesday, June Retail Sales are forecast at -0.2% vs. -1.2% previously. Also released, Minutes from June's FOMC meeting. On Thursday, Weekly Jobless Claims are forecast at 453k vs. 454k previously. Also released, June Industrial Production forecast at 0.0% vs. 1.3% previously. On Friday, June CPI is forecast at 0.0% vs. -0.25 previously. Also released, UoM Consumer Confidence forecast at 74 vs. 72.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Zew Forecast at 25 vs. 28.7 previously. On Wednesday, June CPI is forecast at 1.4%. On Friday, May Trade Balance is forecast at 1.2bn vs. 1.6bn previously.. In the UK, On Monday, Q1 GDP is forecast at 0.3%. On Tuesday, June CPI is forecast at 3.2% vs. 3.4% previously. On Wednesday, June Claimant Count is forecast at -20k vs. -30k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, May Industrial Production is released and Consumer Confidence. On Friday, BOJ Rate Decisions are forecast to remain at 0.1%. In Australia; On Thursday, NZ Retail Sales are forecast at 0.5% vs. -0.3% previously. Also released, July Westpac Consumer Confidence previously -5.7%. We will provide our previews and reviews of these data releases in the daily summary.

12 Jul 10 : Market Risk On

The Dollar was under broad based pressure last week as stocks staged a 4 day rally the biggest since May and the Euro and risk currencies surged. Oil Rallied $4 a barrel and the Dow Jones Index reclaimed the key 10000 level on Wednesday with an impressive 300 point gain. US June Services PMI slipped to 53.8 vs. 55.4 previously and confirmed that the speed of the US recovery is stalling. One positive note however was the drop in Weekly Jobless Claims to 454k vs. 475k previously. The Euro was able to move higher on easing Eurozone crisis concerns and talk of solid bank stress tests to be released on July 23. CDS spreads dropped considerable on European banks and Greece adding to the Euro Rally. The ECB held at 1.0% on Thursday and President Trichet commented that some investors were too pessimistic about the future of the EU. The EUR/USD gained +0.59% closing at 1.2640, after opening the week at 1.2565.

The Japanese Yen positive sentiment and aggressive cross buying made the yen the weakest currency in the market last week with USD/JPY rebounding off Y87 to end above Y88.50. AUD/JPY in particular helped the major push above Y88 on Thursday and large stops above the figure continued the move. The GBP was surprisingly weak as the pound lost its appeal and came under profit taking to stay in an upper range for most of the week. Resistance above 1.5200 proved formidable and the pair eventually fell back back below 1.5100 after multiple failures. The outlook is mixed with UK Government Debt concerns still lingering and cross buying faltering. The BoE held at 0.5% as widely expected. The GBP/USD fell -0.86% closing at 1.5062 after opening at 1.5192. The AUD traded in stark contrast to the previous week with the fortunes of the risk currency changed dramatically by strong economic data and large equity rallies. June Employment Change jumped +45k vs. +15k forecast and the Unemployment rate fell to 5.1% vs. 5.2% previously. The RBA met and held at 4.5% but was relatively upbeat on Asia growth and the Australian economy. The AUD/USD gained +4.09% closing at 0.8773 after opening at 0.8414.

The forex trading week preview

In the States; On Monday, Fed Members Bernanke and Lacker are due to speak. On Tuesday, May Trade Balance is forecast at -39bn vs. -40.3bn previously. On Wednesday, June Retail Sales are forecast at -0.2% vs. -1.2% previously. Also released, Minutes from June's FOMC meeting. On Thursday, Weekly Jobless Claims are forecast at 453k vs. 454k previously. Also released, June Industrial Production forecast at 0.0% vs. 1.3% previously. On Friday, June CPI is forecast at 0.0% vs. -0.25 previously. Also released, UoM Consumer Confidence forecast at 74 vs. 72.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Zew Forecast at 25 vs. 28.7 previously. On Wednesday, June CPI is forecast at 1.4%. On Friday, May Trade Balance is forecast at 1.2bn vs. 1.6bn previously.. In the UK, On Monday, Q1 GDP is forecast at 0.3%. On Tuesday, June CPI is forecast at 3.2% vs. 3.4% previously. On Wednesday, June Claimant Count is forecast at -20k vs. -30k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, May Industrial Production is released and Consumer Confidence. On Friday, BOJ Rate Decisions are forecast to remain at 0.1%. In Australia; On Thursday, NZ Retail Sales are forecast at 0.5% vs. -0.3% previously. Also released, July Westpac Consumer Confidence previously -5.7%. We will provide our previews and reviews of these data releases in the daily summary.

12 Jul 10 : The Week Ahead

U.S. Dollar Trading (USD) the relief rally continued on Friday with stocks finishing at fresh month highs and investor sentiment remaining strong as Eurozone Banking concerns recede. Focus this week will turn to Q2 Company earning and the subsequent fluctuations of the stockmarket. In US stocks, DJIA +59 points closing at 10198, S&P +7 points closing at 1077 and NASDAQ +21 points closing at 2196. Looking ahead, Fed's Lacker Speaks.

The Euro (EUR) struggled as profit taking set in going into the weekend. Some positive news including the falling CDS spreads on Greece and European Bank Debt was overlooked as the size of the recent rally induced a modest pullback. EUR/USD traded with a low of 1.2608 and a high of 1.2722 before closing at 1.2639.

The Japanese Yen (JPY) held to a tight range with marginal losses against the USD. EUR/JPY and GBP/JPY finished slightly weaker but the AUD/JPY tracked the equity markets to finish at week highs. The weekend holds election risks for the Yen with the ruling DPJ party in danger of losing the majority in the upper house. Overall the USDJPY traded with a low of 88.38 and a high of 88.71 before closing the day around 88.64 in the New York session.

The Sterling (GBP) weak trade data did little to help the pair take advantage of the positive risk environment with cable falling below the 1.5100 in quiet trade on Friday. May Trade Balance fell to -8.1bn vs. -7bn forecast. EUR/GBP is holding just under the 0.8400 as the recent downtrend in questioned by the Euro recovery. Overall the GBP/USD traded with a low of 1.5052 and a high of 1.5202 before closing the day at 1.5060 in the New York session. Looking ahead, Q1 GDP Final forecast at 0.3%.

The Australian Dollar (AUD) with commodities enjoying gains across the board and sentiment towards the AUD returning to previous levels of enthusiasm, traders are once again looking for the uptrend to resume. Serious resistance remains at 0.8860 and future gains will remain beholden to movements in stocks. Overall the AUD/USD traded with a low of 0.8728 and a high of 0.8780 before closing the US session at 0.8760.

Oil & Gold (XAU) found strength in the US session breaking back above the psychological $1200 level to close above $1210. Overall trading with a low of USD$1194 and high of USD$1214 before ending the New York session at USD$1211 an ounce. Oil rallied for a 4th day as investors flocked back to commodities. WTI Oil Closed +$0.65 at $76.10 a barrel.

09 Jul 10 : EUR early market report

CB and BoE leave interest rates unchanged!

* The dollar weakened yesterday as risk appetite kicked-in following ECB President Trichet's press conference. The ECB monetary stance had not altered however Trichet's upbeat attitude permeated confidence across the board. The Euro Zone, Trichet's says, was growing at a moderate pace and that the latest string of data was very good. He also highlighted that the markets have tended to be extremely pessimistic about the European economy however data have not confirmed such a stance. When quizzed about the stress tests however he was reluctant to provide further information saying that everything they wanted to know would be addressed in the release date of the stress tests. Some market participants are arguing that the stress tests are not stringent enough and the results will not bring the necessary confidence in the markets. Others argue that the release of certain scenarios may show that some banks are insolvent and spark another bout to safety in the expense of the financial system. Overall price action in the EURUSD was between 1.2617 - 1.2710.
* In the UK we had the BoE policy rate decision which left interest rates unchanged as widely expected. The GBPUSD had made considerable headway this week following the MPC minutes that showed one member of the BoE diverged from the rest voting for a rate hike. Although economic strength is not supportive for rate hikes a string of higher than expected inflation is worrisome and may deem the need for a hike so as to tame such fears. Industrial production figures were released yesterday which were widely encouraging. The year on year figure came in at 2.6% and the month on month at 0.7% indicating a pickup in activity and casting some hope over the economy. The big fear for UK growth now is the deficit reductions undergone by the new government. Let it be known that almost half of the UK economy equates to the size of government expenditure and a sharp reduction in this spending may jeopardize UK growth. GBPUSD price action was between 1.5173 - 1.5130.

Currency to watch out for: EURUSD & USDJPY

* The EURUSD pivot point is at 1.2620 with a preference to enter into Long positions at 1.263
* The USDJPY pivot point is at 88.25 with a preference to enter Long positions at 88.30

09 Jul 10 : Risk Back On ?

U.S. Dollar Trading (USD) with more positive news in the IMF upgrading World GDP to 4.6% vs. 4.2% the market extended its rally for a third day. The USD was weaker against most currencies as the safe haven was sold in preference for riskier assets. Weekly Jobless Claims dropped to 454k vs. 472k previously. In US stocks, DJIA +120 points closing at 10138, S&P +9 points closing at 1070 and NASDAQ +15 points closing at 2175. Looking ahead, May Wholesale Trade forecast at 0.5% vs. 0.7%.

The Euro (EUR) grinded higher but was relatively contained as the rally lost momentum after significant gains over the past week. The ECB held rates at 1.0% and President Trichet spoke of some investors being too pessimistic on the outlook for Europe. German Industrial Production was strong +2.6% vs. +1.2% previously. EUR/USD traded with a low of 1.2623 and a high of 1.2714 before closing at 1.2690. Looking ahead, June CPI 0.1 vs. 0.1% previously.

The Japanese Yen (JPY) broke and held above the Y88 resistance level on solid risk appetite and strong cross buying. AUD/JPY in particular helped lift the major higher after the strong Aussie Jobs data in the Asian session. May Machine Orders dropped -9.1% vs. -3.1% forecast. Overall the USDJPY traded with a low of 87.78 and a high of 88.66 before closing the day around 88.50 in the New York session.

The Sterling (GBP) remained subdued in the risk on environment unable to push higher as Europe sold cable on weak housing data. June Halifax house prices fell -0.6% m/m. The BoE Held at 0.5% as expected and also kept the Asset purchase program at 200bn. Overall the GBP/USD traded with a low of 1.5100 and a high of 1.5244 before closing the day at 1.5160 in the New York session. Looking ahead, May Trade Balance is forecast at -7bn vs. -7.2bn previously.

The Australian Dollar (AUD) led the markets higher boosted in Asia on exceptionally strong job numbers in June. June Employment change +45.9k vs. +17.5k forecast. June Unemployment Rate 5.1% vs. 5.2% previously. Resistance is now seen at 0.8860 but the market is heavily overbought at this time scale. Overall the AUD/USD traded with a low of 0.8631 and a high of 0.8793 before closing the US session at 0.8760.

Oil & Gold (XAU) was mixed, range trading with weakness in the Dollar being offset by less demand for alternative investments. Overall trading with a low of USD$1187 and high of USD$1208 before ending the New York session at USD$1198 an ounce. Oil Surged back to life on bullish inventory numbers, -5m barrels last week. WTI Oil Closed +$1.37 at $75.40 a barrel.

07 Jul 10 : Market Rally... But for how long

U.S. Dollar Trading (USD) continued to be under pressure as the stock market rallied and US data disappointed. June ISM Services dropped to 53.8 vs. 55.4 previously and confirms a long string of recent data that the US economy is growing slower than previously. In US stocks, DJIA +57 points closing at 9743, S&P +5 points closing at 1027 and NASDAQ +2 points closing at 2093.

The Euro (EUR) continued to press higher breaking above 1.2600 as European stocks rallied more then 2%. The European Debt crisis is subsiding for now as a Spanish Bond offering yesterday went well. Market focus is now turning to the European Bank Stress tests slated for release on July 23. EUR/USD traded with a low of 1.2480 and a high of 1.2664 before closing at 1.2610. Looking ahead, Q1 GDP is expected to be confirmed at 0.2% q/q.

The Japanese Yen (JPY) weakened against all except the Dollar as risk appetite and carry trades such as the AUD/JPY surged higher. Resistance at Y88 held once again and the market is bracing itself for further losses as US data turns south. The EUR/JPY outlook remains cloudy with Y110 the major pivot in recent sessions. Overall the USDJPY traded with a low of 87.33 and a high of 88.00 before closing the day around 87.50 in the New York session.

The Sterling (GBP) underperformed the rest of the market with resistance at 1.5200 proving too much even with the major equity rallies. EUR/GBP broke above 0.8330 with the market pressing higher on Euro demand. GBP/JPY is also weighing with lack of follow through making the bulls restless. Overall the GBP/USD traded with a low of 1.5079 and a high of 1.5230 before closing the day at 1.5140 in the New York session.

The Australian Dollar (AUD) rallied aggressively after a brief sell off at the start of Asia to be the biggest gainer on the day. May Trade Balance surged to 1.65bn vs. 0.5bn forecast and the RBA was upbeat in its assessment in the Australian/Asian Economy going forward. Overall the AUD/USD traded with a low of 0.83 and a high of 0.8315 before closing the US session at 0.8562.

Oil & Gold (XAU) Gold fell through $1200 an ounce as the Euro resurgence reduced demand for gold as an alternative currency. Overall trading with a low of USD$1189 and high of USD$1214 before ending the New York session at USD$1195 an ounce. Bounced with stocks but gains were muted by weak US data. WTI Oil Closed +$0.80 at $71.90 a barrel.

06 Jul 10 : Stock Market Risky Now ?

U.S. Dollar Trading (USD) with the US away on Holiday today the market took most of its cue from Europe which traded with a heavy tone. With the weak sentiment still remaining from Friday's Non Farm Jobs Report the market will be looking to today's ISM Services number for more information about the state of the US economy. In US stocks, DJIA -46 points closing at 9686, S&P -4 points closing at 1022 and NASDAQ -9 points closing at 2091. Looking ahead, June ISM Services forecast at 55.1 vs. 55.4.

The Euro (EUR) pared back some of the Friday's gains on subdued PMI data and conservative comments from ECB's Trichet. Trichet's commented over the weekend that Eurozone governments should continue with Austerity Budgets as this would induce investor confidence and lead to growth. EUR/USD traded with a low of 1.2503 and a high of 1.2560 before closing at 1.2490.

The Japanese Yen (JPY) Yen continued to be strong with the market capped at Y88 and crosses treading water waiting for further direction. The Nikkei continues to remain under pressure and the market is waiting for any comments from the Japanese government on the current trend of the yen. Overall the USDJPY traded with a low of 87.44 and a high of 88.02 before closing the day around 87.60 in the New York session.

The Sterling (GBP) came under pressure when profit taking and weak economic data emerged in Europe. June Services PMI slipped to 54.4 vs. 55.4 previously. The bullish turn for the GBP in the last week may require risk appetite to turn positive for further gains. Overall the GBP/USD traded with a low of 1.5088 and a high of 1.5201 before closing the day at 1.5090 in the New York session.

The Australian Dollar (AUD) was under pressure for most of the day as the market tracked European stocks lower and investors traded carefully ahead of today's RBA Rate announcement. AUD/JPY continued to be sold falling below Y74 and is a key driver of Aussie's short term direction. Overall the AUD/USD traded with a low of 0.8349 and a high of 0.8469 before closing the US session at 0.8360. Looking ahead, RBA Rate Announcement forecast to remain at 4.5%.

Oil & Gold (XAU) came under pressure as profit taking continued to hit the precious metals on rallies. Overall trading with a low of USD$1204 and high of USD$1215 before ending the New York session at USD$1208 an ounce. Kept falling towards the key $70 a barrel level on Global Growth Concerns and a strong USD. WTI Oil Closed -$1.10 at $71.10 a barrel.

Wilmar Buys Sucrogen

CSR Ltd. reached agreement to sell Sucrogen, its sugar and renewable energies business, to Wilmar International Ltd. for 1.75 billion Australian dollars (US$1.5 billion).

The deal could bring to a close months of uncertainty about the fate of Sucrogen, which accounts for about 40% of Australia's annual raw sugar output and is a key participant in the voluntary collective marketing arrangements which keep Australian sugar suppliers from competing with each other on international markets.

Outside of Brazil and India, CSR is one of the largest global suppliers of sugar.

A person familiar with the matter said CSR agreed to the deal with Wilmar as it was higher in value and more certain than a formal offer Bright Food was planning.

CSR's original plan to spin off the sugar division was kicked back by the courts over concerns about asbestos liabilities in CSR's building-products division. That ruling was later overturned and CSR was given permission to proceed, but the group had yet to put the spinoff to a shareholder vote.

The deal with Asian agribusiness Wilmar isn't subject to a shareholder vote, a second person familiar with the matter said Monday. While it is subject to review by Australia's Foreign Investment Review Board, it isn't likely to face as much scrutiny as a Bright Food offer, the person said, because Wilmar is a major publicly listed commercial enterprise in Singapore, whereas China's Bright Food is state owned.

Any change of ownership of Sucrogen is of interest to all cane suppliers and sugar industry participants because of the voluntary collective marketing arrangements for raw sugar operated by industry-owned Queensland Sugar Ltd.

If Wilmar withdrew Sucrogen's support, this marketing arrangement could fracture, setting Australian exporters against one another in international markets, potentially weighing on returns to millers and cane farmers.

Sucrogen accounts for about 2 million metric tons of raw sugar production a year through its seven mills, or about 40% of national output. It also has a 75% stake in refiner Sugar Australia, produces ethanol and cogenerates electricity. Australia exports about 3.2 million metric tons of raw sugar, making it an important regional supplier.

Production increases this year have put pressure on the sugar price, and, while it is still trading above the recent 10-year average, sugar is now trading at about 50% off the January high.

Australia's Canegrowers association, a key farming lobby, said Monday it would like to hold talks with Wilmar to ascertain the group's intentions. Canegrowers had been in talks with Bright Food about its intentions for Sucrogen, but Canegrowers' Chairman Alf Cristaudo said the lobby has no idea about Wilmar's plans.

Wilmar said it "intends to build a significant sugar business, utilizing its proven integrated agribusiness model to replicate its success in other agri-commodities" and said this acquisition will help it jump-start that expansion plan.

05 Jul 10 : Non Farm PayRoll Disappoints (again)

US Non Farm Payrolls disappoints at -125K!

• The dollar weakened modestly across the board following the monthly US Non Farm Payrolls report which painted a weaker than expected jobs market in the US. Markets need a growing job market to help boost sentiment and consumer spending to help drive the economy as the manufacturing sector is running out of steam and the housing sector is failing to pick up to sustainable growth levels. Risk aversion however did not overwhelm the markets as European states successfully managed to overcome certain risk events that involved new bond issues. US Non Farm Payrolls came in at -125,000 jobs just below the expectation of -130,000. US interest rate hike expectations have been pushed out as of late due to the recent downbeat data from the US. Expectations for the rate hike have been pushed out to June 2011 and this has been reflected in US Treasuries and the USDJPY which tracked the yields. USDJPY price action on Friday was between 88.19 - 87.32.
• In Europe over the past few days we saw Germany, Spain and Holland qualify for the semi finals for the football world cup which should bode good for sentiment. Angela Merker was seen celebrating Germany's historic Victory against Argentina and should bode well for her current diminishing public approval ratings. EU Bank stress tests will be released on July 23 and it is hoped that the transparency of the results will help calm markets in regards to counterparty risks and help smooth the credit markets. This week markets will focus on Trichet's post policy meeting conference which will most likely be focused on Q and A on bank stress tests. EURUSD price action for Friday was between 1.2611 - 1.2480.

03 Jul 10 : US Non Farm Payroll

US Non Farm Payrolls expected at -110K!

The dollar weakened across the board yesterday as global growth concerns were in the limelight ahead of today's NFP report. Manufacturing ISM disappointed by dropping to 56.2 pending home sales fell by 30%, construction spending down by -0.2% and we also had an increase in initial jobless claims to 472K. Overall rate hike expectations have been pushed out to 2011 and the USD has lost its safe haven status to the JPY. Today the market is focusing on payrolls with an expectation of -110k jobs been lost. USDJPY price action yesterday was between 1.2200 - 1.2540.



In Europe we saw some positive bond auctions from France and Spain and an ECB 6 day tender of Eur 112 bio to 78 EU banks as a bridge loan so as to roll over future debt maturities. Economic data has remained relatively stable in the EU with Manufacturing PMI coming in line with expectations at 55.6. Overall price action for the EURUSD was very strong as the combination of successful bond auctions by member states, and the weak economic data from the US push the EURUSD to 1.2540 as a bout of short covering took hold and short term specs could not help themselves from adding to the momentum.

FX Trading: How to use the right technical tools

Many beginners choose to jump into trading right away after learning a little a bit about a handful of indicators. But the truth of the matter is that no indicator in itself is enough to trade any price pattern. The key to profitable technical trading is combining the various technical tools in an overall plan, without obscuring the underlying price action too much by so-called overanalysis. To be able to achieve this aim, traders must first acquire a good understanding of indicator classes, and their relationship with different price patterns, before it is possible to exploit them in individual trading scenarios that arise during the day. In this article we perform an introductory study with the aim of uncovering these relationships.

1. Trend Indicators

The main trend indicators are trend lines, moving averages, and sometimes channels. Although a large number of tools can be used in general to analyze trends and determine entry/exit points, the simple toolbox consisting of trend lines and moving averages will do the job well in most cases.

Trend lines represent the shifting of support resistance levels with the passage of time. In other words, as new information becomes available to traders, they move their stop losses, and take-profit orders to different levels which are captured by the use of trend lines. Moving averages are in general more accurate than trend lines because they incorporate actual price data in the calculation of the indicator value, instead of the arbitrary choices that are determine the levels of a hand-drawn trend line. The problem with moving averages is their lagged nature. It takes a while before a moving average will emit the necesary trade signals recognizing a potential trade. Oscillators are rarely of much use in trading trends. Nonetheless some, such as the MACD are highly popular with traders.

Moving Averages

Moving averages compute the artihmetic average of the price action over a specified time period. The simple MAs add prices together (often the closing prices), without any weighting or other modification. Other kinds, such as the exponential MA, add a weighting factor to the computation, emphasizing various phases of the price action under examination according to the vision of the designer. They are valuable as trend indicators because they can define trends in a much less arbitrary way than typical trend lines. Longer term MAs with a period of 100, or even 200, can be exceptionally useful for capturing trend changes, and major directional shifts in the market action. They also provide excellent choices of entry/exit points, especially on strong, well-established trend patterns.

The main problem with them is their lagged nature. MAs can be too late in capturing a trend, and trading highly volatile patterns with them can lead to whipsaws.

Oscillators

One can use any kind of oscillator to trade trends, but since their use often implies some kind of top or bottom-catching, optimal trading strategies will aim to limit their use as much as possible. The difference between using an oscillator in a trending market and using one in a range pattern lies in the identification of oversold/overbought values and the determination of indicator periods. For example, a range trader may be content with using the RSI as an oversold indicator whenever it falls below 30, while a trend trader will only consider an oversold value tradeable after the indicator has remained below 20 for, let`s say, a whole week, before he will initiate a trade on the same basis. Since oversold/ overbought values are very fluid and blurry in trending markets, traders must discard any short term signals in favor of longer lasting, stronger price movements so as to avoid whipsaws and false signals.

Common oscillators favored by trend followers include the MACD, Commodity Channel Index, and Williams Percent Range Oscillators.

2.Range Indicators

Range patterns reflect market phases where traders are unsure about the eventual direction of the price. Sometimes the news flow does not provide sufficient information to break an existing equilibrium in either direction, sometimes there is ample news, but it can be interpreted in different ways, and is of no decisive value. At other times, market liquidity is insufficient for sustaining a long-term breakout from boundaries established by stronger players (such as central banks). These, and any combination of them, along with many other possible conditions may lead to the creation of a range pattern requiring specific techniques and tools for successful exploitation.

It is generally thought that trading ranges is easier than trading trends. We argue that neither is very easy unless the trader has a clear idea on what causes a prevailing trend or range pattern to exist. Nonetheless, since the behavior of a range pattern around the boundaries (the tops and bottoms), is predictable, ranges constitute more beginner-friendly patterns. It is possible, on the other hand, that a range pattern that eventually proves solid against fluctuations will also present such a high level of volatility around the boundaries that it will be very difficult to trade it. Thus, measures of volatility, and an eye for the fundamental causes behind price movements often make trading choices much easier in range trading.

Triangles, and similar Patterns

Triangles can be encountered in any kind of market. They are frequently observed in trends as continuation patterns, but they also exist on smaller time frames as part of large scale ranges (such as hourly formations on a daily range pattern.) The advantage of triangles for range trading strategies is their predictability. A triangle will live through its lifetime and eventually breakdown in either direction, and will in the mean time provide ample opportunities for trading. The disadvantage lies in the difficulty of recognizing and exploiting them in a timely fashion. Towards this purpose, it is in general recognized that each side of a triangle should be touched by the price action for at least five times, but since this is a very arbitrary criterion, many tradeable formations exist that do not obey it as a rule.

Among triangles, the most fickle kind is the symmetrical triangle, while the descending or ascending triangles are only slightly more decisive with respect to the eventual breakout. They are traded most effectively during their development phases, without any strong assumptions about the direction of the breakout. Flags, and pennants are patterns that are generally reliable,and can be classified with triangles, but because they are difficult to recognize, and even harder to trade manually, they are not the source of a large number of trading strategies. Traders who prefer these patterns would do well to try auto-trading methods.

Oscillators

The most popular indicator class for trading ranges is undoubtedly the oscillator. Stochastics, RSI, Parabolic SAR are just three of the many tools created by traders over the years for use in ranging markets. Assuming the range pattern is well-formed, in the sense that its boundaries are easily recognized and strongly defended by a large cluster of preferably insitutional orders, ranges can be traded with great ease by the use of oscillators. All that the trader needs to do is identifying oversold/overbought levels that are registered by the indicator close to the range boundaries, and taking a counter-trend position within the range. Losses in most cases will be limited, since if the price fails to act in accordance with expectations and breaks out in either direction, it is very easy to recognize that the trade has failed. On the other hand, it is equally easy to cash out and take a profit on the basis of different strategies depending on the nature and momentum of the price action, provided that it remains within the range boundaries.

Oscillators depend on varying methods of calculation, but the vast majority are used according to the simple principle of selling at overbought levels, and buying at oversold values. The preference is to identify a signal when either of these levels are reached, and then taking a corresponding position when the price action reverses direction as anticipated.

3.Reversal Patterns

Reversals are difficult to identify in trending markets, but easy to notice in ranges. The reason is that in a trend prices tend to create bubbles, which then go on to reach fantastic values even as the price goes through reversal patterns one after the other. Eventually, the gently sloping price movement will spike up as part of a general logarithmic curve, and in this phase predicting reversals is not a very profitable activity.

A descending triangle in an uptrend, and an ascending triangle in an downtrend are generally thought to signify eventual reversals, howewer, since triangles always signal lack of decision, these guidelines should only be taken as hints, and never as a general rule that can be applied blindly to any trading scenario.

Head and Shoulders Patterns

The head shoulders pattern is one of the most common reversal patterns. As its name implies, the pattern looks like a head and two shoulders either side of it, like a mountain chain with a lofty middle section. This pattern generally arises at the end of an uptrend, signalling that the bulls are unable to break through a certain resistance level, even as they manage a false breakout as a breach of the middle section is achieved for some short time. The mirror image of this pattern, the reverse head and shoulders, occurs at the end of downtrends in the same role. Sellers attempt to break through a certain support level three times, and achieve a fake breach in the second attempt, but eventually give up and hand over control to bulls, or just to profit taking.

Head and shoulders patterns are common, and do not constitute strong signals in the absence of confirmation from other channels.

Conclusions

The best results in technical trading are acquired when intricate planning of details is combined with a strong understanding of the overall strategy, and complemented by solid money management methods. That kind of skill is only gained through frequent practice. As with mathematics, one cannot be a spectator and claim to learn how to trade. Patient practice with careful application of risk controls will in time lead to the acquisition of trading intuition that is the basis of all kinds of successful trading methods.