United States
Totally slow day for the markets yesterday as the US celebrated a bank holiday. This kept the USD trading in a tight range versus most major currencies.
Euro zone
The EUR took an early lead versus the JPY and the USD during the Asia session yesterday. Suddenly, however, its tank fell empty following the release of the euro zone's Sentix investor confidence survey.
Japan
The safe-havens took a hit yesterday after the G20 ended their summit with a pledge to continue implementing the necessary monetary and fiscal policies until a recovery is secured. The JPY bowed down to commodity currencies as investors became in the mood to take on more risk.
United Kingdom
It looks like the pound is off to a bad start. It was the weakest among the majors yesterday as it struggled to hold on to its gains and failed miserably. The GBPUSD was unable to sustain its rally past the 1.6400 mark while the GBPJPY slid below the 152.00 level. With a bunch of economic reports due today, the pound has several chances to get back on its feet.
Canada
The CAD got another sucker punch in against the USD yesterday, as the CAD staged another big gain yesterday. Despite bank holidays for both the US and Canada, USDCAD trading hit a low of 1.0741, and closed at 1.0773.
Australia
Boing! Looks like the AUD had a pair of Nikes on, as the pair jumped high to set its yearly record. After closing last week with at a yearly high, the pair pushed slightly higher yesterday, touching a high of .8578 before closing at .8560. Is there no stopping the AUD?
New Zealand
The NZD broke out of the 0.6900 handle against the USD yesterday and set a new yearly high. If this level holds, then we might see the NZD move further as investors gain more confidence in the markets.
Switzerland
Will we see another range bound day for the Swissy today or will we see a breakout as money starts flowing back into the capital markets after the long weekend?
Read more...
FX Trading - China - Impenetrable?
Editor's Note: Today we would be running a guest perspective from our good friend Tom Jefferies. Tom is seasoned veteran of the financial markets with tours of duty at various top-flight media organizations. He has a unique focus on the global macro environment garnered over years of study, real world experience across many borders, and access to top-flight investment talent across the globe.
I am constantly stunned and surprised at the pronouncements that the worst is over and the World Recession is at an end.
A few months ago, in my neck of the woods, the Canadian Federal Government was saying we would skirt a recession - then it was a 'technical' recession...NOW? The fundamentals stink and yet, in parts of "The Great White North", the casual display of Real Estate Investing on a wing and a prayer, and credit card binging continues apace. Take a look at the Global picture. Take a look at the Export numbers and you can see a trend. It's down.
I am going to bet that we see the Indian and the Shanghai Composite roll over like a dead egg roll, before the end of the Fourth quarter. Looking at a chart of the SCI, even my 13 year old cat can figure out that it's Bear City. The SCI has been around a whole TWENTY years and in that smidgen of space and time - the SCI absorbed four huge Bear Markets and four equally loony manic highs.
Looking at the growing unrest in China over jobs, Religion and mixing in the history of banking misadventures in the Middle Kingdom, they all seem to portend a fiscal train wreck of Brobdingnagian proportions.
Even Jim Rogers has moved on to Sri Lanka looking for bargains. From TheStarOnline.com:
· CHINA’S new yuan-denominated loans in July amounted to 356 billion yuan. The monthly increase was the lowest this year.
· Urban fixed asset investment grew 32.9%, lower than expected.
· Industrial production rose 10.8%, also lower than expected. Exports in July were down 23% year-on-year, compared with a 21.4% decline in June. Internal demand?
I wonder If thousands, nay, millions have lost their job, because they aren't selling anywhere near as many crappy jeans to the cash deprived Western Consumer - where is the demand going to come from?
India? Yes - it is 'booming' - but there are many questions about the rate of absorption of high velocity monies into visible infrastructure projects that actually get built, without being withered by huge endemic corruption. India will also have to make huge and painful changes in housing, roads, sanitary facilities, Rail and Air transit routes, Hospitals and Schools.
India works on it's own timetable and will try to maintain the profile of the last five years, but I have a feeling it will be an erratic voyage. Economists seem to discount the deep Hindu belief structure as well as the terrifying and very real Geo Political games being played out in Kashmir. India and Pakistan are armed with Nuclear weapons and both are upgrading their Air Defense and first strike capabilities. Not all the hot money pouring into India is going into building roads. *(India tried a Moon Shot last month - it was not a success).
Meanwhile back in China - I am getting more and more skeptical as to the real strength of any of the so called 'green shoots'. I am even more skeptical of the ability of the Central Planning Committee in Beijing to keep them alive, no matter how much manure and Yuan they throw on the problems.
Read more...
I am constantly stunned and surprised at the pronouncements that the worst is over and the World Recession is at an end.
A few months ago, in my neck of the woods, the Canadian Federal Government was saying we would skirt a recession - then it was a 'technical' recession...NOW? The fundamentals stink and yet, in parts of "The Great White North", the casual display of Real Estate Investing on a wing and a prayer, and credit card binging continues apace. Take a look at the Global picture. Take a look at the Export numbers and you can see a trend. It's down.
I am going to bet that we see the Indian and the Shanghai Composite roll over like a dead egg roll, before the end of the Fourth quarter. Looking at a chart of the SCI, even my 13 year old cat can figure out that it's Bear City. The SCI has been around a whole TWENTY years and in that smidgen of space and time - the SCI absorbed four huge Bear Markets and four equally loony manic highs.
Looking at the growing unrest in China over jobs, Religion and mixing in the history of banking misadventures in the Middle Kingdom, they all seem to portend a fiscal train wreck of Brobdingnagian proportions.
Even Jim Rogers has moved on to Sri Lanka looking for bargains. From TheStarOnline.com:
· CHINA’S new yuan-denominated loans in July amounted to 356 billion yuan. The monthly increase was the lowest this year.
· Urban fixed asset investment grew 32.9%, lower than expected.
· Industrial production rose 10.8%, also lower than expected. Exports in July were down 23% year-on-year, compared with a 21.4% decline in June. Internal demand?
I wonder If thousands, nay, millions have lost their job, because they aren't selling anywhere near as many crappy jeans to the cash deprived Western Consumer - where is the demand going to come from?
India? Yes - it is 'booming' - but there are many questions about the rate of absorption of high velocity monies into visible infrastructure projects that actually get built, without being withered by huge endemic corruption. India will also have to make huge and painful changes in housing, roads, sanitary facilities, Rail and Air transit routes, Hospitals and Schools.
India works on it's own timetable and will try to maintain the profile of the last five years, but I have a feeling it will be an erratic voyage. Economists seem to discount the deep Hindu belief structure as well as the terrifying and very real Geo Political games being played out in Kashmir. India and Pakistan are armed with Nuclear weapons and both are upgrading their Air Defense and first strike capabilities. Not all the hot money pouring into India is going into building roads. *(India tried a Moon Shot last month - it was not a success).
Meanwhile back in China - I am getting more and more skeptical as to the real strength of any of the so called 'green shoots'. I am even more skeptical of the ability of the Central Planning Committee in Beijing to keep them alive, no matter how much manure and Yuan they throw on the problems.
Read more...
THIS WEEK MARKET REVIEW SEPT. 07, 2009
Gold soars to the 1000 mark: Precious metals were the breakout story of the week, as Gold, Silver and Platinum all presented sharp moves higher. The move came as traders jumped into commodities prior to the G20 meeting that was scheduled over the weekend. Gold moved up $34 dollars per ounce this week or 3.7%, and tested trend line resistance that was created by highs in March 2008 and February 2009.
The precious metal tested the $1,000 mark, and backed off slightly on Friday, after the employment report. In addition, silver broke out to new highs for 2009, smashing through trend line resistance to close at $16.23 for the week. Silver had an outstanding move for the week, moving up by $1.45 an ounce (9.8%), leading the precious metals. One must note that Gold is currently trading around major psychological resistance. A break of current levels will only confirm silver’s trend higher as both tend to trade in the same direction.
The equity markets took a breather last week and retraced some of the gains made during the last 5 months. For the week, the S&P 500 index lost 12.5 points or 1.22% while the Nadaq closed down by a mere 0.31%. The week started out on a negative note as Tuesday’s session presented extreme selling pressure. The market was hammered losing 22 points to start the month, something also known as the ‘September Affect’.
On Tuesday, the ISM released its monthly manufacturing index, which showed a strong figure of 52 points. Even though the economy is showing a vast improvement compared to only a couple of months ago (a numbers above 50 signifies a period of expansion), one must note that sentiment is still not at its highest and consumer spending figures are still weighing on the markets. Despite that fact, during the week there were a number of strong economic data releases that pointed to further improvement in the US economy. The ISM Index was followed by a 3.6% increase in pending home sales, and a better than expected employment number. The August employment headline number showed a loss of 216,000 jobs, a figure which was better than the consensus of 245k. Revisions for the month of July, created an additional loss of 20,000 jobs. The unemployment rate showed a worse than the expected figure of 9.7%, compared to the 9.6% consensus. This overall better than expected news lifted the S&P 500 index 13 points on Friday, to close the session at 1016. From a technical point of view the broader market is still holding onto current levels, trading in prior range.
Currency pairs continue to range, AUD/USD shows possible signs of a break out: Last week’s volatile moves had an enormous affect on the currency market sending the various pairs into a trendless pattern. The Dollar increased at the start of the week against its counter parts but quickly lost its ground following the U.S market’s turnaround. Furthermore, the move in Gold had an enormous influence on commodity currencies sending the AUD/USD and the NZD/USD higher. From a technical point of view the AUD/USD bounced off its trend line support, and presented minor signs of a break out during Friday’s session. Even though the pair didn’t present a full body above the resistance line, one should observe this week’s trading pattern as higher commodity prices could help this pair surge.
The NZD/USD also presented a phenomenal turnaround during the week and headed back up to major resistance. The NZD/USD is now trading at $0.69, whereas a break could lead this pair to higher ground.
An Interest rate decision Week: Even though the U.S market will be closed Monday due to Labor Day, economic data scheduled to be released later during the week should continue to have an impact on markets. The BOC, RBNZ and BOE are all scheduled to release their rate decisions this week, all of which are expected to hold their rates at current levels. Even though the rate decisions could cause intraday volatility, many will be observing the statements that follow in order to receive a clue about official’s opinions, regarding future economic growth. Furthermore the results of the Weekend G20 meeting will be released early during the week and could give a clue on what global leaders think of the recent recovery.
Read more...
The precious metal tested the $1,000 mark, and backed off slightly on Friday, after the employment report. In addition, silver broke out to new highs for 2009, smashing through trend line resistance to close at $16.23 for the week. Silver had an outstanding move for the week, moving up by $1.45 an ounce (9.8%), leading the precious metals. One must note that Gold is currently trading around major psychological resistance. A break of current levels will only confirm silver’s trend higher as both tend to trade in the same direction.
The equity markets took a breather last week and retraced some of the gains made during the last 5 months. For the week, the S&P 500 index lost 12.5 points or 1.22% while the Nadaq closed down by a mere 0.31%. The week started out on a negative note as Tuesday’s session presented extreme selling pressure. The market was hammered losing 22 points to start the month, something also known as the ‘September Affect’.
On Tuesday, the ISM released its monthly manufacturing index, which showed a strong figure of 52 points. Even though the economy is showing a vast improvement compared to only a couple of months ago (a numbers above 50 signifies a period of expansion), one must note that sentiment is still not at its highest and consumer spending figures are still weighing on the markets. Despite that fact, during the week there were a number of strong economic data releases that pointed to further improvement in the US economy. The ISM Index was followed by a 3.6% increase in pending home sales, and a better than expected employment number. The August employment headline number showed a loss of 216,000 jobs, a figure which was better than the consensus of 245k. Revisions for the month of July, created an additional loss of 20,000 jobs. The unemployment rate showed a worse than the expected figure of 9.7%, compared to the 9.6% consensus. This overall better than expected news lifted the S&P 500 index 13 points on Friday, to close the session at 1016. From a technical point of view the broader market is still holding onto current levels, trading in prior range.
Currency pairs continue to range, AUD/USD shows possible signs of a break out: Last week’s volatile moves had an enormous affect on the currency market sending the various pairs into a trendless pattern. The Dollar increased at the start of the week against its counter parts but quickly lost its ground following the U.S market’s turnaround. Furthermore, the move in Gold had an enormous influence on commodity currencies sending the AUD/USD and the NZD/USD higher. From a technical point of view the AUD/USD bounced off its trend line support, and presented minor signs of a break out during Friday’s session. Even though the pair didn’t present a full body above the resistance line, one should observe this week’s trading pattern as higher commodity prices could help this pair surge.
The NZD/USD also presented a phenomenal turnaround during the week and headed back up to major resistance. The NZD/USD is now trading at $0.69, whereas a break could lead this pair to higher ground.
An Interest rate decision Week: Even though the U.S market will be closed Monday due to Labor Day, economic data scheduled to be released later during the week should continue to have an impact on markets. The BOC, RBNZ and BOE are all scheduled to release their rate decisions this week, all of which are expected to hold their rates at current levels. Even though the rate decisions could cause intraday volatility, many will be observing the statements that follow in order to receive a clue about official’s opinions, regarding future economic growth. Furthermore the results of the Weekend G20 meeting will be released early during the week and could give a clue on what global leaders think of the recent recovery.
Read more...
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