EUR/CHF Forecast for the Week of April 23, 2012, Technical Analysis

The EUR/CHF pair continues to grind sideways and just above the 1.20 level as the market worries about the Swiss intervening. This is a reaction to the “minimum acceptable exchange rate” of 1.20 in this pair as dictated by the Swiss National Bank. Because of this, there is only one direction you can go in this pair – and that is from the buy side. However, there is little in the way of a catalyst in order to get the market to rise. After all, few people actually want to own the Euro. F we get a break down, we could see a massive intervention, and this would push the market up to about 1.24 or so. However, if you are to buy, patience is needed. Selling can’t be done under any circumstance. 

EUR/CHF Forecast for the Week of April 23, 2012, Technical Analysis
EUR/CHF Forecast for the Week of April 23, 2012, Technical Analysis

AUD/USD Forecast for the Week of April 23, 2012, Technical Analysis

The AUD/USD pair rose for the week as the bounce from the 50% Fibonacci level continues to push prices higher. The breaking of the highs from the previous week (shooting star) is needed to be completely confident in this bullish attitude of this pair, and until then it is hard to be long. The bearish case will be difficult to make as well since the 1.02 level has been so supportive. With this in mind, we find this pair one that we would rather leave alone until we break above that candle from the previous week.

AUD/USD Forecast for the Week of April 23, 2012, Technical Analysis
AUD/USD Forecast for the Week of April 23, 2012, Technical Analysis

US and European Market Perspectives for the Week of April 23rd

Rising layoffs, falling home sales and slowing manufacturing activity are sparking fears that the economic recovery is headed for a springtime stall for the third year in a row  The health of the US economy and prospective Federal Reserve policy will dominate global market influences next week.  By far the two biggest factors will be the FOMC on Wednesday and the 2012Q1 GDP report on Friday.  This will be one of the biggest FOMC meetings of the year in that full staff projections will be updated, and the FOMC members provide their updated projections for the fed funds target rate.  The risk here is toward modest upward revisions to growth and inflation forecasts, and a marginal tilt toward earlier hikes in the target rate by some members.  We do not, however, expect any shift in the Fed’s guidance toward no rate changes until the end of 2014 as per the opinions expressed by the power-weighted Fed members including Bernanke’s #2 Janet Yellen and NY Fed President William Dudley.  It is also unlikely that the Fed will provide any changed references to additional stimulus at this juncture.  Chairman Bernanke will host a full press conference on Wednesday at which we would expect him to address the issue of growth sustainability given the disappointing tone of the recent flow of data in job markets, manufacturing, and housing.  Friday’s GDP report  is expected to register a slower pace of growth at 2.5% compared to the 3% pace of the prior quarter, but not everyone is convinced of that and inventory contributions to growth represent one of the bigger uncertainties after inventories contributed half of the gain to growth in Q4.  Other key data points include the Conference Board’s consumer confidence gauge on Tuesday that may soften due to equity market volatility and softening job markets.  New home sales are not expected to break from a flat trend on Tuesday, and a hat trick is performed with the Richmond Fed’s manufacturing survey also due out that day following what has thus far been a disappointing tone to manufacturing surveys so far this month such as Empire and the Philly Fed.  Durable goods orders are expected to decline on Wednesday due to lower aircraft and vehicle orders, but the ex-transportation component may be more resilient.  The US auctions 2s and 5s next week.

European markets may not lead global influences on the market tone next week but they’ll play a significant role nonetheless.  The first round of French Presidential elections occurs on Sunday and the polls have incumbent. President Nicolas Sarkozy and his challenger Francois Hollande running neck and neck with a small edge to Hollande, but the polls have Hollande sharply leading for the second round on May 6th.  Risks to French bonds (and perhaps peripheral bonds) may be represented by the sharp difference between Hollande’s growth focus over austerity measures and the fact that Hollande has already stated that he does not support the EU fiscal compact.  Hollande believes the ECB should lend directly to governments and not perhaps indirectly through loans to banks such as via the LTRO’s two three year funding tranches.  Scotia expects the UK economy to escape the technical definition of a recession marked by two back to back quarterly contractions when the GDP figures land on Wednesday, but only marginally so.  We’re also in the middle of a round of fresh global manufacturing figures that will help update our perspectives on whether global momentum is waning.  Key in this regard will be manufacturing (and service sector) purchasing manager indices to be released on Monday and Germany’s will get particularly close attention.  Data risk is rounded out by German inflation on Thursday and EC confidence measures that same day.  Auctions will occur in each of Spain, Italy and Germany.  

USD/CAD Forecast for the Week of April 23, 2012, Technical Analysis

The USD/CAD pair fell for the week, but remains stuck in the consolidation area of 1.01 to 0.9850 or so. With the recent action, it looks as if we are in one of those massive rectangles that this pair likes to form. With this being said, it is difficult to trade this pair for anything more than a short-term trade. However, a break out of this box would have us either buying or selling, depending on which direction it goes. In the mean time, we aren’t placing any long-term trades in this pair at all. 

USD/CAD Forecast for the Week of April 23, 2012, Technical Analysis
USD/CAD Forecast for the Week of April 23, 2012, Technical Analysis

NZD/USD Forecast for the Week of April 23, 2012, Technical Analysis

The NZD/USD pair hasn’t been moving very much over the last few weeks. The Kiwi is certainly struggling with the recent economic conditions as the world tries to come to grips with the idea of the struggle in Europe, the fears of easing with several different banks, and this will more than likely have a great effect on commodity prices.

The Kiwi, being a commodity driven currency, is struggling to figure out where it wants to go next. The 0.82 level is obviously important as it has kept this pair from falling that far. The recent consolidation has been difficult for the longer-term trader, and it is because of this very problem that we can perhaps use this very fact to help us trade this pair for a longer-term move.

The breaking below of 0.80 could signal longer-term weakness, and this could send the pair much lower. The level is an obvious place to sell from if we get that close. The 200 day EMA is just below the current action in this pair on the daily chart, so we suspect that the path of least resistance is to the upside in this market. However, we would prefer to see the 0.83 level broken to the upside in order to go long. The upcoming FMOC meeting could provide some catalyst for further Dollar weakness, especially if the members mention anything relating to possible quantitative easing in the future. 

The interest rate will be vital to what happens going forward in the Dollar’s future, and as long as the Fed seems “flat”, there is hope for the Greenback. The pair will greatly reflect the tone of the meeting, and as a result we figure this will be the pivotal catalyst going forward. The Wednesday announcement should move this market, and once we get that move, we can either go long above the 0.83 level, or sell below the 0.80 handle. Until one of these levels gives way, we can only be patient and wait for the signal to present itself. 

NZD/USD Forecast for the Week of April 23, 2012, Technical Analysis
NZD/USD Forecast for the Week of April 23, 2012, Technical Analysis

Silver Forecast April 23, 2012, Technical Analysis

The silver markets continued to grind sideways on Friday as the $31 level held up as support yet again. The volatility in this market is almost zero at this point, but the fact that the $31 support level is holding for so long is somewhat telling. We see the support level as going all the way down to the $30 level, and in order to sell this market, we need to break below that on a daily close. In the mean time, we are accumulating small positions and taking small gains as we bounce from the lows, taking what the market is willing to give. 

Silver Forecast April 23, 2012, Technical Analysis
Silver Forecast April 23, 2012, Technical Analysis

Oil Forecast April 23, 2012, Technical Analysis

The Light Sweet Crude markets had a slightly bullish day on Friday, but managed to lose much of the gains by the end of the session. The market found the $104 level, but it held as resistance as the market remained constrained in the recent range. The consolidation will certainly continue to frustrate most traders as it is a scalper’s market at the moment. The recent action has been within the $102 and $105 levels, and the current behavior suggests that this could continue. The $100 level below should continue to be very supportive as well, and as a result it is difficult to suggest a trade for anything more than a short-term move of a few dimes or at most a Dollar as the market is so tightly wound.

The $102 level is the closest thing to an obvious point in the chart at the moment, and the level would be a reasonable place to look for support. All things being equal, the market will more than likely have an easier time rising than falling, but the action will be choppy none the less, and this market will continue to frustrate the average trader. In this scenario, you are either going to have to scalp the markets, or you have to be able to look at the overall picture. China and India both are more than willing to take up the slack for lower demand out of Europe and the United States. So while the markets will focus on this, the demand will more than likely continue to grow over time. Also, the US is starting to show signs of expanding again – and this should continue to push prices higher over time as well.

Having said all of this, we feel that as long as we stay above the $100 mark, buying dips should work overall. However, as stated before: This market is going to take serious guts and fortitude to trade going forward as the market will be pushed and pulled by various forces, most of which won’t necessarily be obvious.

Oil Forecast April 23, 2012, Technical Analysis
Oil Forecast April 23, 2012, Technical Analysis

Natural Gas Forecast April 23, 2012, Technical Analysis

The natural gas market had a bullish day for a change on Friday, as the end of the week will have more than likely prompted a bit of profit taking. The $2 level is now above us, and there is a significant chance that it will become resistance at this point. With this in mind, we don’t expect this bounce to last very long at all. In fact, we are willing to sell at the $2 level if the market approaches it. Also, weakness should be sold no matter where it shows up. Fresh new lows would also be a sell signal as the trend lower continues.

Natural Gas Forecast April 23, 2012, Technical Analysis
Natural Gas Forecast April 23, 2012, Technical Analysis

Gold Forecast April 23, 2012, Technical Analysis

The gold markets were very quiet on Friday as the $1,640 level continues to support this market. The 50 day EMA is just above the recent action, and this will continue to pressure the gold market to the downside. However, there is a massive uptrend line that coincides with the area just below, and because of this – we feel that the market is about to make a serious move. We prefer buying at this point, and will go long as soon as we get a hammer, or a long green candle. A close above the 50 day EMA is without a doubt a massively bullish signal as well. As for selling, we need a couple of sessions below the $1,600 level to feel comfortable doing so. 

Gold Forecast April 23, 2012, Technical Analysis
Gold Forecast April 23, 2012, Technical Analysis

Silver Forecast for the Week of April 23, 2012, Technical Analysis

The silver markets barely moved during the week as the $31 level continues to keep the bears at bay. The market is currently in a downtrend channel, and the market has been grinding lower for about 9 months now. The $31 level is however, very interesting and important as far as we can tell. The $30 level must be broken in order for the market to reach the bottom of the channel again. The breaking above the $36 level would show a real breakout and acceleration of the bullish momentum that the market has seen from time to time over the last couple of years. In the meantime, we feel that this market will continue to be very tight and should only make short-term moves until this massive channel is either broken to the upside, or the $30 level gives way.

Silver Forecast for the Week of April 23, 2012, Technical Analysis
Silver Forecast for the Week of April 23, 2012, Technical Analysis

Oil Forecast for the Week of April 23, 2012, Technical Analysis

The Light Sweet Crude markets ended the week fairly flat as the bulls got pushed back in the end. The resulting candle is a shooting star, but we are sitting on massive support in the $100 to $102 area. The market overall will more than likely be inflated, even with demand waning in the US and Europe. The Chinese and Indians are willing to buy large amounts of oil, and this could continue to put a bit of a bid in this market. With this being said, we are buying dips, but taking profits rather quickly as this market should be choppy going forward. We won’t sell until we get well below the $95 level. 

Oil Forecast for the Week of April 23, 2012, Technical Analysis
Oil Forecast for the Week of April 23, 2012, Technical Analysis

Natural Gas Forecast for the Week of April 23, 2012, Technical Analysis

The natural gas markets fell yet again for the week as the $2 level has finally given way. The bears are in firm control of this market, and as a result we simply cannot buy natural gas under any circumstance. The trend has been relentless, and as a result it is hard to think that it will change anytime soon.

The market has lain to waste many accounts of traders that look at the chart and think that “It can’t keep falling like this”. We would be quick to suggest that the buying of this contract could lead to destruction of your account as there are so many different reasons to sell natural gas.

The supply and demand equation is by far the biggest problem with the idea of higher prices as there are well over 14 trillion cubic feet of known natural gas deposits in the United States alone. This doesn’t include the Canadian fields as well, and the drillers are finding more natural gas deposits on an almost daily basis as the technology to extract it becomes more and more efficient.

The $2 level should act as resistance, but even if it doesn’t – we are still selling the market overall. After all, the $2.20, $2.40, $2.50, $2.60, $2.80, and $3 levels are all possible places where the sellers could step back into the markets and push prices lower. The $3 level would have to be broken to the upside on a weekly close in order to consider the possibility of buying. Still, even with this, we would more than likely be looking at a pullback for the sellers, not a trend change.

The markets should continue to fall, but will be susceptible to sideways grinding from time to time. There are many analysts on Wall Street that are calling for $1 natural gas, and the way this market has fallen, it would be hard to say that it’s an impossibility. In fact, we are now even seeing some calls for $0.75! Because of this, we sell new lows and rallies. It has worked well for months, and there is nothing to suggest that it is going to be any different going forward. 

Natural Gas Forecast for the Week of April 23, 2012, Technical Analysis
Natural Gas Forecast for the Week of April 23, 2012, Technical Analysis

 

Gold Forecast for the Week of April 23, 2012, Technical Analysis

The gold markets had a fairly quiet week as the market currently flirts with a long-term trend line. The trend line has been around since 2009, and a break of it would signal a significant move. The $1,600 level is starting to look more and more like a potential front line in the battle. The $1,640 level is holding as support so far, and because of this so far we are still bullish. However, we need some momentum to pick up this market. As long as we are above the uptrend line, we have to be either long or flat. We cannot sell unless we get a serious break below the line. We are buying dips at this point, and long green candles.

Gold Forecast for the Week of April 23, 2012, Technical Analysis
Gold Forecast for the Week of April 23, 2012, Technical Analysis

British Pound Finishes Week Sharply Higher

The British Pound closed sharply higher against the U.S. Dollar this week, putting the currency on the bullish side of a Fibonacci retracement level at 1.6089 and setting up a potential test of a downtrending Gann angle at 1.6258. Traders should look for an acceleration to the upside once the 1.6165 swing top from the week-ending November 4 is violated.

British Pound Finishes Week Sharply Higher
British Pound Finishes Week Sharply Higher

Last week the British Pound rallied after minutes from the Bank of England’s latest meeting showed the central bank was less inclined to expand its bond-buying program. In addition, data showing an unexpected decline in the U.K.employment rate to 8.3% from 8.4% also drove up demand for theSterling. The British Pound received its final boost for the week on Friday after British retail sales volumes rose a stronger than expected 1.8% in March according to the U.K. Office for National Statistics.

The strength in the British Pound is a sign that near-term expansion of the bond-buying program is unlikely, however, the program has not been fully eliminated and may be reignited later in the year if demand becomes weak. Traders should also keep in mind that sovereign debt issues on the Euro Zone remain an active threat to the U.K.economy.

Traders should watch for profit-taking following the initial test of the Gann angle resistance at 1.6258. Any weakness should not be perceived as trend changing, however, a closing price reversal top on either the daily or weekly charts will be a sign that the selling is greater than the buying at current price levels.

USD/CAD Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction: The Canadian Dollar moves in reaction to the US Dollar. Movements are small and easy to track and trade. The Canadian Dollar also responds to economic reports within Canada. It has little action against foreign currencies except during major moves or crisis.

The USD/CAD is the single biggest beneficiary of rising oil prices. Canada which is already the biggest exporter of oil to the US will experience a boost to its economy when oil price continue to increase. Therefore, if oil rises the Canadian dollar is likely to follow. Over the past years, the correlation between the Canadian dollar and oil prices has been approximately 81%. 

Analysis and Recommendation:

The USD/CAD is trading at 0.9922, the week started off with the USD as high as 1.0033.

As the weekends, worries over Euro Zone debt and economic growth in the US and China continue to grip commodities and were seen trading in a very tight range waiting for fresh cues for further directional moves. In a lackluster trading, spot gold held steady. Base metals in LME traded mostly flat as investors remained cautious after weak economic indicators from the U.S. Though, successful French and Spanish bond auction allayed concerns over Euro Zone’s deteriorating financial health to some extent. Unexpected rise in German business climate assessed by Ifo lifted the sentiments too. LME copper managed to hang above $8000 a ton.  In tandem with the international market, movements in MCX base metal complex and bullions were dreary.  Crude oil rose for the first time in three days supported by positive German data. Meanwhile, G-20 finance ministers and central bankers are to meet in Washington later today. The Indian rupee was seen bouncing off a 3-month low it hit during previous session at 52.11 up 0.17 percent

Market emotions remained rather subdued in the wake of persistent debt concerns in the Euro region in spite of a strong German business sentiment. Looking into the evening, no major economic data is slated for release. The ongoing G-20 finance minister’s meet in Washington would be the key event markets would be looking up to take cues from.  With Chinese economy going through a lean patch, possible Chinese Central bank liquidity action in the coming days could be a marquee event and have a real impact on the commodities.

Overall, the week has witnessed Euro zone debt crisis scaling up with yields on Spanish and Italian bonds reaching unacceptable levels, which prompted Greece, Ireland and Portugal to ask for bailout.

Consumer price inflation in Canada rose less-than-expected last month, official data showed on Friday. In a report, Statistics Canada said that Canadian consumer price inflation rose to a seasonally adjusted 0.4%, from 0.4% in the preceding month. Analysts had expected Canadian consumer price inflation to rise 1.0% last month.

The Bank of Canada announced Tuesday that it will keep its benchmark interest rate unchanged at 1%. The overnight lending rate has been kept at this level since September 2010. The bank said Canadian economic momentum is “slightly firmer”

The number of Americans who filed requests for jobless benefits totaled 386,000 last week, keeping claims at a four-month high, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. Economists had projected claims would drop to a seasonally adjusted 374,000 in the week ended April 14, so the number is likely to disappoint investors. The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750, the highest level since late January. Continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7, the Labor Department said. 

Sales of existing homes fell 2.6% in March, the second monthly drop though the sales pace in the first quarter was the best in five years, according to data released Thursday. The National Association of Realtors said.

 A gradual improvement in U.S. economic growth is expected past the summer, the Conference Board said Thursday as it reported that its index of leading economic indicators increased 0.3% in March, led by the interest rate spread.

Construction employment should continue to stabilize as those workers finishing jobs have opportunities for new ones Although U.S. builders start work on new homes at a sharply slower March pace, construction permits jump to their highest level in 3 1/2 years, data showed. Builders began construction on new U.S. homes at a slower pace in March, but permits jumped to the highest level since September 2008, the Commerce Department reported Tuesday. Housing starts fell 5.8% last month to an annual rate of 654,000.

Major Economic Events for the past week actual v. forecast

 USD

 

Retail Sales (MoM)

0.8%

0.3%

1.0%

 

 

 USD

 

Core Retail Sales (MoM)

0.8%

0.6%

0.9%

 

 

 AUD

 

Monetary Policy Meeting Minutes

 

 

 

 

 

 EUR

 

ECB President Draghi Speaks 

 

 

 

 

 

 CAD

 

Interest Rate Decision

1.00%

1.00%

1.00%

 

 

 GBP

 

MPC Meeting Minutes

 

 

 

 

 

 GBP

 

Claimant Count Change

3.6K

7.0K

4.5K

 

 

 CAD

 

BoC Monetary Policy Report

 

 

 

 

 

 USD

 

Initial Jobless Claims

386K

370K

388K

 

 

 USD

 

Existing Home Sales

4.48M

4.62M

4.60M

 

 

 GBP

 

Retail Sales (MoM)

1.8%

0.5%

-0.8%

 

 

 GBP

 

Retail Sales (YoY)

3.3%

1.4%

1.0%

 

 

 CAD

 

Core CPI (MoM)

0.3%

 

0.4%

 

 

  

Historical:

Highest: 1.0842 CAD on 01 Nov 2009.

Average: 1.0147 CAD over this period.

Lowest: 0.9435 CAD on 26 Jul 2011.

Economic Highlights of the coming week that affect the American and Canadian Markets.

 CAD

 

Wholesale Sales (MoM)

 

-1.0%

-1.0%

 

 

 CAD

 

Retail Sales (MoM)

 

 

0.5%

 

 

 CAD

 

Core Retail Sales (MoM)

 

1.0%

-0.5%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

Silver Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction: Silver futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of silver (eg. 30000 grams) at a predetermined price on a future delivery date.

Some Facts about Silver

Silver is a soft, shiny and heavy metallic element with a brilliant white luster. A very ductile and malleable metal, its thermal and electrical conductivity is the highest of all known metals.

Besides being used as a store of value, other main uses of silver include applications in areas such as electronics, photography and as antiseptics.

Consumers and producers of silver can manage silver price risk by purchasing and selling silver futures. Silver producers can employ a short hedge to lock in a selling price for the silver they produce while businesses that require silver can utilize a long hedge to secure a purchase price for the commodity they need.

Silver futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable silver price movement. Speculators buy silver futures when they believe that silver prices will go up. Conversely, they will sell silver futures when they think that silver prices will fall.

Analysis and Recommendations:

Silver spent most of the week trailing gold. It closed at 31.66/oz after hitting a high of 32.00.

As the weekends, worries over Euro Zone debt and economic growth in the US and China continue to grip commodities and were seen trading in a very tight range waiting for fresh cues for further directional moves. In a lackluster trading, spot gold held steady. Base metals in LME traded mostly flat as investors remained cautious after weak economic indicators from the U.S. Though, successful French and Spanish bond auction allayed concerns over Euro Zone’s deteriorating financial health to some extent. Unexpected rise in German business climate assessed by Ifo lifted the sentiments too. LME copper managed to hang above $8000 a ton.  In tandem with the international market, movements in MCX base metal complex and bullions were dreary.  Crude oil rose for the first time in three days supported by positive German data. Meanwhile, G-20 finance ministers and central bankers are to meet in Washington later today. The Indian rupee was seen bouncing off a 3-month low it hit during previous session at 52.11 up 0.17 percent

Market emotions remained rather subdued in the wake of persistent debt concerns in the Euro region in spite of a strong German business sentiment. Looking into the evening, no major economic data is slated for release. The ongoing G-20 finance minister’s meet in Washington would be the key event markets would be looking up to take cues from.  With Chinese economy going through a lean patch, possible Chinese Central bank liquidity action in the coming days could be a marquee event and have a real impact on the commodities.

Overall, the week has witnessed Euro zone debt crisis scaling up with yields on Spanish and Italian bonds reaching unacceptable levels, which prompted Greece, Ireland and Portugal to ask for bailout.

Economic Highlights of the coming week that affect the  US, Euro, GBP, and Franc

 EUR

 

Industrial New Orders (MoM)

 

-0.5%

-2.3%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 GBP

 

GDP (YoY)

 

0.3%

0.5%

 

 

 GBP

 

CBI Industrial Trends Orders

 

-20

-8

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

 GBP

 

Nationwide Consumer Confidence

 

 

44

 

 

 GBP

 

CBI Distributive Trades Survey

 

-4

 

 

 

 CHF

 

KOF Leading Indicators

 

0.26

0.08

 

 

 

USD/CNY Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction:  For years, other countries have been asking China to let the yuan, also called then renminbi, to float more freely on the currency market. It appears that China is doing that now, with an announcement that the yuan will be allowed to float more freely against the US dollar.

China announced that it will allow the yuan to float a little more freely against the US dollar, allowing the currency to move one per cent to either side of the US dollar currency peg. The yuan will not be a truly free floating currency as a result of the new policy, but it will have a little more flexibility.

For years, Western countries, especially the United States, have charged that the Chinese undervalue their currency, keeping it artificially low against the US dollar. This allows for an edge in exports, as a weaker yuan makes goods cheaper to purchase by consumers in other countries. Many expect that if Chinese policymakers were to ever let the yuan freely float, it would appreciate quite quickly.

Weekly Analysis and Recommendation:

The USD/CNY closed the week at 6.3047 after bouncing around all week on worries over Chinese and US economic recovery. The yuan traded as low as 6.2924 and hit a high of 6.3202.

As the weekends, worries over Euro Zone debt and economic growth in the US and China continue to grip commodities and were seen trading in a very tight range waiting for fresh cues for further directional moves. In a lackluster trading, spot gold held steady. Base metals in LME traded mostly flat as investors remained cautious after weak economic indicators from the U.S. Though, successful French and Spanish bond auction allayed concerns over Euro Zone’s deteriorating financial health to some extent. Unexpected rise in German business climate assessed by Ifo lifted the sentiments too. LME copper managed to hang above $8000 a ton.  In tandem with the international market, movements in MCX base metal complex and bullions were dreary.  Crude oil rose for the first time in three days supported by positive German data. Meanwhile, G-20 finance ministers and central bankers are to meet in Washington later today. The Indian rupee was seen bouncing off a 3-month low it hit during previous session at 52.11 up 0.17 percent

Market emotions remained rather subdued in the wake of persistent debt concerns in the Euro region in spite of a strong German business sentiment. Looking into the evening, no major economic data is slated for release. The ongoing G-20 finance minister’s meet in Washington would be the key event markets would be looking up to take cues from.  With Chinese economy going through a lean patch, possible Chinese Central bank liquidity action in the coming days could be a marquee event and have a real impact on the commodities.

The manager of China’s massive foreign exchange reserves and lenders are working together to ease funding for overseas investments. But major state-owned enterprises are preferred and financing is only available for projects that fit the government’s “going out” strategy

China’s yuan meanwhile took a slight drop lower against the dollar after the country’s central bank widened the daily trading band for the closely-controlled currency to 1.0 percent above and below a daily midpoint, double the previous 0.5 percent.

The operator of Hong Kong’s stock and futures exchange said late Thursday it plans to introduce offshore yuan futures in the third quarter to provide a way for investors to hedge their exposure to the Chinese currency.

The number of Americans who filed requests for jobless benefits totaled 386,000 last week, keeping claims at a four-month high, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. Economists had projected claims would drop to a seasonally adjusted 374,000 in the week ended April 14, so the number is likely to disappoint investors. The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750, the highest level since late January. Continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7, the Labor Department said. 

Sales of existing homes fell 2.6% in March, the second monthly drop though the sales pace in the first quarter was the best in five years, according to data released Thursday. The National Association of Realtors said.

 A gradual improvement in U.S. economic growth is expected past the summer, the Conference Board said Thursday as it reported that its index of leading economic indicators increased 0.3% in March, led by the interest rate spread.

Economic Highlights of the coming week that affect the Yuan, Yen, Aussie and Kiwi

 AUD

 

CPI (QoQ)

 

0.6%

 

 

 

 AUD

 

Trimmed Mean CPI (QoQ)

 

0.6%

0.6%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

 NZD

 

Interest Rate Decision

 

2.50%

2.50%

 

 

 JPY

 

Tokyo Core CPI (YoY)

 

-0.4%

-0.3%

 

 

 JPY

 

Unemployment Rate

 

4.5%

4.5%

 

 

 JPY

 

Retail Sales (YoY)

 

9.8%

3.5%

 

 

 JPY

 

Interest Rate Decision

 

 

0.10%

 

 

 

USD/JPY Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction: In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment. 

  • The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
  • Japanese government intervention to maintain their currency sends USD/JPY lower

 

Analysis and Recommendation:

The USD/JPY is trading at 81.52. The weight is on Asian equities today (though China is outperforming), with the region headed towards a flat to lower performance on the week. The global all‐world aggregate (based on MSCI data) has fared a bit better, but could be flat as well depending on today’s Western market performance. The equity background has played against a generally better bid USD, in keeping with the typical correlation in a week where risk sentiment remained fairly repressed. Indeed, sentiment has been repressed enough to give both the USD and EUR a bid (on a trade‐weighted basis) versus Asian non‐Japan currencies.    Yesterday we commented that despite the apparent near term re‐acceleration in industrial production in Asia, global growth dynamics are still too repressed to suggest a driver for currency appreciation. Instead it is the Federal Reserve and monetary expansion that most favors support for the Asian FX space; in the near term on its own merits, Asia non‐Japan will find difficulty in sustaining rallies. Indeed next week both the Federal Reserve and Bank of Japan will announce policy, and it is the latter that looks biased to continue to ease given Governor Shirakawa’s recent comments regarding “continuing powerful monetary easing”.   

Yesterday’s Spanish bond auction did not bring any kind of horrible market punishing result, though auction yields were of course higher than back in January when the last 10‐year sale occurred. Ultimately Spanish bonds fell post‐auction, and the 10‐year sold off to yield 5.925% vs. the 5.743% at the auction

The yen also continued to climb as traders sought safe havens amid worries about new deterioration in the eurozone.

The Bank of Japan may raise its consumer inflation outlook for the current and next fiscal years, though the new forecast would remain below the level the central bank has tagged as necessary to tighten its policy, according to a Nikkei report.

The number of Americans who filed requests for jobless benefits totaled 386,000 last week, keeping claims at a four-month high, the U.S. Labor Department said Thursday. Claims from two weeks ago were revised up to 388,000 from an initial reading of 380,000. Economists had projected claims would drop to a seasonally adjusted 374,000 in the week ended April 14, so the number is likely to disappoint investors. The average of new claims over the past four weeks, meanwhile, rose by 5,500 to 374,750, the highest level since late January. Continuing claims increased by 26,000 to a seasonally adjusted 3.3 million in the week ended April 7, the Labor Department said. 

Sales of existing homes fell 2.6% in March, the second monthly drop though the sales pace in the first quarter was the best in five years, according to data released Thursday. The National Association of Realtors said.

 A gradual improvement in U.S. economic growth is expected past the summer, the Conference Board said Thursday as it reported that its index of leading economic indicators increased 0.3% in March, led by the interest rate spread.

Rising layoffs, falling home sales and slowing manufacturing activity are sparking fears that the economic recovery is headed for a springtime stall for the third year in a row.

Monday sees March quarter producer price index data released by the ABS. Analysts are tipping the figures to show that producer prices rose by 0.5 per cent in the quarter and by 2.2 per cent over the year, suggesting that price pressures at a producer or business level are contained.

Tuesday sees long awaited consumer price index figures for the quarter. Economists are expecting the data to show the headline rate of inflation rose by 0.5 per cent, with the annual growth rate easing from 3.1 per cent to 2 per cent.

Markets are closed on Wednesday for the ANZAC Day public holiday.

On Thursday, the Department of Education and Workplace Relations will release its skilled vacancies index for March.

Friday brings March new home sales data from the Housing Industry Association.

And finally, the Bank of Japan will hold it monetary policy meeting for April, and release its outlook report.

Major Economic Events for the past week actual v. forecast

 USD

 

Retail Sales (MoM)

0.8%

0.3%

1.0%

 

 

 USD

 

Core Retail Sales (MoM)

0.8%

0.6%

0.9%

 

 

 AUD

 

Monetary Policy Meeting Minutes

 

 

 

 

 

 EUR

 

ECB President Draghi Speaks 

 

 

 

 

 

 CAD

 

Interest Rate Decision

1.00%

1.00%

1.00%

 

 

 GBP

 

MPC Meeting Minutes

 

 

 

 

 

 GBP

 

Claimant Count Change

3.6K

7.0K

4.5K

 

 

 CAD

 

BoC Monetary Policy Report

 

 

 

 

 

 USD

 

Initial Jobless Claims

386K

370K

388K

 

 

 USD

 

Existing Home Sales

4.48M

4.62M

4.60M

 

 

 GBP

 

Retail Sales (MoM)

1.8%

0.5%

-0.8%

 

 

 GBP

 

Retail Sales (YoY)

3.3%

1.4%

1.0%

 

 

 CAD

 

Core CPI (MoM)

0.3%

 

0.4%

 

 

Economic Highlights of the coming week that affect the Yuan, Yen, Aussie and Kiwi

 AUD

 

CPI (QoQ)

 

0.6%

 

 

 

 AUD

 

Trimmed Mean CPI (QoQ)

 

0.6%

0.6%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

 NZD

 

Interest Rate Decision

 

2.50%

2.50%

 

 

 JPY

 

Tokyo Core CPI (YoY)

 

-0.4%

-0.3%

 

 

 JPY

 

Unemployment Rate

 

4.5%

4.5%

 

 

 JPY

 

Retail Sales (YoY)

 

9.8%

3.5%

 

 

 JPY

 

Interest Rate Decision

 

 

0.10%

 

 

 

Government Bond Auctions (this week)

Apr 23-27  n/a  UK  Re-opened 3.75% 2052 Conventional Gilt syndication (further details tba)

Apr 23  09:30  Germany  Eur 3.0bn new Apr 2013 (12M) Bubill

Apr 23  10:00  Belgium  OLO Auction cancelled

Apr 23  15:30  Italy   Details BTP/CCTeu on Apr 27

Apr 24  00:30  Japan  Auctions 20Y JGBs

Apr 24  08:30  Holland  Eur 1.5-2.5bn Jul 2014 & Jan 2037 DSL auction

Apr 24  08:30  Spain  3 & 6M T-bill auction

Apr 24  09:10  Italy   Auctions CTZ/BTPei

Apr 24  14:30  UK  Details Conventional Gilt auction on May 01 & I/L auction on May 03

Apr 24  17:00  US  Auctions 2Y Notes

Apr 25  09:10  Sweden  Auctions T-bills

Apr 25  09:30  Germany  Eur 3.0bn new Jul 2044 Bund

Apr 25  14:30  Sweden  Details nominal bond auction on May 02

Apr 25  17:00  US  Auctions 5Y Notes

Apr 26  00:30  Japan  Auctions 2Y JGBs

Apr 26  09:10  Italy   BOT auction

Apr 26  14:30  Sweden  Details I/L bond auction on May 03

Apr 26  17:00  US  Auctions 7Y Notes

Apr 27  09:10  Italy   BTP/CCTeu auction

AUD/USD Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction:  The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors

Weekly Analysis and Recommendation:

The AUD/USD is trading at 1.0379 and remained in a channel of 1.0418 to 1.0305.Earlier in the week, it looked like the Aussie was going to break out and move upwards but it never gathered the momentum.

The weight is on Asian equities today (though China is outperforming), with the region headed towards a flat to lower performance on the week. The global all‐world aggregate (based on MSCI data) has fared a bit better, but could be flat as well depending on today’s Western market performance. The equity background has played against a generally better bid USD, in keeping with the typical correlation in a week where risk sentiment remained fairly repressed. Indeed, sentiment has been repressed enough to give both the USD and EUR a bid (on a trade‐weighted basis) versus Asian non‐Japan currencies.    Yesterday we commented that despite the apparent near term re‐acceleration in industrial production in Asia, global growth dynamics are still too repressed to suggest a driver for currency appreciation. Instead it is the Federal Reserve and monetary expansion that most favors support for the Asian FX space; in the near term on its own merits, Asia non‐Japan will find difficulty in sustaining rallies. Indeed next week both the Federal Reserve and Bank of Japan will announce policy, and it is the latter that looks biased to continue to ease given Governor Shirakawa’s recent comments regarding “continuing powerful monetary easing”.   

Yesterday’s Spanish bond auction did not bring any kind of horrible market punishing result, though auction yields were of course higher than back in January when the last 10‐year sale occurred. Ultimately Spanish bonds fell post‐auction, and the 10‐year sold off to yield 5.925% vs. the 5.743% at the auction

HSBC economists said Friday that they believe Australian consumer inflation will need to come in at 0.6% or below for the Reserve Bank of Australia to cut interest rates when it meets in May.

Major Economic Events for the past week actual v. forecast

 USD

 

Retail Sales (MoM)

0.8%

0.3%

1.0%

 

 

 USD

 

Core Retail Sales (MoM)

0.8%

0.6%

0.9%

 

 

 AUD

 

Monetary Policy Meeting Minutes

 

 

 

 

 

 EUR

 

ECB President Draghi Speaks 

 

 

 

 

 

 CAD

 

Interest Rate Decision

1.00%

1.00%

1.00%

 

 

 GBP

 

MPC Meeting Minutes

 

 

 

 

 

 GBP

 

Claimant Count Change

3.6K

7.0K

4.5K

 

 

 CAD

 

BoC Monetary Policy Report

 

 

 

 

 

 USD

 

Initial Jobless Claims

386K

370K

388K

 

 

 USD

 

Existing Home Sales

4.48M

4.62M

4.60M

 

 

 GBP

 

Retail Sales (MoM)

1.8%

0.5%

-0.8%

 

 

 GBP

 

Retail Sales (YoY)

3.3%

1.4%

1.0%

 

 

 CAD

 

Core CPI (MoM)

0.3%

 

0.4%

 

 

 

Monday sees March quarter producer price index data released by the ABS. Analysts are tipping the figures to show that producer prices rose by 0.5 per cent in the quarter and by 2.2 per cent over the year, suggesting that price pressures at a producer or business level are contained.

Tuesday sees long awaited consumer price index figures for the quarter. Economists are expecting the data to show the headline rate of inflation rose by 0.5 per cent, with the annual growth rate easing from 3.1 per cent to 2 per cent.

Markets are closed on Wednesday for the ANZAC Day public holiday.

On Thursday, the Department of Education and Workplace Relations will release its skilled vacancies index for March.

Friday brings March new home sales data from the Housing Industry Association.

And finally, the Bank of Japan will hold it monetary policy meeting for April, and release its outlook report.

Economic Highlights of the coming week that affect the Yuan, Yen, Aussie and Kiwi

 AUD

 

CPI (QoQ)

 

0.6%

 

 

 

 AUD

 

Trimmed Mean CPI (QoQ)

 

0.6%

0.6%

 

 

 USD

 

New Home Sales

 

320K

313K

 

 

 USD

 

CB Consumer Confidence

 

70.3

70.8

 

 

 USD

 

Durable Goods Orders (MoM)

 

-1.5%

2.4%

 

 

 USD

 

Core Durable Goods Orders (MoM)

 

0.5%

1.8%

 

 

 USD

 

Interest Rate Decision

 

 

 

 

 

 NZD

 

Interest Rate Decision

 

2.50%

2.50%

 

 

 JPY

 

Tokyo Core CPI (YoY)

 

-0.4%

-0.3%

 

 

 JPY

 

Unemployment Rate

 

4.5%

4.5%

 

 

 JPY

 

Retail Sales (YoY)

 

9.8%

3.5%

 

 

 JPY

 

Interest Rate Decision

 

 

0.10%

 

 

Crude Oil Weekly Fundamental Analysis April 23-27, 2012, Forecast

Introduction:  Crude Oil is considered the king of the commodities markets.

The Strategic Petroleum Reserve is the United States’ emergency oil stockpile, and it is the largest emergency petroleum supply in the world. The reserve stores about 570 million barrels of crude oil in underground salt caverns at four sites along the Gulf of Mexico. Any dipping into this reserve is going to be big news.

Brent Crude is traded in London as something called Futures contracts, which are priced in US Dollars. Now, all you traders brave enough to run your positions over a period of days or weeks, pay attention

Most commonly traded is the NYMEX where you find West Texas Crude. It is also traded in USD.

Analysis and Recommendation:

Crude Oil skyrocketed at the end of the trading session on Friday, for no obvious reason. The commodity is trading at 104.08. Speculators are pushing Obama’s hand after he recently asked for authority to control the speculation of crude oil.

As the weekends, worries over Euro Zone debt and economic growth in the US and China continue to grip commodities and were seen trading in a very tight range waiting for fresh cues for further directional moves. In a lackluster trading, spot gold held steady. Base metals in LME traded mostly flat as investors remained cautious after weak economic indicators from the U.S. Though, successful French and Spanish bond auction allayed concerns over Euro Zone’s deteriorating financial health to some extent. Unexpected rise in German business climate assessed by Ifo lifted the sentiments too. LME copper managed to hang above $8000 a ton.  In tandem with the international market, movements in MCX base metal complex and bullions were dreary.  Crude oil rose for the first time in three days supported by positive German data. Meanwhile, G-20 finance ministers and central bankers are to meet in Washington later today. The Indian rupee was seen bouncing off a 3-month low it hit during previous session at 52.11 up 0.17 percent

Market emotions remained rather subdued in the wake of persistent debt concerns in the Euro region in spite of a strong German business sentiment. Looking into the evening, no major economic data is slated for release. The ongoing G-20 finance minister’s meet in Washington would be the key event markets would be looking up to take cues from.  With Chinese economy going through a lean patch, possible Chinese Central bank liquidity action in the coming days could be a marquee event and have a real impact on the commodities.

Iraq will start crude oil loading from a new floating terminal in Basra Friday, the second the country has started operating within a month and a half, which will boost export capacity by another 800,000 to 900,000 barrels a day, a senior Iraqi oil official said

The Energy Information Administration said crude inventories rose 3.9 million barrels in the week ended April 13. That contrasts with expectations of a rise around 400,000 barrels according to analysts

President Barack Obama on Tuesday announced a plan to crack down on what the White House calls manipulation in oil markets. Obama delivered a statement from the Rose Garden on the plan to increase oil-market oversight, the White House said. Energy policy has emerged as a major election-year issue between Obama and Republicans.

The Obama administration proposed new measures Tuesday to limit speculation in the oil markets, seeking to draw a contrast with Republicans who have been calling for more domestic drilling during a time of near record gasoline prices.

Major Economic Events for the past week actual v. forecast

 USD

 

Retail Sales (MoM)

0.8%

0.3%

1.0%

 

 

 USD

 

Core Retail Sales (MoM)

0.8%

0.6%

0.9%

 

 

 AUD

 

Monetary Policy Meeting Minutes

 

 

 

 

 

 EUR

 

ECB President Draghi Speaks 

 

 

 

 

 

 CAD

 

Interest Rate Decision

1.00%

1.00%

1.00%

 

 

 GBP

 

MPC Meeting Minutes

 

 

 

 

 

 GBP

 

Claimant Count Change

3.6K

7.0K

4.5K

 

 

 CAD

 

BoC Monetary Policy Report

 

 

 

 

 

 USD

 

Initial Jobless Claims

386K

370K

388K

 

 

 USD

 

Existing Home Sales

4.48M

4.62M

4.60M

 

 

 GBP

 

Retail Sales (MoM)

1.8%

0.5%

-0.8%

 

 

 GBP

 

Retail Sales (YoY)

3.3%

1.4%

1.0%

 

 

 CAD

 

Core CPI (MoM)

0.3%

 

0.4%

 

 

Historical:

High:     114.57 

Low:      76.84

 

WEEKLY

  • This Week in Petroleum
    Release Schedule: Wednesday @ 1:00 p.m. EST (schedule)
  • Gasoline and Diesel Fuel Update
    Release Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)
  • Weekly Petroleum Status Report
    Release Schedule: The wpsrsummary.pdf, overview.pdf, and Tables 1-14 in CSV and XLS formats, are released to the Web site after 10:30 a.m. (Eastern Time) on Wednesday. All other PDF and HTML files are released to the Web site after 1:00 p.m. (Eastern Time) on Wednesday. Appendix D is produced during the winter heating season, which extends from October through March of each year. For some weeks which include holidays, releases are delayed by one day. (schedule)