A very bad GDP number helped provide the currency markets with fireworks on Wednesday and the USD lost ground to the majors. The Advance GDP produced a drop of -6.1%, far worse than the estimate of minus -4.8% and almost matching the fall in the final quarter from 2008. However, not all the components within the GDP were absolutely horrible, while it showed that inventories are incredibly low it did point to stronger consumer demand. Taking that into context some economists might extrapolate that this means manufacturing could see renewed growth when inventories need to be replenished. Following that line of reasoning the Federal Reserve released their FOMC statement yesterday and surprised no one expressing that interest rates will likely remain within the near zero rate policy for a long time, but the report expressed cautious optimism about the economy stating that there are signs of stability returning.
Today the U.S. will release its weekly Unemployment Claims numbers and it is expected to have a number of 639K which would nearly match last week�s outcome of 640K. Also the Chicago PMI data is on schedule and a reading of 35.0 is forecast. Tomorrow the U.S. will publish ISM Manufacturing PMI figures and the University of Michigan will bring forth its Revised Consumer Sentiment findings. The USD lost value yesterday as the U.S. stock markets put in a positive day on heightened hope that manufacturing will somehow see a quicker turnaround. A report this morning says that Chrysler is nearing the prospect of bankruptcy. On the investment horizon, traders should keep in mind that U.S. regulators will release the findings of their Stress Test on the major banks this coming Monday. In short the economic data has offered a slew of contradictory information and has fueled what has become a loud debate on the progress and outlook of the U.S. and international economies as they attempt to climb out of this financial crisis. Having suffered a poor day of trading on Wednesday the USD may face pressure again as its ranges produces questions.
EUR
Continuing a show of strength the EUR climbed back near a two week high against the USD. Economic data from the European Union wasn�t particularly the reason for the positive momentum against the greenback. Both Money Supply and Private Loan numbers from Europe showed negative figures. The Consumer Confidence statistic did turn in a better than expected -31, slightly above the estimate of minus -33. The crux of sentiment that may have helped the EUR yesterday is the thought that the inability of the European Central Bank to garner any conclusions and the lack of a unified front regarding quantitative easing is actually helping the EUR in the short term. The Germans will release their Unemployment Change numbers today and it is expected to produce a 65K result. The broad European Union will also publish its Unemployment data. Tomorrow much of Europe will be shuttered for the Labor Day holiday and this may increase today�s action. The question that is following the EUR is if it will continue to benefit short term from what appears to be a long term dilemma.
GBP
The Sterling had another good day of results against the USD and has entered the higher end of its range again. The GfK Consumer Confidence numbers were released yesterday and had a minus -27 reading, better than the forecast of minus -29. Today the U.K. will see the Nationwide HPI brought forth and a figure of minus -0.4% is estimated. The previous result was a positive 0.9%, thus investors will watching this outcome attentively to see if the U.K. economy is showing a heightened amount of stability. On schedule tomorrow are the Halifax HPI and Manufacturing PMI reports and these numbers should provide impetus into the GBP. The complexities facing the U.K. economy are staggering yet the Sterling has been able to maintain a steady range against the USD. The Sterling has done well under a white hot spotlight and traders will get another opportunity to test their sentiment today.
JPY
The JPY lost ground in late trading against the USD on Wednesday as international equity markets turned in a positive day. The battle between those who have risk appetite and those who are showing risk aversion is an interesting one. While Japanese companies on the Nikkei turned in good results, questions do remain about the long term health of the Japanese economy. Gold turned in a rather conservative day of trading and finished near the 898.00 USD mark. The JPY needs to be watched closely as it is showing the direct results of an uncertain market and moving within a range that is showing signs of growing wider.
written by Robert Petrucci
Does anybody have other good resources that give a similar sort of market recap, not necessarily only forex, commodities etc as they have a relationship with the fx market as well.
The USD rebounded against the majors on Thursday highlighting that the currency markets remain within well known ranges. The U.S. released its weekly Unemployment Claims and it produced a slightly better number than expected with an outcome of 631K compared to the estimate of 639K. Also the Chicago PMI survey was published and it had a reading of 40.1, which was better than the forecast of 35.0. U.S. equity markets turned in basically what became a flat day by showing little impetus. Making news from the corporate front was the announcement that Chrysler is indeed going to pursue bankruptcy in an effort to revamp their business model and allow for a partnership with Fiat. Today the U.S. will release its ISM Manufacturing PMI data and it is expected to have a number of 40.2. The University of Michigan will release its Revised Consumer Sentiment figures too and they are anticipated to turn in a figure of 61.7.
Traders should be aware that today�s market will be focused directly on the U.S. marketplace because of the May Day holiday across much of Europe. Thus investors may be turning their glance to early next week with Pending Home Sales due on Monday and knowledge that the Non Farm Employment Change numbers are scheduled for next Friday. Also expected to deliver power to sentiment is the developing story that the Stress Test due from U.S. regulators on the 4th of May, might actually be postponed. Rumors are circulating that several large banks are disputing findings that the government has claimed. Thus as the examiners and the institutions debate the merits of the report, investors will certainly watch for all road signs which seem to indicate several banks will be warned about amounts of capital on hand which are not considered enough by the government. Because the markets will be thin due to a lack of volume from Europe early today, traders can expect to see some volatility as the Americans step into the center of the ring. The USD had a good day of results yesterday, yet these markets have shown that ranges are being influenced by uncertainty.
EUR
The EUR traded lower on Thursday going into its May Day holiday. The broad Unemployment Rate for the European Union was published and it produced an 8.9% outcome, above the expectation of 8.7%. While trading from Europe will certainly be thin today because of the holiday, investors will have quite a bit to chew on over the weekend while considering their positions. The European Central Bank will be holding their monthly policy meeting next week and the results will be announced on the 7th of May. Also Germany released a new government forecast recently which admitted that their forecast for growth has been slashed and they now predict the German economy will contract by minus -6% this calendar year. This type of information will continue to escalate the debate which is being fanned regarding the way in which Europe is battling the economic downturn. Having lost value on Thursday, the EUR may find that it is under pressure later in the day with the Americas providing most of the trading volume.
GBP
The Sterling was able to maintain the stronger part of its range against the majors on Thursday. The Nationwide HPI was released and had a number of minus 0.4%, but this was better than the estimate of minus -1.2%. The U.K. is open for trading today. The Manufacturing PMI will be published from the U.K. and it is expected to have a reading of 40.2, the previous result was 39.1. If the report can produce a better than expected number it may continue to give the GBP a dose of strength and be a sign that stability is seeping into the U.K. economy, though all numbers still must be considered recessionary. The Halifax HPI has now been pushed back to Monday and that is a tentative date. The Bank of England will be meeting next week and though little may be expected in the way of a change regarding its interest rate, investors will be primed for any new developments regarding quantitative easing. The GBP has kept to the high end of its range against the USD this week and going into the weekend may see some interesting volatility due to thin markets coming from Europe.
JPY
The JPY proved once again that it can provide rapid trading as it lost value to the USD on Thursday. After establishing a following as a safe haven currency in some quarters because it was seen to offer more stability than other Asian currencies, the JPY showed that it can still fall prey to volatility. While equity markets internationally turned in mixed results and the Japanese government issued poor unemployment data, the JPY found itself trading back within the weaker part of its range against the USD. Gold traded downward yesterday but the move appeared rather muted. The JPY may face a cautious day of trading going into the weekend as volume thins because of the holiday.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst
Hey Michael.s@bforex
I enjoy’d reading your post.
I would recommend looking at the mound report. His stuff is pretty good at least in letting you keep an eye on the goings on in the commodity markets.
I find that kitco also posts interesting articles every once in awhile, mostly gold related, but usually there is a nice mix of everything.
Hope this helps.
cheers
Thank you Carlos,
I like kitco, they do have good articles. I never heard of mound but will take a look.
Appreciate the reply
Have a good weekend
Hey Carlos, I took a look at the mound report. Some pretty good stuff there. You are right, while I may not necessarily agree with everything he says at least he points out a few interesting trade setups that I may not be keeping my eye open for in the commodity markets.
Have you ever heard of George Kleinman? I just finished reading another one of his books. He seems to really know his stuff. Especially when it comes to trading grains.
Anyways, cheers
The USD lost ground to all the major currencies on Friday except for the JPY, this on a day of light volume because of holidays essentially leaving the Americas as one of the few active major players going into the weekend. The U.S. released its ISM Manufacturing PMI numbers and they beat expectations with a result of 40.1, the estimate had been 38.4. Also the University of Michigan Consumer Sentiment data was published and produced another good result with a figure of 65.1, above the forecast of 61.7. Today the Pending Homes Sales statistics are on schedule and a gain of 0.1% is anticipated, the previous outcome was a positive climb of 2.1%. Because of the results from the economic reports on Friday, investors who are leaning towards the �green shoots� optimism may have taken on stronger sentiment. U.S. equity markets continued to turn in positive movement too.
The week will start led by more housing sector news, but look for U.S. officials to play their part this week as rumors continue to swirl regarding the Stress Test that the major U.S. banks are undergoing. The findings from the examination will not be released until this Thursday apparently, this because regulators and banks are wrestling over the interpretation of the companies balance sheets. The Stress Test came under criticism from Warren Buffet this weekend, when he said that the analysis would not be the correct one, and that business models should be the focal point of the investigation not merely accounting. Tomorrow the ISM Non Manufacturing PMI will be released, on Friday the Non Farm Employment Change data is on schedule. These reports coupled with the Stress Test and speeches due from various Federal Reserve officials on the calendar this week have the potential to make the coming days a wild ride. The USD has seen big ranges and finds itself being tested by both the EUR and GBP. The USD has shown some short term weakness against the major European currencies the past couple of days and it is a certainty that there are investors who will be willing to traverse against these trends today and tomorrow.
EUR
As the European Union celebrated its May Day holiday going into the weekend , traders witnessed the EUR climbing against the USD as most investors stood on the sideline. This will be a huge week of news for the EUR which will culminate on the Thursday with the meeting of the ECB. The European Central Bank has an immense amount of pressure on it as some of its key members states have had to admit that their growth forecasts are now coming under gray clouds. Both Germany and Italy have stated that their forecasts for growth this year will be less than what they expected. While both countries continue to state optimism for 2010, the IMF has publically said it questions these estimates. The Germans will release their Retail Sales figures today and the number is anticipated to be unchanged from the previous month. Europe will release its PPI data tomorrow and PMI statistics on Wednesday. All of this will lead directly into the ECB meeting later this week when President Trichet is expected to cut the interest rate and talk about unconventional fiscal policy. There is a growing rift within the ruling council of the European Central Bank and some of these cracks may be on public display later this week. It is expected that Trichet will get his way during the meeting since he controls the largest faction within the council but discussions may be severe. The EUR finds itself having performed well the past couple of sessions and this will give traders an opportunity to test its strength today.
GBP
The Sterling continued to show remarkable strength on Friday as it kept its pace against the USD and found itself touching the highs of its range. The U.K. released its Manufacturing PMI statistics and they produced a positive result of 42.9, above the estimate of 40.2. The U.K.�s mortgage approval data was also released on Friday and turned in numbers that met expectations. While the Sterling has certainly enjoyed positive trading the past week, traders will question the results of the GBP because of low volume being within the marketplace. Today the U.K. has a banking holiday which means the Sterling may be moved more by foreign financial systems. The Halifax HPI is tentatively scheduled for tomorrow along with the Construction PMI numbers. The Bank of England is due to meet on Thursday and though the chances of a change to the key interest rate remains low, what investors will gear their attention to are any new developments regarding fiscal policy. The U.K. like the U.S. has seen better economic data the past couple of weeks, yet like its counterpart the numbers are still very much within a down cycle. Many questions face the U.K. about its ability to climb out of this recession and because of that the recent success of the GBP is still getting skeptical glances.
JPY
The JPY lost ground to the USD again on Friday and is back to the weaker part of its range against the greenback. International equities turned in rather mixed results going into the weekend and have left bears and bulls standing eye to eye as they push each other around trying to get better footing. Gold finds itself within the midst of its trading range and is hovering around the 890.00 USD mark, which underscores that uncertainty remains high even though there has been talk of greater risk appetite. Japan will be celebrating holidays until the middle of the week which may affect volatility within JPY trading.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst
A rollercoaster ride awaited the USD on Monday. It started the day stronger against the major currencies but upon a better than expected Pending Home Sales number and swift positive momentum continuing in the equities markets, the greenback began to move lower. The U.S. release of the Pending Home Sales figures turned in 3.2% rise compared to the estimated gain of a mere 0.1%. This result added to the optimistic sentiment prevailing among equity traders who believe that stability may be returning to the American economy. Today the U.S. will publish its ISM Non Manufacturing PMI survey and the forecast is calling for an outcome of 42.5. The marketplace appears to be on the verge of rather important move, while the USD has turned in mixed results the past few trading sessions, the equity markets have remained on the strong side of its recent trend.
The U.S. will be releasing its Stress Test report this coming Thursday and it is expected to be a 150 page document which will be presented by Treasury Secretary Geithner. Persistent speculation continues to be printed that a handful of important banks are being told that they will need to raise additional capital. Causing a bit of a ruckus also yesterday was the announcement by President Obama that he will present new legislation which will try to curb off shore tax shelters for large U.S. corporations. Tomorrow the ADP Non Farm Employment Change numbers will be brought forth, which will serve as a precursor to the important U.S. official report due on Friday. The USD appears to be trading based on the amount of risk appetite that is making its way forward at this time. The action of the USD has had an inverse reaction to gains coming from Wall Street and the international bourses. Thus, one of the critical questions becomes just how long will this current strong movement will continue among the stock markets. Financial stocks have outperformed many other shares but with the results of the Stress Test due on Thursday many investors are at best weary of what will unfold. The USD saw a broad test of its range yesterday and volatility may continue to be fueled with so many risk events on the horizon within the U.S. and from abroad at the end of this week.
EUR
The EUR performed well yesterday against the USD after getting an initial surge of pressure against it. The Germans released their Retail Sales numbers and they turned in a disappointing drop of -1.0% compared to the estimate that said the numbers would be unchanged from the previous month. The European Union also published its Final Manufacturing PMI data which fell in line close to expectations. Also brought forth was the broad European Sentix Investor Confidence survey which turned in a negative -34.3 reading, below the anticipated result of minus -27.8. Europe will release its PPI broad numbers today and tomorrow Retail Sales and Final Services PMI is on the calendar. The crux of EUR sentiment however will come from the upcoming ECB meeting on Thursday which may produce a sudden storm. The key interest rate of the European Central Bank remains the highest of the major central banks and there is no doubt that Europe is in the grips of a strong recession. Questions and debate abound regarding the stance and ability of the ECB to battle the economic downturn which is having a negative affect on many of its member states. The EUR has continued to turn in somewhat positive results the past few sessions and finds itself near short term highs against the USD. However with so much dire economic warnings surrounding the European Union, the query must be the following - is the current value of the EUR is sustainable?
GBP
As the U.K. celebrated a banking holiday on Monday, the Sterling was able to maintain its strong pace against the USD and climbed to new high water marks within this current trend. The GBP will get another opportunity to say whether or not the strength of its range is justified when the Construction PMI and Nationwide Consumer Confidence numbers are released today. Having started to show some stability within its economic data like the U.S., investors will be monitoring these figures closely. It is tomorrow however and Thursday which will be critically important risk event days for the Sterling. The Halifax HPI has been tentatively scheduled for Wednesday along with the Services PMI numbers. With the additional possible impetus of the Bank of England lurking in the shadows on Thursday its stands to reason investors will be challenged with a good amount of intrigue in the coming days. The Sterling has regained its luster the past few weeks as it has shown a steady and positive climb. But like the questions that surround the improvement shown in equities markets, the long term health of the GBP remains perplexing.
JPY
Like the other major currencies, the JPY had a day of mixed results against the USD as it lost some strength early on but picked up steam as Monday came to a close. With Japan still shuttered for the holidays and other Asian markets closed as well volume is mostly coming from outside financial entities. Gold turned in an interesting day of results as it broke above the 900.00 USD mark and has showed stronger signs even amidst gains in the international equities markets. The JPY will continue to be under the gaze of in investors as it hovers near the weaker side of its range against the USD. As of yet the JPY has not had a day in which it has clearly capitulated its value but its range and the weakness it has shown should be watched carefully.
Written by: Robert Petrucci
A day of whipsaw trading met the USD on Tuesday as it started off on its back heels but finished the day gaining on most of the major currencies. The ISM Non Manufacturing PMI survey was released and it produced a reading of 43.7 compared to the estimate of 42.5. Fed Chairman Ben Bernanke testified in front of Congress also yesterday and his comments came in line with expectations. Bernanke said that he believed the pace of contraction has slowed and that the possibility of growth slowly coming back into the U.S. economy could happen by the end of this calendar year. He also pointed to better housing data which he said is showing signs of reemerging stability. The U.S. equity market responded to the better than anticipated data and Bernanke�s comments with a slight drop. Perplexed? Well, this may have taken place because of pressure on the financial sector which is battling growing speculation that the Stress Test which is due to be released tomorrow will say a number of banks need to raise more capital.
Today the ADP Non Farm Employment Change numbers will be presented and a result of minus -644K is expected. This data will be the forerunner of the official U.S. report due on Friday. The next three trading sessions, including today�s, are likely to produce wicked trading ranges. All of the currencies seemingly stand on a cliff with a vast array of economic risk events ready to parade forth. The American employment data will create a great deal of caution among investors who have seen better outcomes from reports recently. However, storm clouds remain entrenched on the horizon, the banking industry still has many problems ahead and while it is easy to voice optimism it is harder to actually make it a reality. The USD will face a test of its sentiment that will give traders an opportunity to try their wares and volatility could be a standard maxim then next 72 hours.
EUR
The EUR found a day filled with push and shove as it gained early on but found itself back around its starting ground against the USD later. The broad PPI numbers released from the European Union showed a drop of -0.7% compared to the estimate of minus -0.5%, showing that deflation and not inflation remains a concern. Today Europe will release its Retail Sales and Final Services PMI data. These numbers will be watched for surprises but the fact is that the results from the European Central Bank�s meeting that will be released tomorrow are the focal points for EUR investors. The ECB has sent out a barrage of mixed signals the past month regarding its interest policy and philosophy on fiscal measures. It is expected that the ECB will cut its interest rate on Thursday to 1.00% but the real fireworks if that comes to pass, will occur from the press conference held with President Trichet afterwards. The overall health of the European economy and the obstacles it faces in creating one unified policy to battle the downturn continue to sound alarm bells for some investors. The EUR is maintaining the high end of its recent range against the USD and it is certain that pressure will be applied.
GBP
Continuing its upward momentum, the Sterling mounted additional hurdles on Tuesday climbing to new highs within its range against the USD. The U.K. having returned from its banking holiday on Monday released a stronger Construction PMI survey than expected, producing a number of 38.1 compared to the forecast of 31.9. Also adding fuel to the sentiment that the U.K. economy has stabilized was the Nationwide Consumer Confidence report showing a result of 50, above the anticipated figure of 43. The Halifax HPI is scheduled for release today if it is not pushed back once again, and it is estimated to have an outcome of minus -1.0%. Also the Services PMI data is on the docket and is projected to be 46.2. The Halifax data will be watched closely by investors who will look to see if the housing numbers are showing additional signs of having reached a bottom. The Bank of England will release its interest rate policy tomorrow but no great surprises are expected from this BoE meeting however. The Sterling has had a good run the past few weeks and it has shown a significant amount of staying power against the USD within this current range, its momentum must continue to be monitored.
JPY
The JPY was able to back away from its recent lows against the USD on Tuesday but it is still remains on the weaker side of its range. Japan continues to be on holiday today and will only resume trading tomorrow which may bring some different sentiment into the market. The price of Gold continues to practice a consolidated pattern and is a tad over the 900.00 USD an ounce mark. The JPY is a good barometer of market uncertainty and tomorrow�s return of Japanese traders will change conditions particularly with a slew of important economic risk events unfolding internationally. The JPY is likely to see cautious trading today until tomorrow when volatility is likely to return.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst
Hi Michael.S
didnt see your usual post this morning so took the liberty of posting it.
I am in a gold trade. Entry was around 897, first profits were 913 area. Got lucky. Looking for a nice push up. Problem is we have lots of data and news coming out in the next two days. Am more inclined to sell it, but, I try to go with the direction of the market. Right now, I am running relatively tight stops. If the market drops below 909 I dont really want to be there. And will wait for a good re-entry point, long or short depends on previous market price action.
Cheers
May 7th 2009, Major Risk Events On Calendar
The USD bounced around within ranges finishing the day down against the GBP and having mixed results against the other major currencies. The markets are pervaded by a high degree of uncertainty due to the rather strong wave of sudden optimism which has been embraced by some traders and led to a rise in risk appetite. While the USD showed little direction, the U.S. equity markets continued their surge forward. Today the U.S. will release the results of the Stress Test on the major banks. Much of the data has been leaked by officials and it is expected that all the banks under examination are going to pass, which might lead to a giant shrug by investors this because the criteria of the report is being looked upon with a critical eye by many. Speculation has been rife that many banks will be told they need to raise capital but there remains doubt among analysts that substantive data investigating the business models of the institutions will have any merit.
The U.S. will also release its weekly Unemployment Claims numbers today and a figure of 639K is the estimate. However it should be noted that the ADP Non Farm Employment Change reported yesterday surprised many with an outcome of minus -491K compared to the forecast of minus -644K. Tomorrow the ever important U.S. Non Farm Employment Change survey will be released and investors who have recently flirted with the notion of allowing them selves a sigh of relief will be watching closely. The U.S. economy has certainly showed signs of stabilizing within the midst of this downturn, but questions remain about the ability to accomplish real growth. The Stress Test survey today may turn out to be a non event but traders must be prepared for the unexpected. Today and tomorrow will be packed with the potential for market moving risk events globally and though it may not prove to be a Pandora�s Box, the currency markets will face rapid fire impetus. The USD finds itself in a precarious juncture and investors may feel a tad edgy having watched it linger the past few days towards the weaker side of its range.
EUR
The EUR experienced a cautious day of trading as it moved swiftly within a range bound pattern. The European Central Bank is holding their monthly policy meeting today and this afternoon will announce the outcome. It is expected that the ECB will cut their interest rate to 1.00%. If that take place the press conference that follows will become the focal point for all traders. This because ECB President Trichet has the tendency for speaking bluntly and investors will be keen to hear a couple of subjects discussed. One, will this be the last interest rate cut by the ECB for the foreseeable future and will rates remain low for a long duration? Two, will the ECB President speak about �unconventional fiscal policy� and measures to create new policies to extend credit to the financial sectors within Europe? Europe did release its broad Retail Sales figures yesterday and it turned in a disappointing minus -0.6% compared to the forecast of minus -0.1%. It was also mentioned last night that Porsche and Volkswagen have agreed to an outline creating a merger of their automobile companies. The crux of the matter for the EUR is the dynamic in which the ECB is able to show that they have a plan to help manage the recession. A unified approach will be looked for by investors today when Trichet speaks about fiscal policy. The ECB meeting looms as the major risk event of the day in the currency markets and trading will be cautious before the results of this gathering are brought forth.
GBP
The Sterling turned in another positive day against the USD. The Bank of England will be holding their MPC meeting today but no further interest rate cuts are expected today. What may come out is a bit of information on further decisions regarding quantitative easing. Yesterday the U.K. turned in mixed data, this as the Service PMI numbers had a good result of 48.7 compared to the forecast of only 46.2. Unfortunately the Halifax HPI release was not as positive as it produced a negative -1.7% outcome, worse than the expected decline of -1.0%. The Bank of England meeting today will take center stage for GBP investors today and the currency may trade in a quiet mode until the moment passes. Tomorrow the U.K. will release PPI data. The Sterling has had a significant run and gained in value the past few weeks. It is trading at the high end of its recent range and has shown few signs of reversing.
JPY
The JPY found a consolidated range on Wednesday as international equity markets turned in positive gains. The Japanese return to the fold today coming back from their long holiday. Having been tagged as a safe haven currency, the recent upswing in the international stock markets has created a range for the JPY against the USD in which it appears to be languishing. Interestingly the price of Gold has crept back up to the 910.00 USD mark which could signal two things. One is that traders still have a large degree of uncertainty. The second reason that needs to be examined is the possibility that long term investors fear inflation creeping in from the horizon. The JPY will continue to be a barometer of risk appetite and the potential for surprises today could stir it.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst