Forex Daily Outlook

U.S. Dollar Trading (USD) weakened as risk sentiment stepped up a notch on the back of better than expected economic data. February Durable Goods Orders rose +1.7% vs. -2% forecast. New Home Sales (FEB) rose +4.7% vs. -13.7% previously. The most interesting story was the slip by Geithner that he would consider a super Global Reserve Currency which was quickly clarified. Crude Oil closed down -$1.21 ending the New York session at $52.77 per barrel. In US share markets, the Nasdaq was up 12 points or 0.82% whilst the Dow Jones up 89 points or 1.17%. Looking ahead, Q4 Final GDP forecast at -6.5% vs. -6.2% previously. Also released, Weekly Jobless Claims forecast at 650K vs. 646K. Full Story

Ready To Sell Dollars? How Long Have You Got?

Thursday wrapped up another day of strange intra-day movement in regard to historical commodity/currency links, but the markets are not ready to swallow the Fed's requirement that they de-value the dollar. Ready? Full Story

Chart of the Day - 3/26/2009 – USD/JPY

Yen weakness this week has translated into a USD/JPY recovery that currently appears to be targeting a potential uptrend continuation ... Full Story

Should You Have More Than One Forex Dealer?

I think that is certainly a great question to ask, because when financial institutions run into financial trouble, as many are now, the account holders are the last group to recoup their money, if they ever do. When it comes to your forex trading account, there are some great solutions to deal with this potential uncertainty. Full Story

Gbp/Usd Big Picture Elliott Wave

This pair has broken through the support line, with the wave B leg in place with the top around 1.4775. Wave C looks already to be on the underway, looking for a five wave decline down to the 38.2% support area. Full Story

The Bernanke Dollar Call

By Joseph Trevisani, Chief Market Analyst FX Solutions The spectre haunting Federal Reserve monetary policy is the fear of deflation. A prolonged period of falling prices presses down on both the productive and the consumption sides of the economy. Businesses lose pricing power and face shrinking revenues even if they maintain sales levels. Consumers, frightened by job losses and discouraged by the collapse in family wealth postpone purchases, particularly of large items like homes and cars. Businesses with falling revenues fire workers, who buy less and in turn business production takes another leg down and employment follows. Historically deflation is rare and associated only with... Full Story

Reversal Pattern - EUR/USD Changing Course?

While I am not a fan of referring to candle patterns using names, occasionally I become interested in a candle pattern. Of particular interest is the 3 bar reversal patterns on a daily chart, which has just occurred on the EUR/USD pair. Three daily bars that deviate from the immediate price direction and all close higher or lower can reveal important information about where price is likely to head. It is not always accurate, however it accurate more often than not and if you were forced to use this input alone, you would likely make money given that you had good trade management. Instead of rewriting a lot of things I have already written, I am simply going cite to a more in depth... Full Story

A world currency moves nearer after Tim Geithner's slip

This is how matters quickly escalate in geo-finance. China's suggestion – backed by Russia, Brazil, and India, and clearly aimed at breaking US dollar hegemony – is making its way onto the agenda of the G20 Summit next week. 'Dollar-dämmerung' no longer looks so far-fetched. China's paper, by Governor Zhou Xiaochuan, is couched in understated language – more a 'thought experiment' than a declaration of monetary war. His ideas could be mistaken for the musings of an academic theorist. Nobody should be fooled by decorum. Full Story

Roubini Says Stocks Will Drop as Banks Go ‘Belly Up’

U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year’s economic crisis. “The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.” The global equity rebound in March that sent the Standard & Poor’s 500 Index to its best monthly advance in 17 years is a... Full Story

Dollar Strong, But for How Long?

As we approach New York closing, markets are still in a euphoric mood, with DOW JONES up and S&P 500 so far its biggest monthly rally for many years! The markets are clearly in a more positive mood these days, and news today that economic growth was at its lowest did not seem to make any difference... Full Story

USD/CAD - Yet Another Pennant Pattern

Similar to other dollar-based pairs, USD/CAD (a daily chart of which is shown) is displaying a clear inverted pennant consolidation ... Full Story

March 27 Market Commentary and Technical Levels

Fri, 27th of March, 2009 March 27 Market Commentary and Technical Levels By Setyo Wibowo (analyst@fxinstructor.com) EURUSD Outlook EURUSD still made no significant movement yesterday, trapped between 1.3735 – 1.3435 area. We have no clear direction so far and remain in the “no trade zone”. Daily CCI just cross the 100 line down suggesting a potential bearish view, but as long as price stay above 1.3435 the bearish scenario is not yet confirmed. Consistent movement below 1.3435 could trigger further bearish momentum targeting 1.2990 area. EURUSD Daily Supports and Resistances: S1= 1.3467 S2= 1.3408 S3= 1.3323 R1= 1.3611 R2= 1.3696 R3= 1.3755 Full Story

News from the G7

The EUR plummeted against the USD and the JPY this morning after the G7 meeting made a declaration of ‘broad principles’ and postponed the real challenges until the meeting of the G20 in April

Towards 7am GMT today the EUR was worth 1.2747 USD compared to 1.2856 on Friday night – a fall of over 100 pips. The EUR lost 150 against the JPY, opening to day at 116.80 JPY compared to 118.30 JPY at close on Friday. The USD also fell against the JPY, opeing today at 91.63 JPY compared with 92.01 at close on Friday evening.

This strength of the JPY seems to ignore the official statistics released this morning which show that the GDP of Japan, the second largest global economy, fell by 12.7% of the annuam rate for the three months from October to December (-3.3% from the previous quarter). This was its worst economic contraction in 35 years.

Turbulence on the Forex

At Sunday night’s opening of the Forex traders saw a huge gap which illustrates the lack of effectiveness, if not the impotence, of the largest economies in the world – represented by the G7.

As early as 23.00 on Sunday evening EUR/USD opened 60 pips lower than its Friday closing and GBP/USD had gained 120 pips before the first trade!

The G7 failed to produce concrete decisions and lacked firmness towards protectionism. These two factors combined with the poor coordination of the member countries, has reduced risk aversion which in turn has propelled the JPY and the USD upwards.

This is an interesting week for forex traders. In the U.S. yesterday was a public holiday – Presidents Day. In Japan the impact of the financial crisis – Japanese GDP down -3.3% and industrial production down 10% – was highlighted by the resignation of the Finance Minister. At the same time China announced that they had experienced a loss of 32.6% in foreign investments in one year.

Lack of clear policy threatens the EUR

The EUR fell against the USD overnight because investors are concerned about the deteriorating economic situation in Europe. These concerns were heightened yesterday when Germany’s Chancellor Merkel said “I will not allow Germany to participate in any speculation.” ie : Germany will not promise to offer financial support to those insolvent countries in the eurozone.

Merkel’s announcement caused traders to sell the EUR moving the situation within the Euro Zone from bad to worse. Investors are worried about the financial soundness of several Euro Zone countries including Greece and Ireland and Eastern Europe countries like Hungary and Ukraine. As a result the EUR is declining. Towards 07.00 GMT this morning the EUR stood at 1.2594 USD a fall form 1.2673 USD overnight. Against the JPY, the EUR fell to 118.56 from 119.35 overnight.

Several Central European currencies have experienced a sharp decline in recent weeks because of concerns about the status of the banks in these countries and fears of massive capital withdrawals.The bleak outlook within the Euro Zone is exacerbated because despite these growing concerns, governments have not adopted any significant budgetary measures. There is a lack of clear policy direction which only reinforces concerns about the recession and weakens the EUR.Elsewhere : In the U.S. the dollar was supported by the rise in producer prices in January, increasing by 0.8% compared to December after five consecutive months of decline.

News Flash - UBS Chief Resigns

UBS Chief Rohner has tendered his resignation and will be replaced by Credit Suisse CEO Oswald Gruebel with immediate effect, the bank announced today.

UBS has lost billions of dollars in the financial crisis and is also presently facing a legal dispute with U.S. over tax evasion probe on UBS’s americans account holders. UBS annual loss in year 2008 stands at about US$17 billion dollars, the largest full-year loss in Swiss corporate history. Loss could be further extended with the worsening of the Eastern European countries economy.

Australian dollar higher on unexpected rate decision

As we approach another cycle of risk aversion, with the dollar staring as the head master of risk aversion haven, (taking the lead out of the Japanese Yen which clearly lost it’s allure lately) we start today’s London trading session with a strong performance of the Australian dollar verses major pairs.

The move did come as a surprise, after the Australian central bank (RBA) unexpectedly left rates unchanged on tonight’s meeting. The market was counting on a slash of at least 0.25% from 3.25% to 3.00% on overnight borrowing costs.

Consequently, demand for the AUD rose sharply overnight.

AUDUSD is fighting its way up this morning, closing on the first main resistance level at 0.6415,
I expect it to have some difficulty in clearly breaching above this level today, especially, if the Dollar will continue its global bullish trend.

Monday’s trading starts with more pressure on the dollar

After Friday’s sell off, the Dollar continues to trade lower against major currencies at thebeginning of this week.

The current market sentiment indicates risk appetite is high, stimulating investors to continueand sell the dollar.

This morning we can see EURUSD aiming for its major resistance level at 1.3. This level servedtrue barrier for the pair in the last six months. Many attempts to break above 1.3 did notreach higher than 1.3080 before a serious correction took place. It will be interesting to see if thecurrent environment can supply enough fuel for EURUSD to break and trade clearly above as a 1.3080.

GBPUSD however, turns to be much more resilient this Monday, already trading around 1.42.
If the current dollar sentiment will continue to favor risk, we can expect to see 1.45 get printedthis week.

Tip of the day: try to keep a straight line with the market, that is, if the dollar is weak againstmost majors, don’t go ahead and buy it. Pay attention to EURGBP, as soon as the dollar willregain some of its power back, this pair should head up once more. Conversely, if the Poundcontinues to trade higher vs the dollar, while EURUSD is still not able to clearly breach 1.3 andbeyond this should take EURGBP to lower levels today.

Yen, Dollar haven status faded on stock rally

Yesterday was a good day on wall street, with the dow Jones closing up 6.84% after the U.S Treasury Secretary Timothy Geithner elaborated on hid plan to sop up mortgage debt and other soured assets.

This of course affected the demand for safe haven currencies in the forex market, with a pretty obvious move, the Yen and the dollar lost ground against most major currencies.

USDJPY has fully recovered from its “two day” dive to 93.5, this morning trades around 98.5, the 100 target looks closer then ever.

AUDJPY: this pair will potentially hit a very important resistance area 70 after breaking above its two and a half month high at 68.33.

GBPUSD: was topping at 1.4730 , might have some difficulty to advance further before the release of the Great Britain CPI and Inflation Report figures at 9:30 and 9:45 GMT accordingly.

A Chain of disappointments

Lately the greenback is depreciating as optimism is spurred around the market. But anyone who trades against the greenback most remember that a depression is built on a chain of disappointments rather than the opposite. Maybe that whole optimism and anti dollar rally is just a big honey trap?
If the feds intention to print a large sum of money is the concern take a look at Japan. They have a history of printing large sums of money and the Yen has preformed rather well, why then this should affect the greenback?

*Please acknowledge that this is my opinion alone and is not a trade or an investment recommendation in any sort or way.

Dollar rebounded after Obama’s remark

The U.S dollar gathered some steam, and gained back some of its losses yesterday on the New-York trading session, after President Obama said “the U.S currency is extraordinarily strong because investors are confident in the economy”. In addition risk appetite faded when stocks retraced on Tuesday.

EURUSD: finally broke under 1.35 marking a possible beginning of a serious correction to the downside, naturally putting an end to the extraordinary upward momentum we have seen last week.
It is time to reconsider all long positions on this pair, at least until we can spot some buying pressure in the market.
Notice the 1.3414 support level, this is the last stand before we drop back to the 1.33 area, if EURUSD will keep its head above it, we can still hope for a possible come back to 1.3550 this week. However, a clear break under could potentially moderate bigger selling pressure on the pair.

GBPUSD: the pound is still holding its ground against the dollar. After topping at 1.4781 the pair retraced a little over 100 pips, keeping its upward trend intact. The next serious support level is at 1.4440.

Worse than expected Retail Sales in U.K pressure the Pound

A report this morning is showing retail sales in U.K dropped by -1.9% , much worse than the expected -0.3% , in the forex arena this translates to Pound downside pressure entering the first trading hours of the London session.

Generally, the market remains lucked in an anti-dollar environment, as we have yet to experience a serious retrace preformed by any of the major pairs yesterday. This might limit GBPUSD downside potential today.

As for EURUSD, the lower it could drop yesterday was 1.3414, which now marks its most important support area. The pair saw some high volatility around 12:00 GMT after U.S. Treasury Secretary Timothy Geithner’s commented on television he was open for changes concerning the status of the dollar as the world’s reserve currency. The volatile move ended with little change after Geithner repeated and said the dollar would keep its status as the top reserve currency for a long time.

Next important report today would be the U.S Unemployment Claims at 12:30GMT, a report which indicates the number of individuals who filed for unemployment insurance for the first time during the past week,
the forecast number is 649k.

Risk appetite grows on hope for US

Risk appetite showed further signs of improvement on Thursday as hopes that the US economy was close to bottoming helped equities extend their winning run, credit spreads narrow and oil reach a four-month high.

Dollar dips on Geithner’s ‘loose talk’

By Krishna Guha and Tom Braithwaite in Washington and Peter Garnham in London

Published: March 25 2009 14:19 | Last updated: March 26 2009 01:14

The dollar fell briefly on Wednesday after Tim Geithner, the Treasury secretary, appeared to suggest that the US was open to exploring a Chinese proposal to reduce reliance on the dollar as the world’s reserve currency.

Mr Geithner told the Council for Foreign Relations that he had not studied the proposal by Zhou Xiaochuan, Chinese central bank governor, for greater use of special drawing rights – a synthetic currency maintained by the International Monetary Fund that represents a basket of actual currencies – in global reserves, but added: “We are quite open to that.”

He said increased use of SDRs should be thought of as an “evolutionary” step rather than a step towards “global monetary union”.

The dollar fell 1.3 per cent against the euro as headlines saying “Geithner open to SDR currency” flashed across traders’ screens. With the currency falling, Mr Geithner’s interviewer – Roger Altman, a deputy Treasury secretary in the Clinton administration – gave Mr Geithner the chance to clarify.

NZ dollar hits 10-week high

By Peter Garnham

Published: March 26 2009 12:01 | Last updated: March 26 2009 22:25

The New Zealand dollar climbed on Thursday as improving risk appetite boosted the appeal of higher-yielding currencies.

Analysts said the continued rally in commodity prices, resilient US equity prices and falling asset price volatility would remain the driving force behind the strength of the New Zealand and Australian dollars.

Late in New York, the New Zealand dollar rose 1.5 per cent to a 10-week high of $0.5747 against the US dollar, while the Australian dollar climbed 0.6 per cent to $0.7016.

The New Zealand dollar outperformed as the country’s current account deficit came in better than expected, widening to 8.9 per cent of gross domestic product in the fourth quarter.

“To the extent that the figures may not have been as catastrophic as some whisper numbers, the New Zealand dollar rallied,” said Christian Lawrence at RBC Capital Markets.

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KCCI seeks protection of geographical indication of products

KARACHI: Karachi Chamber of Commerce & Industry (KCCI) President Anjum Nisar has urged the federal government to promulgate Geographical Indications Law and establish a GI Registry in Pakistan.
Addressing the members of KCCI Intellectual Property Rights Sub-Committee here on Wednesday, he underscored the need for protection at both local and global levels, of the country traditional and indigenous items, produced at cottage industry level as well as by mid-level manufacturers and industrialists.
The government, he said, must secure GIs of Pakistani Basmati, Sindhri Mango, Chaunsa Mango, Anwarratol Mango, Sargodha Kinno, Sindhi Ajrak and Cap, Multani Mitti, Kashmiri Pashmina Shawl, Chiniot Furniture, Hala Furniture & handicraft and other traditional indigenous products first in Pakistan and then globally. The KCCI president expressed his apprehensions that otherwise other countries could secure Pakistani GIs as their own and seriously affect the country exports.
He said that India has already promulgated GI law and had established GI registry in 2003 and only recently also approved IPR Protection Bill in parliament and mandated its Agri Export Promoting Authority (APEDA). India now intends and is propagating to register majority of Pakistani Traditional Indigenous Products as GIs of India, said the senior industrialist.
Anjum Nisar said in Pakistan the draft on GI law was submitted to the Ministry of Commerce in the year 2000 and IPO Pakistan initiated its working in the year 2006, whereas the proposed draft of Bill on GIs is still pending before the concerned ministry.
He on behalf of the business community expressed his fear that if the government failed to take immediate measures to implement and promulgate the GIs law and its Registry and does not register Pakistani GI first in the country and then globally, the exports of traditional and indigenous products would be badly hampered.
In order to avoid confrontation among the private sector, the KCCI president urged the government to secure GIs under its competent authority like the TDAP.http://www.forexpk.com/finance/5239

Metro aims to expand business in Pakistan

KARACHI: Metro has been successfully operating in Pakistan with its four centres despite tough economic conditions in the last six months and now with our first centre in Karachi we aim to open many more outlets in the financial hub of Pakistan, said James Scott, Regional Operating Officer Asia Pacific, Metro Cash and Carry.
He was talking to The News on the sidelines of the opening ceremony of its first Metro Cash and Carry wholesale centre here on Wednesday. He said: We are already operating four centres in Pakistan, we have been successfully coping with the economic slowdown in the world economy, especially in the last six months. Our total investment in existing five centres is almost 100 million euros (Rs11.8 billion) with each centre 20 million euros (Rs2.3 billion). We are satisfied with our performance.
When asked why two weekly wholesale bazaars have been shut down recently in the vicinity of new Metro centre, he said we are inaugurating this centre today and these bazaars have already been shut down so there is no possible connection between the two events, and we are open to all sorts of competition.
Metro is already running four wholesale centres in Pakistan, two in Lahore, one in Islamabad and one in Faisalabad. It exclusively caters to professional customers like hotels, restaurants and small retailers like Kiryana stores.
Scott said: We only deal with professional customers and do not sell products to private customers (in retail).
Giovanni Soranzo, MD Metro Cash and Carry, Pakistan, said with the population of over 170 million people and more than a million residents in eight cities, Pakistan is a very attractive and important market for our company, adding that we see a vast prospect for our business, and will continue to invest in Pakistan to grow in coming years.
Along with expansion, we aspire to contribute to economic growth of the country. He said the average capital investment for this new Metro Cash and Carry outlet is Rs2 billion.http://www.forexpk.com/finance/5240

KSE capitalisation crosses Rs2 trillion

KARACHI: Short-covering on dips helped the Karachi bourse end the session with modest gains on Wednesday. Otherwise, aggressive buying, which had started after the reinstatement of judges last week, faced resistance during the day.
The constitution of a committee to probe the 2005 stock market crash and threats to abandon peace efforts in the Northern Areas were said to be the main reasons for making investors cautious and encouraging them to book profits on available margins.
The KSE 100-share index managed to post another rise of 57.20 points or 0.86 per cent and closed at 6,674.20 points. It helped overall market capitalisation cross Rs2 trillion with fresh inflow of Rs14 billion.
However, 228 stocks out of 378 actives fell, 138 rose and 12 closed unchanged. Notably, the Pakistan Telecommunication Company, MCB Bank, Fauji Fertilizer Bin Qasim and Pak Petroleum closed lower.
Hasnain Asghar Ali at Aziz Fidahusein said that the formation of a sub-committee by the National Assembly Standing Committee on Finance to re-open the March 2005 crash probe and threats to end peace efforts in the Northern Areas made investors cautious and caused intra-day correction.
The market opened with extended gains and briefly breached through 5,700 points in the wee hours. Simultaneously, the leading benchmark 100-Index touched an intra-day high of 6,761.10 points, surging by another 144.10 points from pre-opening level.
Non-availability of buyers at the day peak levels provoked investors to offload their holdings at available margins and book profits to run safer.http://www.forexpk.com/finance/5244

US, Pakistan discuss ROZ bill

ISLAMABAD: US Ambassador to Pakistan Anne W Patterson on Wednesday called on the Minister of State for Investment and Chairman Board of Investment, Saleem H Mandviwalla and discussed implementation and other important aspects of the bill related to the Reconstruction Opportunity Zones (ROZs) for NWFP.
According to a press release issued by the Ministry of Investment, the US Ambassador informed the minister that this measure has been introduced in the US Congress to launch a preferential trade programme through establishment of ROZs in Pakistan and Afghanistan.
This would give the people in impoverished areas a new economic hope and help curb violent extremism. The US ambassador and the minister expressed satisfaction over the steps taken by the NWFP government for restoration of peace in Swat, it added.
The minister assured the ambassador that the federal government would fully support the region socio-economic welfare and early rehabilitation of internally displaced persons in the valley.
Referring to the Reconstruction Opportunity Zones, the minister said the passage of this bill would expedite socio-economic development in FATA. However, the minister of state also urged upon the US government to build and liaison directly with the people and business community in the province of NWFP for expediting their financial support.
He further said that economic development of people will be vital in rooting out the menace of extremism in the region through a holistic approach, including other components as well, the press release added.
http://www.forexpk.com/finance/5249

WB to resume $500m programme loan today

ISLAMABAD: The World Bank is all set to resume programme loan worth $500 million for Pakistan on Thursday under the Poverty Reduction and Economic Support Operation (PRESO) after a pause of almost one and a half years.
An official document exclusively available with The News comprising details of proposed PRESO reveals that Pakistan has agreed to the WB withdrawal of power subsidies, automatic fuel price adjustments, reduction in carry forward of development spending and strengthening of public debt management as well as expanding targeted subsidy to 40 million or 25 per cent population living below the poverty line.
The WB had suspended its programme loan for Pakistan during last fiscal year 2007-08 when Musharraf-Aziz government was unable to control political upheaval after March 9, 2007 and took crucial decisions on the economic front.
However, the document states the PRESO proposed the government to introduce an automatic fuel price adjustment mechanism, which is likely to provide benefits to consumers during the current period of low crude prices.
Interestingly, the WB assessment observes electricity tariff increases are unlikely to have any direct adverse impact on poor people. It further states fortunately, the recent decline in international commodity prices makes reduction in domestic food and fuel prices more likely than increases, which allays the earlier mentioned concerns. The proposed PRESO action on fuel is expected to benefit all households.
The WB will provide Special Drawing Rights (SDR) of 321.3 million (equivalent to $500 million) on standard IDA terms with a 35-year maturity and 10-year grace period.
The WB executive board is scheduled to take up the issue of $500 million loan in shape of single tranche policy development credit under PRESO for Pakistan on Thursday when it will meet in Washington. http://www.forexpk.com/finance/5251

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