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July 31, 2010

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Filed under: Forex General — Tags: — admin @ 5:49 pm

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ForexLive European Wrap: Choppy month end session

Filed under: Central Banks — Tags: , , , , , — admin @ 5:48 pm
  • Moody’s says Spain may lose Aaa rating, US needs “clear plan”
  • S.Korean fx authorities buy dollars to curb won’s strength- dealers
  • Goldman’s leading indicator plummets to a 7-month low, predicts an ISM collapse next week
  • German June retail sales -0.9% m/m, +3.1% vs median forecasts of -0.2%, +1.9% respectively
  • Euro zone June unemployment 10%, unchanged from May and as expected.  July inflation estimated at 1.7% y/y, up from 1.4% in May and as expected
  • Fed’s Bullard: Deflation not main economic scenario in front of U.S., but a risk
  • Swiss KOF July leading inidicator 2.23, weaker than expected, median forecast 2.30
  • Spain’s PM: Govt is meeting deficit reduction targets
  • Chinese fx regulator: Expectations of yuan appreciation have diminished

Choppy month end trade. EUR/USD sits at 1.3010, down from early 1.3065. We initially rallied reaching session high 1.3093.  An Asian sovereign came in selling above 1.3085 and that helped cap things.

European stocks starting to slip and a UK clearer helped trip stops through 1.3045.  Some in the market blamed the sell-off on the Moody’s threat of a Spanish downgrade. Well if that’s the case it sure took awhile for the market to react is all I’m saying.

Large US bank stepped in around 1.3030 and helped manage to provide robust support. We got back up to  around 1.3050 before accelerated European stock losses upped general risk aversion.  Stops were tripped through 1.3020 and more through 1.3000. Another sharp sell-off in the EUR/CHF cross also helped pressure EUR/USD.  That cross is down at 1.3520 from an early 1.3580.

There was talk of 1.3000 buy orders but they were brushed aside on way to 1.2981 session low.  An Asian sovereign was a notable buyer around lows and as European stocks managed to bounce we clawed our way back just above 1.3000.

USD/JPY at 86.35 is effectively unchanged on the day.  Stops were tripped through 86.25 but “decent name” buying surfaced at 86.20.

Cable down slightly at 1.5590 from early 1.5610, underinned by pick up in risk aversion.  At one point stops through 1.5580 were tripped sending the pairing quckly to session low 1.5553 before recovery.

New Bull Market for Uranium Ahead?

Filed under: Forex News — Tags: , , , — admin @ 3:11 am

New Bull Market for Uranium Ahead?

By Justice Litle, Editorial Director, Taipan Publishing Group

Uranium soared from $10 a pound in 2000 to a stunning $136 a pound in 2007 – and then the bottom fell out. After three lean years, could another bull market be ahead?

According to the Ux Consulting Company, which tracks the price of uranium, the July 26 weekly spot price for U308 was $46 per pound. That is a 15% spike from the February lows around $40 per pound.

So does uranium at $46 per pound count as cheap, or expensive? That depends on how you look at it…

In the year 2000, uranium was well and truly dirt cheap. Thanks to a seemingly endless supply from decommissioned nuclear stockpiles, no one wanted the stuff… and the price of U308 (a standard mix of uranium oxides) fell to just $10 per pound.

Seven years on, however, uranium was at the pinnacle of a stunning bull run, riding a wave of increased demand for nuclear power plants around the globe. By the year 2007, U308 had hit an incredible $136 per pound – more than a 1,200% price increase from the bear market lows.

But then the bottom fell out for uranium prices – again – as hard assets got abandoned in the great financial meltdown. So now, in the mid-$40s, the uranium spot price is well off its year-2000 lows, but merely a third of bull market highs. Does that make it cheap?

China seems to think so…

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In fact, you’ve probably never thought about buying a single ounce of this… But if the market collapses, it could be even more valuable to you than gold.

Follow this link to find out what commodity is better than gold.

The Dragon Inhales

“China is buying unprecedented amounts of uranium,” Bloomberg reports, “signaling that prices are poised to rebound after three years of declines. The nation may purchase about 5,000 metric tons this year, more than twice as much as it consumes, building stockpiles for new reactors…”

Keep in mind, too, that China is buying at the “long-term price,” which is higher than the spot price. A few weeks back, the dragon agreed to lock in uranium purchases of “more than 10,000 tons over 10 years” from blue chip miner Cameco (CCJ:NYSE).

“China’s demand is insatiable,” says analyst Dave Dai in Hong Kong. “They will have to take almost whatever is available.”

India is hungry too. Jagdeep Ghai, the finance director for Nuclear Power Corp., reports that India’s uranium needs could grow tenfold in the coming years.

The name of the game now is locking in supply. In a world where the flow of oil is uncertain – and emerging market energy demand is certain to surge – nuclear power is a critical fallback. And that means more nuclear reactors in the works.

According to the World Nuclear Association (WNA) , China alone has 24 reactors under construction – and may have 200 reactors in play by the year 2030. Russia is building another 10… South Korea six… and India four. There are also new reactors under construction in places like Finland, France, Japan, Argentina, and even the United States.

(If you would like to read more of my investment commentary on other topics, sign up for Taipan Daily.)

A Unique Market

Uranium is not like most other commodities. As one might expect, the “nuclear” tie-in makes it a highly regulated market. Not anyone can just buy it or sell it. (Although there is a uranium “ETF” of sorts – Uranium Participation Corp (U:TSE) – trading on the Toronto Stock Exchange.)

The supply profile for uranium is also unique. In the short run, there appears to be plenty of uranium to go around. The long run, though, is another question entirely. With all the new reactors slated for construction – and the price of oil a wildcard – forward-thinking players like China are thus happy to start stockpiling uranium more aggressively here and now, “just in case” demand gets out of hand later. Nor is China the only country to be thinking this way.

Another factor unique to the uranium market is what one might call the “Cold War effect.” The reason uranium became absurdly cheap a decade or so ago was because of massive Cold War era stockpiles. For a time the world had uranium coming out of its ears as Soviet-era warheads were scrapped. Even today there is still Cold War supply to work through – but that supply will not always be there.

In fact, were all the Cold War uranium to be used up tomorrow, prices would head into the stratosphere. Current uranium demand outstrips new production by a huge margin – something on the order of 100 million pounds per year – and it’s only the dwindling stockpiles (those old warheads again) that make up the shortfall.

In addition to finite Cold War supply, uranium has its own version of the “peak oil” profile. Virtually all the cheap and easy uranium deposits have been tapped. As with crude, what’s left are the hard and dangerous deposits located in politically unstable parts of the world, like Kazakhstan and Niger. This is another factor that could push uranium prices higher.

The Large-Scale Alternative

When disaster unfolded in the Gulf, we wrote that the BP oil spill would be a game changer for alternative energy. That assessment still holds true. But it may prove out that the biggest “alternative” winner of all, in respect to deepwater drilling fallout, is nuclear energy.

The main trouble with wind power, solar power and the like, is the challenge of large-scale deployment. With each passing day the underlying technology improves – which moves us closer to getting the economics right – but there is still a long way to go.

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Nuclear power, in contrast, is already tested and proven. It has already been deployed on a massive scale. Take modern-day France, for example, a country known for (among other things) bucolic landscapes and old-world farming techniques. Roughly 79% of France’s electricity is produced by nuclear power, the highest percentage in the world.

Nuclear energy has more or less been embraced as a vital, large-scale alternative to fossil fuels. Even aggressive green advocates, who have grumbled over safety and waste disposal issues with nuclear in the past, now grudgingly admit that nuclear power has clear advantages in reducing air pollution and C02 emissions (both serious problems in China).

Combine this reality with good prospects for oil back above $100 per barrel before too long, and you have political “safe passage” for the upcoming nuclear renaissance. Put it all together, and it’s not hard to accept the assessment of RBC Capital Markets that uranium could rise another 32% in price next year. That makes a number of companies in the mining and reactor space worth exploring.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

About the Author:

Justice Litle is the Editorial Director of Taipan Publishing Group, Editor of Justice Litle’s Macro Trader and Managing Editor to the free investing and trading e-letter Taipan Daily. Justice began his career by pursuing a Ph.D. in literature and philosophy at Oxford University in England, and continued his education at Pulacki University in Olomouc, Czech Republic, and Macquarie University in Sydney, Australia.

Daily analysis and trading strategies 7-30-10

Filed under: Technical Analysis — Tags: , , , , — admin @ 3:06 am

EURUSD

Trading strategy: standing aside

The euro holds steady above former intra-day resistance at 1.3050 after reaching a fresh multi-week high at 1.3105 yesterday. Current recovery is likely to continue and next upside objective is seen at 1.3250/90. Today’s most important event in the economic calendar is the US GDP data release at 13:30 GMT. Since it is the end of July, a corrective move is also possible due to profit taking later today. However, no change in short-term sentiment should occur as long as the 1.27 region is far from current trading levels. Intra-day support starts at 1.3050, backed by 1.2970/00 and 1.2900. Resistance starts at 1.3100 followed by 1.3200 and 1.3250/90. Current exchange rate is 1.3075 @06:15 GMT

Support: 1.3050, 1.2970/00, 1.2900, 1.2860 and 1.2750/70
Resistance: 1.3100, 1.3200 and 1.3250/90
Market sentiment: long term – bearish, medium term – slightly bearish, short term – bullish, intra-day – bullish

EURUSD hourly chart 7-30-2010
EURUSD hourly chart 7-30-2010

More trading setups

EURJPY

EURJPY 4hrs chart 7-30-2010
EURJPY 4hrs chart 7-30-2010

EURAUD

EURAUD 4hrs chart 7-30-2010
EURAUD 4hrs chart 7-30-2010

AUDUSD

AUDUSD daily chart 7-30-2010
AUDUSD daily chart 7-30-2010

Have a good day!


© liviu for innerfx.com, 2010. |
Permalink | Post tags: audusd, EURAUD, eurjpy, eurusd

Check out what’s going on in Forex today!

Filed under: Business — Tags: , , , , — admin @ 12:36 am

Once again we are fortunate to have Abe’s insight into the Forex market.  Enjoy!

This Friday morning we have some important patterns emerging. I like to form a daily outlook using a 4 Hour chart because it provides a good combination of “big picture” perspective as well as enabling our “thumbs on the pulse” of the market.  So let’s get started:

USDCHF
Dollar weakness is the focus today and we see the battle lines are right on the key support at 1.04.  Its best to get a confirmation of either a bounce off support or a break down before one anticipates what will happen.
usdchf2.JPG

EURUSD – Bearish facing test of Inner and Outer Support
Technically, the action is clearly on the side of the bears.  But the key is confirmation. We have a fuzzy barrier of Inner support at 1.2980.  Its fuzzy because there are a lot of candlestick “tails“ there.   This means the market is not drawing a line in the sand on Support.  It actually tested the Outer Support at 1.2953.   Tactically, the interesting situation will be a break of Inner Support with a target to Outer Support.   Also, a failure at 1.2980 could generate a bounce condition.
eurusd2.JPG

GBPUSD – BULLISH BUT TIRED
The technical trading conditions for the GBPUSD is more challenging this morning.  We have a sloppy sideways channel between support at 1.5545 and resistance at 1.5666.  It’s really not clear in either direction.  But a breakdown at 1.5545 puts this pair into a sell zone.

gbpusd1.JPG

AUDUSD –   SELL ZONE EMERGING
Notice a descending triangle showing compression on the 4 hour chart.   A confirmed breakdown at .8975 will put this pair into a sell zone.  This presents us with a 75 pip trading range if the breakdown occurs.

audusd1.JPG

USDJPY –  Dollar Weakness May Be Over
The Yen is showing strength against the dollar, but it’s not a decisive line of Support at 86.33. The action outlook is a battle at this line.  Bounces above it will confirm a buy opportunity, but an inability to stay above 86.5 gives bears permission to sell the USDJPY pair.  Watch this one closely!

usdjpy1.JPG

USDCAD- INDECISION
On the Loonie we have a clear indecision.  It a tight sideways channel and inside it is an equilateral triangle forming. This means we just have no clear direction.  Until the USDCAD pair breaks out of this range, trading is difficult.

usdcad1.JPG

Tags: aud, cad, eur, forex, gbp, jpy, usd

SEC vs. the media, round two

Filed under: Business — Tags: , — admin @ 12:36 am

NEW YORK (CNNMoney.com) — The Securities and Exchange Commission was not seeking a blanket exemption from public information laws, when it asked Congress to include a little known provision in the Wall Street reform law, the agency said in a letter to lawmakers Friday.

Journalism industry groups have been up in arms about the wording of section 929I of the law, since Fox Business reported on Wednesday that the SEC tried to block one of its requests for internal documents invoking the new provision.

In what is widely considered to be a crucial part of the media’s role as a check on government, journalists will often submit requests under the Freedom of Information Act, or FOIA, to obtain internal documents from federal agencies.

By partially exempting the SEC from FOIA, the new Wall Street reform law seemed to fly in the face of the so-called “transparency” championed by both President Obama and the legislators who wrote the law, journalism groups and Fox Business said.

But in letters to Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., who sponsored the bill, SEC chairman Mary Schapiro said the exemption is critical to the agency’s ability to conduct compliance investigations.

Journalism groups including the Society of American Business Editors and Writers and the Reporters Committee for Freedom of the Press were concerned about the law’s language that said it would exempt the SEC from disclosing documents related to its “surveillance, risk assessments, or other regulatory and oversight activities.”

Since the SEC is a regulatory agency, that broad wording had those groups wondering if the agency could interpret the law to block essentially all requests for information.

The SEC responded to those concerns in its letters to Dodd and Frank on Friday, saying the exemption was merely meant to apply to documents related to routine examinations, in which companies will often reveal “sensitive and proprietary information” including customer records, trading algorithms and company strategies.

Without the exemption, the SEC said many companies would refuse to cooperate with such examinations out of fear that their private information may be made public. The FOIA exemption makes it harder for companies to refuse to participate in the examinations, the SEC.

“It will allow the SEC to gain access in a timely fashion to information and data that it otherwise may not receive, thereby further enhancing our ability to identify fraud and root out wrongdoing,” Schapiro said in the letters.

Schapiro also said the agency will publish guidelines on its Web site to ensure its staff uses the provision only as intended, and not as a “blanket” exemption. To top of page

Why McDonald’s Can Borrow But You Can’t

Filed under: Investing — Tags: , , — admin @ 12:36 am

McDonald’s this week borrowed $450 million from investors, issuing 10-year bonds that yield 3.5%. That’s a record low rate for a large corporate offering, the Wall Street Journal reported Thursday.

For comparison, 10-year debt of the federal government, backed by its taxing authority, yields nearly 3% now and yielded 4% as recently as April. House buyers, whose loans are backed by the value of their properties, pay just over 4% on 14-year loans – that is, if they can get the loan to begin with. These days, buyers must make significant down payments and prove their creditworthiness.

So why does McDonald’s get such plum rates? Two reasons:

First, corporate bonds in general are in strong demand at the moment, as evidenced by broadly low rates. Bank of America Merrill Lynch’s (BAC) U.S. Corporate & High Yield Index recently fell to its lowest level in more than six years.

Savers are squeezed between punitively small returns on bank deposits (a result of the Federal Reserve’s policy of targeting record lows for the banking system’s core interest rate) and extreme volatility in stocks (epitomized by the “flash crash” of May 6).

Sales of U.S. corporate bonds, which exist somewhere between bank deposits and common stocks in terms of riskiness, jumped 31% this month to a July record, as companies rushed to take advantage of investor demand.

Of course, the surge in issuance and the low rates together increase the riskiness of corporate bonds, all else held equal, raising the question of whether bonds are in a bubble, and whether stocks are now the safer investment.

Consider McDonald’s (MCD). The company is expected to earn $4.50 a share this year, which, divided by its stock price, makes for an earnings yield of 6.5%. That’s three percentage points more than its bond investors get, assuming the company’s earnings are put to work for the benefit of investors, making them the equivalent of bond payments. That seems a fair assumption; McDonald’s pays about half its earnings yield to shareholders directly in the form of a 3.2% dividend yield, and on the capital it invests in its business, it recently earned a return of about 15%.

That brings us the second reason McDonald’s can borrow so cheaply: It doesn’t need the money. The company borrows merely because the leverage is so cheap. McDonald’s generates about $4 billion in free cash per year, enough to retire its net debt in two years. Through the recent recession, when profits for many U.S. companies plunged, profits at McDonald’s increased. Sales at the company’s longstanding stores recently grew about five percentage points faster than those of the average for fast food chain.

Among fears facing investors at the moment — ballooning government debt, sclerotic stock trading, the slow theft of inflation on bank deposits — a decline in Big Mac demand over the next decade simply doesn’t rank that high.

July 30, 2010

Dope dealers are the ECB’s best customers

Filed under: Central Banks — Tags: , , , , — admin @ 5:41 pm

Who hoards large quantities of high-denomination banks notes? Money launderers, organized crime and drug dealers.

Who benefits? The European Central Bank.

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Filed under: Forex Strategies — Tags: — admin @ 4:43 pm

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GBP/USD – Bullish Target of 1.5800

Filed under: Technical Analysis — Tags: , , , — admin @ 4:30 pm

Price action on GBP/USD (a daily chart of which is shown) as of Friday (7/30/2010) has consolidated above 1.5500, a prior resistance region that was broken to the upside earlier in the week. This occurs within the context of a strong accelerated uptrend extending originally from the 1.4230 area lows in May, and after price just hit a fresh 5-month high on Thursday. For more technical analysis on this currency pair, please click here for Friday’s (7/30/2010) Chart of the Day.

James Chen, CTA, CMT

* For information on my DVD set, High-Probability Trend Following in the Forex Market, please click here.
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Essentials of Foreign Exchange Trading (Wiley), please click here.
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