The EUR-GBP-JPY & USD Stable on Tuesday

 

The EUR-GBP-JPY & USD Stable on Tuesday
The EUR-GBP-JPY & USD Stable on Tuesday
This morning the US dollar has weakened a bit after lackluster data releases in the US housing market weighed heavily on an already volatile market Monday. This morning the euro has regained 37 pips to trade at 1.3075. Yesterday against the dollar, the euro was at 1.3038, down 0.55 percent.  The euro was down against dollar as global risk appetite was hurt following the sell-off in international commodities, especially gold. The euro is expected to fall further as issue concerning Cyprus has resulted in panic that other debt ridden nations in Euro can also be asked to sell off their gold reserves. The tumble in gold and oil continue to hold market attentions with gold falling the most in one day in 30 years to touch the mid-1350 range and crude oil breaking the psychological price and 90.00 and tumbling through support at 89.00 to trade at 87.97 this morning.

The JPY is trading this morning at 97.38 with the greenback gaining 63 pips. The dollar last traded on Monday at 97.04 yen, down 0.3 percent. The yen is expected to move in a range ahead of the G20 meeting which is likely to raise concerns about the excessive devaluation of the currency to gain competitive advantage in exports.

The dollar index fell to 82.193, down from 82.295 on late Friday. The Japanese yen rose from recent multi-year lows against the dollar and euro, as renewed worries about the global economy spurred traders to sell riskier investments funded by the relatively cheap Japanese currency.

A new political party has been formed in Germany with the sole aim to get the country out of the Euro amid the rising economic burden that Germans share to keep the currency afloat in wake of the ongoing financial crisis in the bloc. European Central Bank President Mario Draghi underscored that his institution is limited in what it can do to help struggling small firms in the euro zone, noting that other central banks that have tried to guide lending to companies have only had limited success. Meanwhile, the European Central Bank on Monday put pressure on governments to push ahead with plans for a closer European integration to address the crisis’ core problems. Undertaking structural reforms, budget consolidation and restoring bank balance sheet health is neither the responsibility nor the mandate of monetary policy.

Sterling was last down 0.2 percent at $1.5306, pulling away from last week’s peak of $1.5412, which was its highest level since Feb. 20, though it held above chart support at its 55-day moving average at $1.5300 and remains flat on Tuesday morning. Bank of England minutes will be released tomorrow as traders look to see if policymakers are leaning any closer to propping up the economy with more quantitative easing (QE), which is usually seen as negative for the pound.  But traders said they did not expect sterling to move too much before the release of first quarter gross domestic product figures next week, which will reveal whether or not Britain has avoided recession

The Bottom Falls Out Of Crude Oil

The Bottom Falls Out Of Crude Oil
The Bottom Falls Out Of Crude Oil
WTI crude oil continues to decline this morning trading at 87.97 down by 1.06 after tumbling on Monday. Crude oil closed with a loss of nearly 3%, supported by weaker-than-anticipated quarterly economic growth and monthly industrial production numbers from China, adding to worries about global demand for the commodity.

Late last week, US retail sales for March fell by 0.4%, which was sharper than expected. Retail sales in the world’s largest economy were up 1.1% in February. The May delivery crude oil contract on the NYMEX fell below the key psychological level of $90 a barrel on Monday, as fear of a fall in demand deepened on release of weaker-than expected Chinese growth data. WTI Crude oil futures breached the crucial support of US$89/bbl., weighed by weak global demand forecasts from various agencies. Crude oil broke in one day a psychological barrier and an important support line, opening the commodity to further declines.

China’s implied oil demand rose 3 percent in March from a year earlier to about 9.72million barrels per day (bpd), the lowest since August 2012, Reuters calculations based on preliminary government data showed yesterday. Chinese refineries processed 5.5 percent more crude oil in March than a year earlier, data showed, as state-run firms ramped up operations amid steady margins.

For the past week global eco data has showed a stall in recovery, compounded by the IMF downgrade of growth forecast and the EIA, IEA and OPEC lowering the demand for oil products. The US recovery has been thrown into doubt after a major surprise in the US labor market as seen in the nonfarm payroll print, followed by falls in retail sales, manufacturing and housing.

Crude prices were down as weak China GDP data further weakened the demand outlook for oil after poor economic data from US pushed prices down. Concerns over the euro zone recession also weakened the global demand outlook for crude and hurt prices. Crude prices also followed a decline in all major international commodities and a stronger dollar also weighed on prices.

U.S. natural gas ended lower due to profit taking and after touching a 2 year high in the previous session. Natural gas is trading at 4.149 gaining 11 points this morning. Moderate weather forecasts for the week are likely to push natural gas prices down. With poor eco data the export demand for gas may also reduce. Natural gas futures shrugged off chilly forecasts for the next 2-weeks and closed down for the first time in 4-sessions, due to profit booking, after the front contract in overnight trade posted its highest mark in more than 20-months. 

US Dollar Index Forecast April 16, 2013, Technical Analysis

The US Dollar Index had a strong showing during the session on Monday, as the 82 handle offered support again. Of particular interest is the fact that the precious metals markets came completely undone during the session, this course was bullish for the Dollar in general. There is still plenty of fear out there in the marketplace, and as a result we believe that this contract will grind higher, possibly to the 83.50 level before it’s all said and done. The still looks like consolidation to us, but most certainly has an upward bias.

 

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US Dollar Index (DX) Futures Analysis – April 15, 2013

The June U.S. Dollar Index is trading lower, but rebounding from early session weakness. The dollar is posting strong gains against the Australian Dollar; however, gains in the index are being capped because the dollar is trading lower versus the Japanese Yen.

The AUD/USD is down sharply after weaker-than-expected economic data from China. China’s gross domestic product for the January-March quarter rose 7.7% from a year earlier, weakening from growth of 7.9% in the fourth quarter. The number also missed the consensus guess of 8%.

 Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

The weak data from China also caused the U.S. Dollar to lose ground to the Japanese Yen as investors sought safety in the lowest yielding currency. Also helping to boost the Japanese Yen against the dollar was a reaction to last week’s warning from the U.S. Treasury. The Treasury Department warned Japan “to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.”

Technically, the main trend is down on the daily chart. For the past three sessions, the June U.S. Dollar Index has been trying to establish support on an uptrending Gann angle at 82.27. Holding above this angle could drive the market into a downtrending Gann angle at 82.73.

On the downside, a break through 82.27 could fuel a break into last week’s low at 82.14. Breaking this level could draw the attention of short-sellers with an eye on the March 25 main bottom at 81.83.

If the news from China triggers a more out of higher risk assets today then look for the June U.S. Dollar Index to rally. The AUD/USD is already weakening. A drop in the Euro and British Pound should give the dollar a boost. 

China Upsets Global Currency Markets

China Upsets Global Currency Markets
China Upsets Global Currency Markets
Chinese data has upset the apple-cart this morning. In the Asian session, crude oil was continuing to decline, natural gas climbed and precious metals and industrial metals were trading in the red after more lackluster data in the US on Friday as retail sales printed below forecast.  Data showed that U.S. retail sales fell 0.4 percent in March, suggesting the economy may have faltered at the end of the first quarter. Analysts say the pace of the dollar’s upward progress against the yen will largely be determined by whether the BOJ’s massive asset-buying prompts Japanese investors to increase their overseas investments, and the extent to which those investments will be unhedged. Currency speculators decreased their bets in favor of the dollar in the latest week, according to data from the Commodity Futures Trading Commission. This morning the euro was trading at 1.3094 but tumbled as traders absorbed the GDP release from China. Disappointment regarding China’s economy will add to the negative sentiment toward China that has weighed on currency and commodities. The euro tumbled to trade at 1.3077. The US dollar gained momentum to trade at 82.34 up by 12 points. The Australian dollar edged lower to trade at 1.0403 losing 73 pips, while the kiwi followed the Aussie downward to trade at 0.8496 dropping 92 points.

Sterling fell by 18 points to trade at 1.5325 as the greenback gained. The surprise was the climb of the Japanese yen, which gained to trade at 97.86 with the US dollar giving up 52 points.

This morning’s print showed that China’s gross domestic product rose 7.7% from a year earlier in the first quarter, down from growth of 7.9% in the fourth quarter of last year, China’s National Bureau of Statistics said Monday. The increase was slower than a median 8% gain forecast. Retail sales in China met expectations but markets are once again questioning the Chinese recovery, even though the numbers indicate a strong recovery it questions if China can meet its expectations for 2013. There has been a shift in numbers which seems to be justifying the strategy of the government to change internal economic developments.

The euro has been weak since disappointing data and outlooks have forecast that the zone might remain in a recession and also might not show signs of recovery until later than projected. While the bailout of Cyprus continues to grow as depositors in Italy, Spain, Slovenia and Greece pull funds from their deposit accounts after Cypriot depositors have lost as much as 60% of their savings. The country also is functioning with currency controls.

Market focus will be on Tuesday’s slew of economic data due in the US, including CPI and housing starts, building approvals and industrial production. This data might show that the economy has stalled or give a look into the effects of the “fiscal cliff” and “sequestered” budget cuts are absorbed in the marketplace.

 

 

US Dollar Index forecast for the week of April 15, 2013, Technical Analysis

The US Dollar Index had a negative showing over the last week, going as low as hitting the 82 level. However, this market currently looks like it’s trying to consolidate more than anything else. We do see quite a bit of support down at the 81 handle, and most certainly at the 80 handle. Because of this, we believe that this market will eventually see buyers stepped into the fray, and push prices higher. With that being the case, we look to buy supportive action at roughly the same levels that we are trading and now. If we can find a hammer or something like that we would be more than willing to start buying. It really is until we break down below the 79 handle that we think shorting this market is going to be much clearer.

 

US Dollar Index forecast for the week of April 15, 2013, Technical Analysis
US Dollar Index forecast for the week of April 15, 2013, Technical Analysis

US Dollar Index Forecast April 15, 2013, Technical Analysis

The US Dollar Index had a slightly positive session on Friday, but had given up about half of its gains by the time we closed. Looking at this chart, you can see that the 82 level continues offer support, which is just below where we stopped. Adding to that is the fact that the 50 day exponential moving average is now crossing the 82.00 level, and as a result it looks like we are starting to see a significant amount of support. With that being said, it we managed to break down and close below 82, we think this is a very bearish sign. Alternately, a break above the 82.50 level has is think of that this market will eventually try to breakout to the upside.

 

US Dollar Index Forecast April 15, 2013, Technical Analysis
US Dollar Index Forecast April 15, 2013, Technical Analysis

US Dollar Index (DX) Futures Analysis – April 12, 2013

Weakness in the Euro is helping to bolster the June U.S. Dollar Index this morning. The Euro is down versus the dollar as European finance ministers meet in Dublin to review the state of Cyprus’s rescue package and the easing of bailout-loan terms for Ireland and Portugal.

The EUR/USD fell overnight after Cyprus was forced to deny it required additional European aid. Profit-taking after a strong surge this week is helping to weaken the AUD/USD. Despite today’s weakness, investors remain confident that the Aussie will continue to gain versus the dollar because of optimism over China. Oversold conditions are also helping to boost the Japanese Yen after a prolonged decline.

Besides moving to the sidelines ahead of the European finance ministers’ meeting, investors are paring positions in front of this morning’s U.S. Retail Sales report. According to economists, retail sales probably stagnated in March amid the smallest employment gain in nine months. Additionally, another report is likely to show that consumer confidence also fell.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Technically, the June U.S. Dollar Index is posting an inside move this morning with a bias to the upside. This typically indicates uncertainty. The current technical bounce started after the market found support on an uptrending Gann angle on Thursday. This morning this angle moves up to 82.24. The market also crossed over to the bullish side of a downtrending Gann angle at 82.16. This could trigger a move later in the session to 82.91.

If a bottom was reached on Thursday then look for a retracement of the 83.66 to 82.14 range at 82.90 to 83.08. Bearish economic numbers today could drive the market sharply lower like the jobs data did last week. This would mean a complete reversal of the overnight strength. If downside momentum is strong enough then look for the low at 82.14 to fail, setting up a possible break into the March 25 bottom at 81.83. 

Jobs, Unemployment and Central Banks Weigh on Currency Markets

Jobs, Unemployment and Central Banks Weigh on Currency Markets
Jobs, Unemployment and Central Banks Weigh on Currency Markets
US jobless claims fell by more than expected and the usual anonymous Labor Department spokesperson said there were no estimated states this time, and nothing unusual. That would suggest the number stands up to scrutiny and therefore that the earlier spike was not indicative of a sudden deterioration in job markets. That said, the fact that new firings are not accelerating and hence driving trend claims higher does not discount the fact that hiring’s have slowed as evident in last Friday’s weak nonfarm report. The drop in claims from the prior week reinforces the view that it was an Easter distortion that drove the prior week’s gain, but now the issue is whether they’ll stay lower after the distortions have shaken out. The US Department of Labor neglects to look at the effects of the “fiscal cliff” and “sequestered” budget cuts on the economy and business confidence. Employers froze hiring due to the uncertainty facing them as US politicians failed to properly handle the economic and fiscal problems quickly and efficiently. The FOMC is closely monitoring the labor market as the Fed has tied their monetary stimulus directly to the unemployment rate, aiming to reach 6.5% unemployment. As traders try to guess Fed thinking and continued stimulus they seem to ignore Mr. Bernanke’s promise, regardless of Fed speakers pushing to unwind the program, until the Fed can see a clear recovery in the labor market they will not act to reduce stimulus. This leaves, gold and the US dollar trading fairly safe, without central bank intervention. The US dollar remains in a tight range close to 82.50, while the euro climbed to trade at 1.3118. There has been little support to help the euro gain except for global sentiment moving to risk on mode and money flows out of the JPY. The JPY is trading against the US dollar at 99.47 while the EUR/JPY is holding above the 130 level.

Cyprus is once again the center of focus as reports released yesterday showed a huge miscalculation in the bailout requirements. The new figures are 50% more than agreed. The original bailout was estimated at 17 billion euros, but new figures show that the banks will need 23 billion euros leaving Cyprus and EU Ministers with mud on their face and it a bit of a jam. Ministers are now trying to figure out what can be done.

With the euro compromised and the JPY being influenced by monetary stimulus which is moving close to being currency intervention traders are moving to a new safe haven and money flow seems to be moving towards the GBP which has climbed above 1.54. Traders are hoping a round of better eco data will help the UK stay out of a triple dip recession.

Today traders will closely monitor US retail sales and Michigan consumer confidence to see if consumers in the US are once again spending with budget cuts behind them.

Gold and Silver Sitting On The Perch

Gold and Silver Sitting On The Perch
Gold and Silver Sitting On The Perch

Gold gave back yesterday’s slight gains to trade at 1561.45 down by 3.45 in Asian trading on Friday morning. Silver also followed cues from gold. Gold futures recovered to close slightly higher on Thursday, rebounding from a drop of nearly 2% a day earlier while weakness the US dollar pushed bargain hunters back to the market. Gold imports by China from Hong Kong jumped 89% to 97 tons in February, rebounding from a decline the month before, according to figures from the Hong Kong government.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 1,181.42 tons, as on April 11. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,497.59 tons, as on April 5. The US dollar came close to the 100 Japanese yen level on Thursday, reaching as high as ¥99.94 before edging down. The balance between the value of the JPY and gold is causing some market movement as traders sell off the stronger dollar to shift into gold and other commodities and equities. The US dollar index, a wider measure of the dollar against a basket of six major currencies, eased to 82.255 from 82.508.

Precious metals prices rose yesterday as a drop in the dollar triggered bargain hunting after the previous session’s sharp drop on news of possible gold sale by Cyprus and uncertainty over Fed’s monetary stimulus. Earlier the FOMC released its minutes from its meeting earlier this month, which indicated that some members would like to see an easing in asset purchases, while eco data in the US shows a poor performance in the labor market, which the Fed tied their stimulus program to earlier this year. Last Friday’s nonfarm payroll data showed a small drop in unemployment with a dismal print on new jobs. Yesterday’s unemployment data was mixed but a bit on the positive side, leaving investors confused.

The big market news is the Cyprus bailout which continues to be a disaster with the government announcing new figures for the bailout showing the total bailout climbed from an estimated 16 billion euros to 23 billion euros, which means that the country has to raise a significantly larger amount of money. Cyprus this week sold off over 6 billion euros of its gold reserves to raise much needed capital. Gold investors and European depositors are closely watching what Cyprus will do to raise its needed funds.

Industrial metals prices rose yesterday on a weaker dollar and after strong U.S. jobs data lifted sentiment about the outlook for global metals demand. Copper and silver climbed. This morning silver is trading at 27.603 down close to 10 cents, while copper is following cues from silver to trade at 3.410 down .032%.

Traders will closely monitor US data today, with retail sales and consumer confidence due later in the day and could have caused some volatile in the metals markets.

US Dollar Index Forecast April 12, 2013, Technical Analysis

The US Dollar Index fell during the session on Thursday, testing the 82 handle. This 82 level is an important one as far as we’re concerned, as it is significant support. Going forward, we believe that as long as we stay above this area this is a “buy only” type of market. However, we do manage to break down below the 82 handle; we think that this market will head towards the 81 handle in relatively short notice. That being said, we are simply basing our next rate off of the 84 handle, but did not get a significant signal one way or the other at the end of the session for Thursday.

 

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US Dollar Index (DX) Futures Analysis – April 11, 2013

The June U.S. Dollar Index posted an outside move overnight, demonstrating volatile trading conditions. After an early session rally, the market broke sharply, taking out the recent low at 82.31. Pressure is coming from all sides this morning as demand for higher-yielding assets has surged.

Leading the way is the Euro which rose to its strongest level in six weeks versus the dollar as Italian and Spanish borrowing costs fell. Higher-yielding currencies like the Australian and New Zealand Dollars are also rallying. The British Pound is spiking higher versus the dollar after four days of consolidation. Commodity-linked demand is also driving up the Canadian Dollar.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Technically, the main trend is down on the daily chart. The downtrend is resuming after three days of consolidation and a failed retracement.

Holding up the market at this time is a slow-moving Gann angle at 82.21. Once this angle is taken out with conviction, investors should see selling pressure increase. The next likely downside target is the March 25 bottom at 81.83. Resistance comes in at 82.41 today. 

FOMC Minutes Release and The US Budget Make For Strange Trading Day

FOMC Minutes Release and The US Budget Make For Strange Trading Day
FOMC Minutes Release and The US Budget Make For Strange Trading Day
Traders remained positive yesterday shifting from currencies to equities but the day’s trading seemed lackluster and without conviction or excitement. The S&P and Dow both reach record highs with little enthusiasm. Traders seem not to have paid much attention to the President’s budget, announced yesterday, granted it was an 1100 page document which might take some time to sort through, but generally speaking advocated more ‘discretionary’ spending than perhaps might have been expected, alongside a mix of tax hikes and lower entitlement program costs to pay for the spending increases.

As a negotiating tactic, the budget in some respects represents a hard line as it includes measures such as tax hikes that Republicans have said are nonstarters. The President does seem to have moved towards the Republican position of lowering entitlement program costs by reducing cost of living adjustments. As the budget represents the beginning of a political process and not its culmination, its relevance is not so much the details of what it says so much as the broad negotiating stance that it presents.

The US dollar (82.55) along with the euro  (1.3065) seemed to be unaffected. The headlines were all abuzz with the Fed minutes, which were pretty much as expected but this time the buzz was not about the contents but the delivery method. The Federal Reserve released its market-influencing minutes of the Federal Open Market Committee five hours early, at 9 a.m. ET, because somebody messed up. The minutes had already gone out to trade groups and congressional staffers on Tuesday afternoon in error a day early.  “The reason is they were inadvertently sent early to a list of individuals who normally receive the minutes by email shortly after their usual release time,” a Fed spokesman said in a statement.  About 100 people received the report early, according to MarketWatch.

Later today traders will closely eye, the unemployment report as analysts get a first look at jobless claims in April and it will be interesting to see if the high jobless claims prints that the Department of Labor chalked up to the shifting Easter holiday.

On the other side of the globe, Bank of Japan governor Kudora has been forced to defend his aggressive monetary stimulus actions as many financial leaders think it a bit overly aggressive bordering on currency intervention as neighboring countries begin to feel the pair of their loss of export business due to the weak JPY which is trading close to 100 this morning. The far ranging effects of the yen are beginning to hurt German exports also. The EUR/JPY has topped the 130 price causing huge shifts in currency flows as well as exports.

Dropping to south we can take a look at the AUD which was headed to break the 1.06 price until a lackluster jobs report surprised traders and sent the Aussie down to 1.0507 off by 36 pips this morning. Its neighbor the kiwi continues to trade strong as the housing market showed an increase in house prices, as the kiwi remains firmly embedded at the upper 85 price level with the possibility of it breaking 86 today.

Precious Metals Slightly Up, Base Metals Slightly Down

Precious Metals Slightly Up, Base Metals Slightly Down
Precious Metals Slightly Up, Base Metals Slightly Down
This morning gold inched up from its weakest level in almost a week as rising tensions in the Korean peninsula stirred some safe-haven buying in Asia, though gains are likely to be capped by uncertainty over the Federal Reserve’s stimulus program. Gold is trading 1560.35 up by 1.55 in early trading. Yesterday’s botched release of FOMC minutes had only little effects on the market as the minutes indicated that the Fed would continue on at the same pace as present. This was what the market was thinking already after Friday’s disastrous nonfarm payroll report.

South Korea and the United States remained on high alert for any North Korean missile launch as the North turned its attention to celebrating its ruling Kim dynasty and appeared to dial down rhetoric of impending war. Gold had ignored the tensions earlier this week, but bargain hunters and suppliers resurfaced this morning as bullion’s outlook remained patchy on fears the Fed’s bullion-friendly bond buying program could end soon. Heavy outflows from gold exchange-traded funds also weighed on the metal, in addition to rallies in stock markets and Cyprus’ plan to sell excess bullion reserves to help finance its part of its bailout.

Numerous Fed officials said the central bank should begin tapering its quantitative-easing program later this year and stop it by year end, according to the minutes of their March meeting, released yesterday. Goldman Sachs Group Inc. yesterday cut forecasts for the metal through 2014, saying the turn in the price cycle is accelerating on the U.S. economic recovery. Each month the Fed buys $85 billion of securities.

The dollar index was up 0.2% at 82.508. FOMC minutes from March meeting underscored a chasm among Federal Reserve officials over the duration and extent of its bond-buying program, known as quantitative easing, with some members calling for an easing of the program around mid-year.

The European Commission warned of deepening economic problems in France, Italy and Spain and said that Slovenia must take urgent steps to offset the risk of a wider destabilization across the euro zone.

Cyprus has to sell excess gold reserves to raise around 400mn Euros ($523mn) to help finance its part of its bailout, an assessment of Cypriot financing needs prepared by the European Commission showed.

Silver on the other hand remains in the red trading at 27.515 down by 13 cents in morning trade as industrial metals eased off as market sentiment shifted as there are worried that outside of China global economies are showing signs of a slowdown.  Copper declined, after gaining the most in 3-months in the previous session, amid concern that rising supplies will outpace demand from China, the biggest consumer. Thomson Reuters GFMS in its copper survey has estimated that metal market registered a surplus of 214,000 tons last year and said the inventory build has contributed to capping major upside for prices this year till date.

 

US Dollar Index Forecast April 11, 2013, Technical Analysis

The US Dollar Index initially fell during the session on Wednesday, but found enough support at the 82.40 level to bounce and form a stubby little hammer. This looks like a return to consolidation, and that the market simply isn’t going to go anywhere. With that being the case, we think that the contract is good for a few small moves higher, but at this moment in time we feel that this market is essentially a scalpers market, and nothing more. If we managed to get above the 83.50 level, we think this market will continue much higher, but at this moment in time it appears it the participants are happy to simply move sideways.

 

US Dollar Index Forecast April 11, 2013, Technical Analysis
US Dollar Index Forecast April 11, 2013, Technical Analysis

US Dollar Index (DX) Futures Analysis – April 10, 2013

The June U.S. Dollar Index is rebounding this morning after an early release of the Fed minutes. The report showed that Fed officials remained divided over how long it should keep buying bonds. One member wanted to slow purchases immediately while other favored a change at mid-year. The news triggered a volatile reaction in the market.

Daily June U.S. Dollar Index
Daily June U.S. Dollar Index

Traders should keep in mind that the last Fed minutes took place before the release of Friday’s bearish U.S. jobs data. Since employment is a major determinant of Fed policy, many investors feel that this is a stale report and that pressure should remain on the dollar.

Technically, the June U.S. Dollar Index is challenging last week’s low at 82.31. A move through this level will resume the downtrend on the daily chart. The first downside target is 82.17, followed by the late March bottom at 81.83.

The first sign of weakness overnight was the penetration of an uptrending Gann angle at 82.52. The market will remain in a weak position as long as it holds below this price as well as a Gann angle at 82.66.

US Dollar Index Forecast April 10, 2013, Technical Analysis

The US Dollar Index fell during the session on Tuesday; however it still remained above the 82 level. That is the area we need to see broken below in order to start selling. At this point time, the US dollar still seems to be one of the more favored currencies, but it is starting to lose ground against the Euro, and the Pound. Because of this, it appears we might be entering another phase of “don’t bother looking at what’s going on in Europe” in the Forex markets. If that’s the case, we could see a bounce in the Euro, which of course is 40% of this contract. That being the case, we have to wait and see how the market reacts to the 82 zone, and at this point time would be flat.

 

US Dollar Index Forecast April 10, 2013, Technical Analysis
US Dollar Index Forecast April 10, 2013, Technical Analysis
 

Metals Close In The Green

Metals Closed In The Green
Metals Closed In The Green

Industrial metals prices jumped more than 2% as a flurry of upbeat news forced bearish traders to shed bets on lower prices. The London Metal Exchange’s warehouse load-out rule change may have increased the amount of copper locked up in financing deals, the exchange’s chief executive said on Tuesday.  China’s March copper arrivals rose 7.2 percent from a month ago on hopes factories will resume output after the Lunar New Year break, but fell by a sharp 30 percent from a year ago indicating the pickup in demand was not as strong as expected. Copper hit its highest since late March while other metals too were up after the Chinese inflation data, which underpinned a steady but modest seasonal recovery in metals demand. Copper futures for May delivery closed up by 2.1% at $3.4415 on the COMEX division of the NYMEX. Silver was able to rebound yesterday from the low 27.00 price range to climb over 28.00 and gave back some of its rise this morning to trade at 27.858.

After the release of strong Chinese trade data this morning industrial metals are expected to climb which should see copper and silver rebound.

While industrial metals trade in a positive mode, precious metals remain flat this morning with gold trading at 1586.45 after positing large gains on Tuesday. Gold advanced to a 1-week high while silver jumped the most since January, on speculation that central bankers in major economies will take more steps to bolster their economies, boosting safe haven demand for the metals.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 1,200.37 tons, as on April 9. Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,497.59 tons, as on April 5.

The dollar pulled back against the Japanese currency and other rivals while the greenback is likely to hit the psychologically important 100-yen level on the wake of Japan’s aggressive monetary-stimulus efforts. Indian gold futures traded steady on Tuesday in line with global markets, with traders looking for bargains as weddings and festivals neared. Hong Kong’s net gold flow to mainland China rebounded last month from three month lows in January, reflecting increased demand ahead of the Lunar New Year holiday and as buyers took advantage of weaker prices, data showed on Tuesday

Today traders will get their first glimpse at the FOMC minutes from its last decision, while Mr. Bernanke said on Monday, that the economy is not where he had hoped, indicating that the Fed will continue its current asset purchase programs. Gold is likely to see-saw on today caught between demand for safe investment and rising equities that are attracting investors. US earning season kicked off with Alcoa reporting well above forecast, which turned sentiment to a positive note as traders pushed equities upwards lessening the demand for precious metals. The surging stock markets are always an attraction for quick returns on investments.

Growth and Korean Tensions Effecting Crude Oil Prices

Growth and Korean Tensions Effecting Crude Oil Prices
Growth and Korean Tensions Effecting Crude Oil Prices
WTI. crude slipped today as much as 0.3% on the NYMEX, heading for the first decline in three days, after the API said inventories gained 5.1 mn barrels last week. Crude oil is trading at 93.92 this morning. Strong Chinese trade data should help support prices along with the ongoing Japanese stimulus. Yesterday, the UK saw positive reports for Industrial and Manufacturing production which also helps increase demand. Crude oil prices rose on yesterday, posting their biggest gain since late December as a weak dollar and tame Chinese inflation data drew investors to commodities. China’s daily crude oil imports in March fell 2.1 percent versus a year earlier, customs data showed on Wednesday, as some refineries started maintenance programs amid high fuel stocks. The turnaround in Chinese data caused the Asian Development Bank to upgrade its growth forecast for China to over 8%.

International oil prices rose on the back of upbeat quarterly earnings from Alcoa and supportive inflation data from top energy consumer China, analysts said. Brent North Sea crude for delivery in May won 42 cents to $105.08 per barrel in early afternoon deals in London. NY’s main contract, West Texas Intermediate light sweet crude for May, added eight cents to $93.44 per barrel. The market had already rallied on Monday in a technical rebound after last week’s sharp fall on poor US jobs data.

Anticipation of a refinery ramp-up in preparation of the US driving season is also keeping the West Texas Intermediate market buoyed. However, traders should not get too carried away with this optimism. While there is room for increased distillate production (stockpiles are currently extremely low), gasoline inventories are largely in line with their seasonal 5-year average.

Tension between North and South Korea today as the North announced a mid-range missile launch, which has pushed the US and South Korean alerts up on notch. Oil prices found some support from worries over increasing tension in North Korea and a stalemate in talks between Iran and Western nations, raising fears of a possible disruption to fuel supplies from the Middle East.

Analysts say the Brent-WTI spread could narrow further as European concerns weigh on Brent, while the start-up of a new pipeline will alleviate a glut of crude at the Cushing, Oklahoma, hub for U S oil, and keep the US crude contract well supported.

Oil markets await U S inventory data for the week ended April 5. Data last week showed an inventory build last seen in 1990, dragging oil prices down to an eight-month low on Friday. A Reuter’s analyst’ survey showed crude stockpiles were expected to rise by 1.5 million barrels. 

 The U.S. Energy Information Administration on Tuesday trimmed its estimate for growth in domestic natural gas production in 2013, but still expects output to rise 0.3 percent from 2012’s record levels. Natural gas has been trading near record highs earlier in the week but traders sold off to book profits as gas rose towards 4.15. Natural gas has drifted down from its high but is trading in the green this morning at 4.037 as winter 2013 draws to a close. Export demand continues to keep prices over the 4.00 level.

The EUR-JPY-GBP-USD Traders In Risk On Mode

The EUR-JPY-GBP-USD Traders In Risk On Mode
The EUR-JPY-GBP-USD Traders In Risk On Mode
The yen fell versus most of its 16 major counterparts as the BOJ’s unprecedented stimulus measures aimed at ending almost two decades of deflation spurred bets the currency will weaken further. The JPY closed at 99.00 and climbed this morning to trade at 99.11 as markets expect the currency to break the 100.00 mark this week. The JPY is trading at its lowest point since 2008.

This morning, Chinese equities are trading lower as china’s export trades rose less than last month whereas import trades improved at a faster pace from survey figures indicating declining trade balance.  Chinese data showed imports grew 14.1 per cent in March, more than double economists’ forecasts of a six per cent rise. That surprise 14 per cent jump in imports is really encouraging, considering the figure from the prior month was down over 15 per cent.

On Tuesday, the euro closed on a higher note, around a half percent higher after Germany’s trade balance and current account balance data showed improvement from last month’s numbers. This morning, the euro is trading on a marginally positive note at $1.3086. There are no economic releases from the euro-zone to support the euro. However, the US monthly budget statement and FOMC minutes are due on today.

In a speech late Monday, Fed chair Ben Bernanke said that the US economy still has far to go to recover to an acceptable state of health, suggesting the policy would remain unchanged as long as inflation doesn’t threaten and joblessness remains high.

“Today the economy is significantly stronger than it was four years ago, although conditions are clearly still far from where we would all like them to be,” he said in a speech in Georgia.

The US mortgage application figure is expected to decline, which may keep up the pressure on the dollar. The US dollar index is flat this morning holding at 82.45. The dollar was lower ahead of the release of the minutes of the Federal Reserve’s policy meeting three weeks ago, as traders look for signs of direction on the US central bank’s $85 billion a month quantitative easing program.

The pound has been supported by stronger than expected industrial production data. The 1.0% m/m gain for February exceeded expectations of 0.4% but has failed to fully retrace the 1.3% decline from the previous month. As such, concerns about a Q1 contraction remain elevated. Meanwhile, UK trade data were weaker, with a widened deficit driven by a decline in exports as imports held flat. The positive reports have helped the ailing pound to trade at 1.5332