AUD/USD Forecast April 24, 2012, Technical Analysis

The AUD/USD continues to looks weak overall as the slump on Monday indicates. The pair is currently suffering by less than stellar economic numbers out of Australia, and the stronger than usual US dollar. However, it should be noted that the Kiwi looks stronger than the Aussie, so this could be more of an anti-Australia play than a “risk aversion” play. The Reserve Bank of Australia is expected to cut rates soon, and the market looks as if it is pricing this in. Because of this, we aren’t as keen on the Aussie as we once were, but aren’t ready to sell until we see a fresh low. A daily close well above the 200 day EMA could change our minds however, and have us buying again.

USD/CAD Forecast April 24, 2012, Technical Analysis

The USD/CAD pair rose for much of the session on Monday, only to turn around and form a wicked looking shooting star. The action suggests that we are going to continue to drift around in this consolidation zone, but the bearish pressure seems to be picking up. The resistance runs all the way to the 1.01 level, and the 200 day EMA is just above as well.

In order to consider this pair broken down, we need to see a close sub-0.98 to be comfortable selling. In the mean time, playing the market as a scalper could be the way to go if you feel the need to be involved. For us, we are comfortable waiting for the breakout, no matter which direction it happens. 

NZD/USD Forecast April 24, 2012, Technical Analysis

The NZD/USD pair fell most of the session on Monday, but bounced in which it managed to form a hammer-like candle. The bounce came off of the 200 day exponential moving average, which to us suggests that the longer-term market outlook for this pair is higher. This EMA attracts a lot of trend traders, and that group will often leave their money in the markets meaning that the participants are buying with conviction.

The recent consolidation should continue in our opinion, and a break above the top of the Monday session highs has us buying for a small bounce to the 0.83 level. The selling of this pair isn’t possible until we get below the 200 day EMA, the 50% Fibonacci level, and the 0.80 handle. 

Silver Forecast April 24, 2012, Technical Analysis

The silver markets fell hard on Monday as the “risk off” attitude came back in to the markets. Unlike gold, silver has many purposes. This may have been part of the move for the session as the possible lack of industrial demand can come into play and have a negative effect on the price of this market. With this being said, there are a lot of other factors as well that can come into the market and determine the price of silver.

Silver can be a play against inflation, much like gold. As a general rule, if the US dollar is falling, this market can rise over time. The silver markets can also rise if the economic expansion of the world looks healthy. Because of this, the reasons why silver may or may not gain over time aren’t always clear. As a rule, it is best to pay attention to the US dollar as a barometer of the reasons pushing this market. Also, if the gold market is rising or stable while this one falls, this can often mean that people are buying gold for the “safety trade”, and as a result this metal will underperform because of the industrial component. This is exactly what we saw on Monday.

The breaking of the $31 level is something to concern the bulls, but the support level extends all the way down to the $30 mark. In fact, it is best thought of as a “zone” that should be supportive. The market begins to look very weak on a break below that level, and at that point we would have to start selling silver overall. However, as things stand at the end of Monday, we haven’t broken down quite enough to start selling yet. In fact, until the $30 level gives way, we have to assume that the bulls will step back in and move prices upwards again.

It does look like there is significant bearish pressure on this market though. It is because of this that a breakdown wouldn’t surprise us at all. In fact, our best defense against this is going to be waiting for a daily candle to close below the $30 mark in order to sell. Also, a daily close with a hammer or bullish engulfing candle has us buying as it would show that the level held up.

Oil Forecast April 24, 2012, Technical Analysis

The Light Sweet Crude markets fell much of the session on Monday, but found a bit of a bounce late in the session to form a hammer. The bottom of the hammer bounced from the $102 level, a spot where we have seen a bit of support lately. The market looks like there are plenty of buyers willing to come aboard as we get closer to the $100 level, and as a result we are hesitant to sell this market until we get well clear of $100 – and in fact would wait for a sub-$95 daily close.

The market looks as if the $102 to $105 levels will be the consolidation area that the market bounces around in for the time being. The market will more than likely be tight until we can close above the $105 level – of which we would have to get aggressively bullish. The breaking of the $102 level only leads to further support levels below. With this in mind, buying dips continues to be the way to play this market to aim for short-term gains. 

Natural Gas Forecast April 24, 2012, Technical Analysis

The natural gas market rose during the Monday session as the “bottom feeders” stepped out and bought what they undoubtedly thought of as a “cheap market”. However, with the vicious selloff we have seen over the last several months, it is hard to think that any rally will last more than a few sessions at best.

The $2 level has given way, but only just so. Above that is the $2.20 level, the $2.40 level, and the $2.60 level – all of which looks resistive. Because of this, we are looking to sell again on the first sign of weakness, and would even look to shorter timeframes in which to find it. 

Natural Gas Forecast April 24, 2012, Technical Analysis
Natural Gas Forecast April 24, 2012, Technical Analysis

Gold Forecast April 24, 2012, Technical Analysis

The gold markets fell most of the session on Monday, only to bounce and form a nice looking hammer just below the often visited $1,640 level. The hammer forming suggests that perhaps there are buyers starting to step back into the market, and this makes sense as the longer-term trend is up.

The market looks as if the $1,700 level will be the biggest barrier in the immediate future if it can break higher from this point. The biggest issues facing gold at the moment seem to have little to do with gold itself, but rather to do with the European Union and its problems. The financial crisis in that area seems to be the biggest focus as to the “risk attitude” of the financial markets on the whole, and it is because of that it will continue to be a choppy trade, regardless of which direction we head next.

The top of failure to push prices lower for any substantial amount of time does suggest that perhaps there is a lot of support underlying this market, and as it has been trending higher for over ten years this shouldn’t be any kind of surprise. As for us, we still stand by the thought that gold is going continue to rise over time. The real question is what kind of trader you are, as it will determine what kind of trading strategy you will want to employ.

No matter what kind, buying is the only thing that is feasible in this market. The question is if you are trading short term or long term. For the short term traders, there looks to be a bit of consolidation between current levels and the $1,700 level. For the longer term trader, this market is a buy every time it dips, using a pyramiding approach as you add small bit to the overall position over time. For us, we choose to have a core position that we can add to when price action warrants so. We certainly aren’t ready to sell, and until we see a sub-$1,600 daily close, it isn’t even a thought. 

Gold Forecast April 24, 2012, Technical Analysis
Gold Forecast April 24, 2012, Technical Analysis

A Hindu Holiday to Buy Gold

This Akshya Tritya, jewelers are depending more on the emotional sentiment for gold sales. After Dhanteras, this is the biggest gold buying festival in India. To celebrate the festival and boost sales amid record high gold prices, banks and jewelers alike have various discounts and offers for the consumers.

Their enthusiasm for the gold-buying festival although high, doesn’t come without slight hesitation concerning demand due to high prices for the precious metal.

HDFC Bank is optimistic about gold coin sales and investment in paper gold this season. “During these festivals one sees a lot of off take in terms of gold coins, banks also become aggressive in selling,” a senior official from HDFC Bank told Business Standard.

Gold prices are reigning high due to weak Asian and global equities. Investors are flocking to the safe-haven asset as risk aversion in the face of the ever-deepening Eurozone crisis, analysts comment. Despite this, jewelers and banks are confident about the sale of gold jewelry, paper gold and coins during the festival.

During 2011 Indian households continued to turn to gold as a store of wealth, with gold now accounting for 7% of household savings.

Despite gold touching a two-month high, jewelers are expecting about 15 tonnes of sale of the metal, This is 5% more than sales on last Akshya Tritya.

GBP/USD Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

The GBP/USD is currently exchanging at 1.6103. The pound has been able to sustain the 1.61 price now since late last week, after having a difficult breaking through the 1.60 level the sterling has been able to maintain.

The GBP/USD was the standout performer of last week as strong economic data, including a shift in a key BOE policymaker’s outlook, pushed the pair up over 300 pips. Cable has been one the strongest pairs over the past few days as it has benefited both from safe heaven flows and better than expected economic data.  With the summer Olympics coming up, we could see another boost to spending.

U.K. banks will present a mixed picture when they publish first-quarter results in the coming weeks, as those with a greater international presence continue to muscle ahead of more domestic focused rivals, analysts say.

The dollar has been stronger in today’s session against most of the majors except in this pair. With the FOMC two day meeting starting on Tuesday, it could be crazy for the USD and its partners.

There is a clear division among the FOMC policy makers on when the Fed should start tightening monetary policy. Some policy makers have called for an exit and rate hikes as early as this year, while a couple of committee members felt that policy accommodation should continue until 2016. With some of the recent U.S. economic data beginning to show signs of weakness and forecasts predicting slower economic growth, it would not be surprising to see the Fed maintaining a dovish stance and expressing a cautious outlook on the economy and the labor market, but stopping short of announcing another round of quantitative easing at this meeting.

However, QE3 will not be completely out of the picture and will remain as a viable option, especially if the occasional soft spots in the U.S. economic data become a persistent trend of deteriorating economic conditions lasting for at least a couple of months. Although additional quantitative easing may not come until the second half of the year or simply not at all, the future fate of the U.S. dollar will continue to depend on QE3 expectations and the Fed’s next move.

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Government Bond Auctions (this week)

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

EUR/GBP Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

The EUR/GBP is holding at 0.8151. EUR/GBP basically held a sideways trading pattern roughly between 0.8145 and 0.8205. The pair was changing hands in the middle of that range at the start of trading in Europe. A decent German IFO report pushed EUR/GBP for a test of the 0.82 big figures. Mid morning, the UK retail sales came out much stronger than expected. There were exceptional factors, but the report was strong overall. EUR/GBP reversed the post-IFO gains, but a real test of Thursday’s low didn’t occur. Later in the session, the euro found a better bid overall and EUR/GBP joined this move. The pair revised the 0.8200 area after the close of the European markets, but failed to sustain above that level. EUR/GBP closed the week at 0.8197, compared to 0.8184 on Thursday. 

Later this week, markets will look out for the first estimate of the Q1 UK GDP. Will the UK avoid a technical recession (two consecutive negative quarters). This is somewhat of a symbolic issue, but a reasonably good figure will confirm the assessment in the market that the BoE will not raise the amount of asset purchases at the May meeting. After the Minutes of the Previous BoE meeting and decent eco data of late, an ‘on hold’ status of the BoE shouldn’t be a surprise for markets anymore. So, the rally of sterling against the euro might slow going into the BoE meeting.  

The euro was pressured throughout the day with just a lot of negative problems in the eurozone, beginning with French elections and the announcement that Dutch Prime Minister Mark Rutte will tender his resignation to Queen Beatrix on Monday, setting the stage for elections, after the weekend collapse of budget talks, news reports said. 

 Business activity across the 17-nation euro zone contracted at a faster-than-expected pace in April, according to the preliminary purchasing managers’ index, or PMI, readings released Monday by data firm Markit. Manufacturing PMI fell to 46.0

French, Dutch, Spanish and Italian government bonds fell Monday, pushing up yields, while German government bonds rallied on safe-haven

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Government Bond Auctions (this week)

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

EUR/CHF Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

The EUR/CHF continues to hold within a tight range. The pair at presently at 1.2016 remaining between the 1.2012 and the 1.2025 channel they have been in for days. With the SNB floor set at 1.20 and the bears trying to push it below, this is a battle pays no attention to the markets or other eco data.

With little in the way of economic data due this week for the EU and Switzerland, they will remain in this stream for the rest of the week.

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Government Bond Auctions (this week)

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

Crude Oil Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

Crude Oil has begun to fall trading at 1.0202 and looking to drop below the 102.level before the end of today’s trading. Crude lost -1.87 in early morning trading.

Business conditions in China improve for manufacturers in April from levels seen in the previous month, although activity in the sector continues to decline, data released by HSBC show, prompting calls for Beijing to loosen its policies. 

Iraq’s crude oil exports from its southern oil terminals have jumped to record rates in April and theses are expected to be sustained for the rest of the year thanks to the operation of two new floating terminals.

This week be careful of the potential for the GDP report to join this month’s list of weaker economic data with the U.S. economy forecast to grow at a slower pace from 3.0% in the fourth quarter of 2011 to 2.6% in Q1 2012. Some less optimistic forecasts anticipate an even lower reading of 2.3%, while Moody’s monthly GDP gauge points as low as 1.8%. It would not be surprising to see the pressure mounting on the U.S. dollar on signs of U.S. economic slowdown and elevated QE3 odds.

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

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)

Government Bond Auctions (this week)

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

EUR/USD Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

The EUR/USD fell today to trade at 1.3125 after powering up to the 1.32 level on the back of the German ifo data, the euro was unable to sustain. It was a weekend of negative news, including the elections in France which is now down to a runoff between Hollande the favorite and Sarkozy the current with Sarkozy in the rear. This change could shift the entire view of the EU and France.

French election results overnight confirmed that Nicolas Sarkozy and Francois Hollande will face one another in the final runoff election on May 6. Scotia’s European economics team notes that the market consequences of the results (albeit not unexpected) are likely to be not great. Mr Hollande has said that he wants to renegotiate the fiscal compact that was agreed by Mr Sarkozy. In particular, Hollande wants to create more pro-growth measures.  For France specifically, the underlying thrust (i.e. pace of tightening) of the domestic fiscal policy plans under Hollande would not be that different to Sarkozy. However, the emphasis is likely to be more dependent on tax hikes than spending cuts. 

Dutch Prime Minister Mark Rutte will tender his resignation to Queen Beatrix on Monday, setting the stage for elections, after the weekend collapse of budget talks, news reports said. 

Business activity across the 17-nation euro zone contracted at a faster-than-expected pace in April, according to the preliminary purchasing managers’ index, or PMI, readings released Monday by data firm Markit. Manufacturing PMI fell to 46.0

French, Dutch, Spanish and Italian government bonds fell Monday, pushing up yields, while German government bonds rallied on safe-haven.

PMI data release for Germany and the eurozone was a mixed bag of over and under forecast numbers.

The greenback is beginning to see traders position themselves ahead of the FOMC meeting this week, which could have huge effects on the USD.

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Government Bond Auctions (this week)

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

Gold Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

Gold has been falling throughout today’s trading session to trade at this time at 1629.75 down -13.05. Gold and silver prices fell in electronic trade during Monday business hours in Europe, as the dollar rose on risk aversion amid worrying political developments in the euro zone and as China data showed continued contraction for the manufacturing sector.

Unabated concerns over Euro zone’s debt crisis and US economic releases postponed investor action. Investors have already digested the news of the stabilization of Chinese factories in April as output ticked higher. HSBC Flash Purchasing Managers Index showed China’s industrial activity recovered slightly to 49.1 in April from revious month’s 48.3. However investors will closely watch the US Federal Reserve’s policy meeting later in the week which may weigh in on US economic health. At the same time, as per reports, Indian gold traders are staying away from purchasing gold, despite the Akshya Tritya on Tuesday, as weak rupee made importing gold more expensive.

There is a clear division among the FOMC policy makers on when the Fed should start tightening monetary policy. Some policy makers have called for an exit and rate hikes as early as this year, while a couple of committee members felt that policy accommodation should continue until 2016. With some of the recent U.S. economic data beginning to show signs of weakness and forecasts predicting slower economic growth, it would not be surprising to see the Fed maintaining a dovish stance and expressing a cautious outlook on the economy and the labor market, but stopping short of announcing another round of quantitative easing at this meeting.

However, QE3 will not be completely out of the picture and will remain as a viable option, especially if the occasional soft spots in the U.S. economic data become a persistent trend of deteriorating economic conditions lasting for at least a couple of months. Although additional quantitative easing may not come until the second half of the year or simply not at all, the future fate of the U.S. dollar will continue to depend on QE3 expectations and the Fed’s next move.

The dollar rose amid increased political risk in Europe after the Socialist Party candidate for the French presidential election, Francois Hollande took a narrow lead in the first round of the country’s election. Far-right candidate Marine Le Pen finished a surprise third. French election results overnight confirmed that Nicolas Sarkozy and Francois Hollande will face one another in the final runoff election on May 6. Scotia’s European economics team notes that the market consequences of the results (albeit not unexpected) are likely to be not great. Mr Hollande has said that he wants to renegotiate the fiscal compact that was agreed by Mr Sarkozy. In particular, Hollande wants to create more pro-growth measures.  For France specifically, the underlying thrust (i.e. pace of tightening) of the domestic fiscal policy plans under Hollande would not be that different to Sarkozy. However, the emphasis is likely to be more dependent on tax hikes than spending cuts. 

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Natural Gas Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

Natural Gas jumped in today’s trading to 2.056 on news of a late winter storm.

This strong spring storm brings heavy rain to eastern New England and heavy, wet snow to western parts of New York, Pennsylvania and Maryland and northern West Virginia.

– Heavy rain should taper off to showers from southwest to northeast across eastern New England today.

– An additional 1 to 3 inches of rain is possible in Maine with up to an inch in northern New York, Vermont and New Hampshire.

– Up to 1/2 inch of rain is possible in southeast New York and southern New England.

– Heavy, wet snow falls in western New York, western Pennsylvania, extreme western Maryland and parts of eastern West Virginia.

– Additional snowfall of 10 to 15 inches is likely in the mountains bringing storm totals into the 1 to 2 foot range.

– Lower elevation snow will vary greatly between 1 and 12 inches.

Unexpected cold will create an additional demand for natural gas, perhaps using the excess inventory.

Although natural gas is forecast to remain below the 10 year low, this might keep it above the 2.00 price.

Economic Events: (GMT)

WEEKLY

 

USD/CAD Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

The USD/CAD are trading at 0.9971 as the USD powered up in today’s session as investors prepared for Tuesday’s FOMC meeting. With hopes of monetary easing the USD has been gaining strength against most of its partners.

Canada wholesale sales for February will be released today above forecast, and markets are anticipating contraction of -0.2% of GDP after weak -1% reading in March. Wholesale trade accounted for roughly 5.5% of GDP in January 2012, so marginal changes in the extent of wholesale trade will not materially impact Canada monthly GDP, which is due for release next week. Although this was a fairly large difference and could affect the GDP

Economic Data for April 23, 2012 actual v. forecast

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

 

EUR

 

 

 

French Business Survey 

95

 

96 

 

98 

   

 

EUR

 

 

 

French Manufacturing PMI 

47.3

 

47.2 

 

46.7 

 

 

 

EUR

 

 

 

French Services PMI 

46.4

 

50.2 

 

50.1 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

46.3

 

49.0 

 

48.4 

 

 

 

EUR

 

 

 

German Services PMI 

52.6

 

52.3 

 

52.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

46.0

 

48.2 

 

47.7 

 

 

 

EUR

 

 

 

Services PMI 

47.9

 

49.4 

 

49.2 

 

 

 

EUR

 

 

 

Italian Consumer Confidence 

89.0

 

96.5 

 

96.3 

   

 

TWD

 

 

 

Taiwanese Industrial Production (YoY) 

-3.4%

 

-6.8% 

 

8.4% 

 

 

 

EUR

 

 

 

German 12-Month Bubill Auction 

0.074%

 

 

 

0.077% 

 

 

 

CAD

 

 

 

Wholesale Sales (MoM) 

1.6%

 

-1.0% 

 

-1.1% 

   

 

EUR

 

 

 

French 3-Month BTF Auction 

0.090%

 

 

 

0.084% 

 

 

 

EUR

 

 

 

French 6-Month BTF Auction 

0.121%

 

 

 

0.119% 

 

 

 

EUR

 

 

 

French 12-Month BTF Auction 

0.250%

 

 

 

0.249% 

 

 

 

MXN

 

 

 

Mexican Retail Sales (YoY) 

7.6%

 

5.0% 

 

4.4% 

 

 

 

Economic Events scheduled for April 24, 2012 that affect the Canadian and American Markets

13:30     CAD       Core Retail Sales (MoM)                                              1.0%                      -0.5%    

Core Retail Sales measures the change in the total value of sales at the retail level in Canada, excluding automobiles. It is an important indicator of consumer spending and is also considered a pace indicator for the Canadian economy.

 13:30    CAD       Retail Sales (MoM)                                                                                         0.5%     

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. 
A higher than expected reading should be taken as positive/bullish for the CAD, while a lower than expected reading should be taken as negative/bearish for the CAD.

 15:00    USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Silver Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendations:

Silver is trading down -1.002 following gold straight down today. Silver is holding right above the 30.00 price as 30.718. Just three weeks ago the markets were expecting silver to trade below the 30.00 price when it moved over the 32.00 level surprising investors.

Gold fell 13.05 in today’s session to trade at 1629.75. The pair are continuing to fall as markets get close to closing for the day.

With the FOMC meeting on Tuesday, investors are positioning themselves for the possible comments and monetary easing from the Fed.

• On a week-on-week basis, spot silver prices gained around 0.6 percent.

• Silver May contract gained around 1.2 percent.

• Spot silver prices traded higher in the last week, taking cues from weakness in the US dollar index and revival in the global markets due to successful Spanish bond auction.

• Additionally, upside movement in base metals complex also helped further gains in prices last week.

The white metal touched a high of $32.01/oz and closed its trading session at $ 31.64/oz in the last week.

• On a week-on-week basis, holdings in the iShares Silver Trust, the world’s largest silver-backed exchange-traded fund, declined by 0.4 percent to 9,552.14 tonnes by 20th April 2012 from the previous level of 9591.39 tonnes on 13th April 2012.

We expect silver to trade lower this week, taking cues from fall in gold prices, a stronger dollar and weak sentiments in the markets. Silver will also take cues from movement in base metals pack.

Economic Events scheduled for April 24, 2012 that affect the European and American Markets

07:00     EUR       Finnish Unemployment Rate                                                                     7.40%   

The unemployment rate represents the number of unemployed persons expressed as a percentage of the labor force. The unemployment rate for a particular age/sex group is the number of unemployed in that group expressed as a percentage of the labor force for that group. 

 10:00    EUR        Industrial New Orders (MoM)                                   -0.5%                     -2.3%

Industrial New Orders measures the change in the total value of new purchase orders placed with manufacturers. It is a leading indicator of production. A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism. 

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

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Central Banks Take Center Stage

This is going to be a busy week for the central bank committees and the markets will be waiting on news, announcements and indications of what the banks are going to decide.

On Wednesday we will hear the Federal Open Markets Committee Interest Rate Announcement. There is a clear division among the FOMC policy makers on when the Fed should start tightening monetary policy.

Some policy makers have called for an exit and rate hikes as early as this year, while a couple of committee members felt that policy accommodation should continue until 2016. With some of the recent U.S. economic data beginning to show signs of weakness and forecasts predicting slower economic growth, it would not be surprising to see the Fed maintaining a dovish stance and expressing a cautious outlook on the economy and the labor market, but stopping short of announcing another round of quantitative easing at this meeting.

However, QE3 will not be completely out of the picture and will remain as a viable option, especially if the occasional soft spots in the U.S. economic data become a persistent trend of deteriorating economic conditions lasting for at least a couple of months. Although additional quantitative easing may not come until the second half of the year or simply not at all, the future fate of the U.S. dollar will continue to depend on QE3 expectations and the Fed’s next move.

Following the FOMC the markets will get news from the Reserve Bank of New Zealand. With the inflation gauge lower than expected, the global economy slowing and the EU debt crisis far from over, the Reserve Bank of New Zealand will not be in any hurry to start hiking rates and is expected to keep the benchmark interest rate at the current 2.50% level. The RNZ will try to anticipate the upcoming RBA move and also interpret the April 3rd decision.

The announcement that the markets have been waiting for will be heard on Friday when the  Bank of Japan offers their interest rate decision and statement. Everyone expects that the Bank of Japan will announce additional expansion of its quantitative easing operations, but not everyone is betting on the bank lifting its inflation target to 2%.

Such move would make sense, especially because in February the combination of more QE with a 1% inflation target has proven to be an effective tool in the Bank of Japan’s campaign to weaken the yen. Considering that a decision to make additional asset purchases may be already priced in, the Japanese central bank will need to deliver a “shock and awe” type of an announcement in order to trigger another leg of significant yen weakness.

A failure to do so could see the yen quickly erasing some of its recent losses against the U.S. dollar and other currency majors. It will be a difficult call for the bank, but they will be watching the FOMC release earlier in the week.

USD/JPY Fundamental Analysis April 24, 2012, Forecast

Analysis and Recommendation: (close of Asian session)

The USD/JPY  traded at the end of Monday’s session at 81.3375 gains may be limited as market participants are unlikely to take any aggressive action ahead of Friday’s much-awaited Bank of Japan meeting as well as several economic data releases.  The central bank is to hold a policy meeting on Friday amid high hopes for further monetary easing.

Lackluster results on Chinese manufacturing also affected the strength of the yen today.

China’s manufacturing activity contracted further in April, although the sector improved from levels seen in March, a preliminary reading from HSBC showed Monday. HSBC’s so-called “flash” Purchasing Managers’ Index rose to 49.1 in April, compared with a final reading of 48.3 in March. A reading below 50 shows contraction, while one above 50 indicates an expansion. The improvement in factory conditions in April suggests that the earlier easing measures have started to work and hence should ease concerns of a sharp growth slowdown.

Eco data for Monday April 23, 2012 actual v. forecast that affect the ANZ, JPY, NZD and CNY

Apr. 23

 

AUD

 

 

 

PPI (QoQ) 

-0.3%

 

0.4% 

 

0.3% 

 

 

 

 

CNY

 

 

 

Chinese HSBC Manufacturing PMI 

49.10

 

 

 

48.30 

   

Economic Events scheduled for April 24, 2012 that affect the NZD, AUD, JPY and CNY

02:30     AUD      CPI (QoQ)                                                                                                            0.6%       

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

02:30     AUD      Trimmed Mean CPI (QoQ)                                           0.6%                      0.6%

The Trimmed Mean Consumer Price Index (CPI) measures the change in the price of goods and services purchased by consumers, excluding the most volatile 30% of items. This data helps illustrate underlying inflation trends. A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

15:00     USD       CB Consumer Confidence                                            70.3                        70.8

Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.

15:00     USD       New Home Sales                                                             320K                      313K     

New Home Sales measures the annualized number of new single-family homes that were sold during the previous month. This report tends to have more impact when it’s released ahead of Existing Home Sales because the reports are tightly correlated

Government Bond Auctions (this week)

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