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November 30, 2011

Hang 10

Filed under: Forex Strategies — Tags: — admin @ 4:42 pm

Perhaps the market has just had TOO much time to think and plan and surmise and guess what will or will not happen with Europe, as it felt to us yesterday that there were few folks left with the patience to play and those that were, were just punting the headlines. Take the Euro for example, which did about 120 pts up, then down again on little more than a BTP auction and headlines. Which means +/-120pts is the slack in the market before you get to any reasonable old fashioned interests.

On the “will they, won’t they?” front, TMM reckon Dec 9th is inching its way to a Schengen-shaped fiscal union leading to allowances (read: bailouts/rescue/aid/support) being extended to the debt-laden, with the ECB via the IMF the preferred mechanism ( if we are to follow the trail of German leaks) . A Schengen grouping would slice off the protestations of Finland and Ireland but it would be interesting to see how Schengen could use the ECB without total Euro-Zone involvement. And, of course, it is not obvious that the ECB are ready to play their part (though the latest MNI headlines suggest that opposition to a larger role by the ECB is falling).

Trying to talk to anyone about any good news out there (the US consumer confidence print yesterday, perhaps) and there seems to be a morbid gloom in response , as in “what’s the point in talking about that when everything is going to be killed by the Euro implosion”. Well what if, just if, we do wake up from this Euro-nightmare, or at least have a period of remission long enough to look at whats else has been going on in the rest of the World? For whilst some may argue that if German data is only just seeing impacts from Euro-chaos, then the US is back of the queue and we ain’t seen nothing yet, TMM would prefer to think that the US is about to see its own resurgence and rather than being dragged down by Europe will end up helping to lift Europe up. In particular, TMM note that the Jobs Hard to Get measure from yesterday’s number suggests that the US unemployment rate is likely to resume its downward march:

But still, Dec 9th is going to be D-Day though we do think the mood is remarkably similar to the end of September at the moment. Our no-commentsometer is definitely bleeping and flashing a turn and we hear that the Church of Doom is crammed with believers looking for salvation in each other. Dec 5th would make a befitting take-off day for markets in general (Equity-led), but it may strain at the leashes before that. The pattern of the past year has been a hope-driven rally into Europlan announcements, followed by the (inevitable?) post-plan sell-off. TMM see no reason for this pattern to be broken, especially upon the backdrop of an accelerating US economy (that appears to be driven, counter-intuitively, by the consumer – more on that in an upcoming post) and a positive seasonal (Santa Claus rally).

But let’s be honest, end of month? Noise deafening? We are revving our engine at the lights but as for direction, we are heading East…

TMM managed to catch the bounce in Chinese H-Shares reasonably well in October as the deafening sound of the ongoing Chinese property market falls and potential banking crisis went Tabloid. Though they were spooked out of the trade when the Squideroos recommended going long vs. SPX a few weeks ago. Since then, H-Shares have underperformed the S&P500 by about 10%, stopping them out. Now, TMM certainly do not want to poke fun – we all have cold periods, and TMM have had some very cold periods at times over the years – but we reckon that now is the time to get back in.

TMM note that sequential inflation (TMM’s model reckons November’s CPI comes in around 4.2/4.3%, for what it’s worth) in the key problem categories – food and particularly pork has been trending down for a few months now. Not only that but Li Keqiang and related entities (CBRC, PBOC) seem have done more than shown cold steel the the real estate developers – they’ve whipped it out, said “I’m gonna cap this guy right here” and sprayed Dalian Rightway’s brains all over the room. Cue massive price cuts. Depending on who you talk to cuts have been in the order of 30% from last offer in month of September for various Vanke developments particularly in Shanghai – TMM don’t see this slowing down until sales pick up – which they are not. If a 20% drop in prices is what they wanted they are well on their way with the attendant cost in rent-equivalent cost of shelter.

Despite this, recent rate cuts at more SME centric banks (China Merchants & their ilk) indicate that while the government is going to continue terrifying developers unemployment is a no-no and TMM expect loosening to continue with this recent rate cut. China’s confidence with inflation is always given away when they stop suppressing power prices which were lifted today.

Of course, the noise overnight has been that a particular advisor to the PBoC – Xia Bin – stated that selective easing does not mean broad-based reserve ratio cuts etc. Coupled with rumours of tonight’s PMI coming out as low as 47.5, this sent Chinese equities down. Now, TMM run their own Chinese PMI model, which is pointing to something closer to 50.5 (vs. the consensus 49.8), and while the difference there is not particularly large, the psychological function of the (essentially, arbitrary) 50-level means that there is potential for something of a sentiment turn-around. So, at the risk of (once more) looking stupid, TMM dipped their toes back in overnight.

Now, TMM are certainly not arguing that China is not without problems, as the property sector stress and associated knock on effects to the banking sector are nothing to sneeze at. But TMM will point out, that when you borrow in the same currency as you lend in, nominal GDP running at 10% (even in the event of a so-called hard-landing) can help cover up a lot of poor lending decisions. TMM’s approach here is to try and fade the sentiment extremes as the whole “China thing” appears to something of a semi-religious debate between the two Jims (O’Neill & Chanos). China may have a ton of deleveraging to do and the developers may be public enemy no 1 but the rest of the economy is catching a break for now.

UPDATE: Just as we finished writing this, the news hit the wires that China have indeed cut the RRR, so TMM guess folks won’t be reading Xia Bin’s blog again…! And to some extent, this could be seen as validating the weak PMI rumours and thus TMM’s PMI model is probably wrong.

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USDCHF had formed a cycle top at 0.9329

Filed under: Forex News — Tags: , , , — admin @ 3:09 am

USDCHF had formed a cycle top at 0.9329 on 4-hour chart. Range trading between 0.9085 and 0.9329 would likely be seen in a couple of days. As long as 0.9085 support holds, the price action in the range is treated as consolidation of uptrend from 0.8569, another rise towards 1.0000 is still possible after consolidation, and a break above 0.9329 could signal resumption of uptrend. On the downside, a breakdown below 0.9085 will signal completion of uptrend, then pullback to 0.8400 could be seen.

usdchf

Daily Forex Analysis

Daily Forex Fundamentals – November 29, 2011

Filed under: Currency Charts — Tags: , , , , — admin @ 1:28 am

What’s on the Economic Horizon

U.S. Consumer Confidence: Upside Surprise?
U.K. Nationwide HPI on Tap
Current Account Figures Due Today

U.S. Dollar (USD)

It looks like the dollar was included in the holiday weekend deals, as it struggled in yesterday’s trading sessions. EUR/USD gapped up over the weekend and retested the 1.3400 handle before giving back its gains, while USD/CAD sank 93 pips to finish at 1.0353. Read more…

Euro (EUR)

EUR/USD may have gapped up over the weekend and reached a high of 1.3400, but it still ended the day with a loss as it closed 21 pips down from its 1.3332 open price. EUR/JPY, on the other hand, scored a win as it ended up 38 pips above its 103.39 open. Why did the euro have a mixed performance yesterday and what’s in store for the euro pairs today? Read more…

British Pound (GBP)

With risk appetite back up, the pound was able to overcome weak sales data and dovish words from central bank officials to end the day higher against its safe haven counterparts. Cable finished 25 pips higher at 1.5504 while Guppy rose 81 pips to close at 120.87. Read more…

Japanese Yen (JPY)

Phew! I bet the Bank of Japan let out a sigh of relief when they saw all the risk-taking that took place yesterday! EUR/JPY rose to as high as 104.52, before settling at 103.77 to finish with a 38-pip gain, while GBP/JPY closed at 120.87, up 81 pips on the day. Read more…

Canadian Dollar (CAD)

Take that, Greenback! The Loonie ended its losing streak against the U.S. dollar as USD/CAD closed 83 pips down from its 1.0436 day open price. Is this merely a retracement or could USD/CAD be in for a reversal? Read more…

Australian Dollar (AUD)

What a beautiful start to the week! After gapping up over the weekend, the Aussie tore up the charts, rising to as high as .9977 before settling for a 79-pip gain and finishing at .9901. Read more…

New Zealand Dollar (NZD)

It’s aliiiiive! Like a zombie, the Kiwi rose from the grave yesterday as risk appetite and positive business confidence data helped revive the comdoll. After gapping up over the weekend, NZD/USD rallied to close at .7550, ending the day 159 pips above last Friday’s closing price. Read more…

Swiss Franc (CHF)

Surprise, surprise! Despite the risk rally, the Swiss franc was able to chalk up some pretty decent gains against the dollar and the euro. It stole 45 pips from the dollar, pushing USD/CHF to .9231. Meanwhile, it took 79 pips away from the euro and dragged EUR/CHF to 1.2287. Read more…

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!

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Aussie (AUD) Back To Parity With USD!

Filed under: Business — Tags: , , — admin @ 12:27 am

The Australian dollar “Aussie” has moved back to parity with USD in a sign of things to come.  The markets have been on edge for some time due to the Euro debt crisis but are looking for a “Santa Claus” rally into the close of the year.  With the EU Finance Minister meeting taking place today, confidence could be restored quickly.

One thing to consider though when looking at the Aussie is that they are closely tied to China economically and raw materials, which they export.  As commodity inflation continues to rise, the Aussie dollar will benefit.

While everyone Central banker around the globe will shout that inflation is not a problem, commodity prices tell a different story.  So the Aussie dollar looks poised to rise further , as carry traders buy Aussies for the interest they receive on the “hidden inflation story”.

Potential price target of 1.0250 by the end of the week.

November 29, 2011

Twenty Questions and a Box of Matches, Please

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

1. Where will SPX be trading when Santa comes down the chimney?

a) above1250
b)1150- 1250
c) below 1150

2. What will Europe have pulled out of the hat by December 24th?

a) A Schengen-based fiscal union around which to structure mutual support.
b) A battered can, to be place kicked into January.
c) Sorry, don’t understand the question as Europe cannot currently be defined.

3. By year-end the Middle East will see (multiple answers allowed) :

a) The Syrian leadership be toppled.
b) Egypt have become the most democratic country on the planet.
c) Egypt be boiling in blood.
d) Libya be teetering on Somalian warlord rule

4. And Italy’s 10 yr yields will be:

a) over 8%.
b) under 6%.
c) Unavailable due to the EU banning trading in them.

5. In 2012 China’s economy will be:

a) A smouldering property market train wreck with HSCEI at 6k.
b) Moving BRICs like back in the day with 9% growth. Jim O’Neill will publish a note simply titled “Todja, didn’t I?”.
c) Bumbling along, 7-8.5% growth, with HSCEI no higher than 11k.
d) Revolution! All your equities belong to Great Hong, son of Holy same sex couple of Buddha and Jesus.

6. As BRICs has become an overused term which new country grouping acronym would you propose?

a) Turkey, Uzbekistan, Romania, Denmark & Sweden.
b) Chad, Romania, Afghanistan & Paraguay.
c) Brazil, Oman, Liberia, Lithuania, Oman, China, Korea & Switzerland.

7. The IPO of Facebook said to value the company at $100bn is:

a) A great opportunity to Buy (Like).
b) Groupontastic.
c) Facebook? Wasn’t that soooo 2011?

8. If you are receiving fixed rates on Euro swap, what does paying 6m Euribor in EUR mean?

a) What it says on the tin.
b) 6M FIBOR in DEM.
c) 6M ATHIMID in GRD.
d) Some blended rate in ECU-2.
e) Who cares, my counterparty already went bust so I’m fucked

9. Where will DEM/ITL trade post breakup?

a) 1100
b) 1400
d) Down at the Mithras
e) On an e-platform run by the Vatican.
f) On an e-platform run by the Bundeathstar.

10. Gilts are:

a) The new safe haven.
b) A great way to stuff the Japanese.
c) Something you have after forgetting your wife’s birthday.
d) something that an Italian would love instead of BTPs, but as the word is unknown in his vocabulary he will never have.

11. Merv’s remarks about the massive bookkeeping profits on the AFP are:

c) Asinine as it will have every part of government clamouring to spend it.
b) Solely down to his financial brilliance.
c) Solely down to his own belief in his financial brilliance.

12. Silver is:

a) Money.
b) Metal.
c) Way to fleece clients through theta.
d) The word that normally comes after “hi ho”.
e) Tarnished.

13. The Sun is:

a) A shiny bright object last seen in the UK by a past generation.
b) A shiiity light objectionable publication in the UK run by a past generation.
c) The first name of your next boss.

14. The disclosure that Hank Paulson gave a bunch of ex-GS hedge fund mates the heads up on how the Fannie & Freddie bailouts were going to go down is:

a) A friendly thing to have done.
b) Yet more evidence of Crony Capitalism, likely to add fire to the OWS campaign.
c) Not a surprise.
d) Going to land at least one of those guys present in jail.
e) A lie… He would never do that.

15. How do you make a billion dollars?

a) Start with $10bn and invest in airlines.
b) Start with $10k and invest it in that nerdy kid down the hallway’s thing he keeps on talking about to stalk girls on campus.
c) GoldsheepleBer-nankfiatmoneyRonPaul.
d) Apply academic theory regarding optimal currency unions to CDS trading circa January 2010.

16. Who is coming to Jim Chanos’ Xmas Dinner Party?

a) Wife 1.
b) Kids.
c) 6 Czech models.
d) All of the above.
e) Client No. 9.

17. Today’s BTP auction was:

a) A disaster as Italy had to pay 7.5 % for 10 yr money.
b) A great result compared to what people were dreading.
c) An excuse to further squeeze the market shorts by the knadgers.
d) Only filled thanks to a buy one get one free offer on the back of Kellogi’s Corniflakies?

18. The FSA report into the RBS/ABN deal:

a) Was amazingly insightful: “FSA CALLS RBS DEAL ON ABN `RECKLESS’ GAMBLE”.
b) The product of 3yrs of hard investigation.
c) Another example of regulator too busy looking backwards to allocate blame rather than looking forwards to prevent it.
d) Cost 40bn quid.

19. Wiedmann is:

a) The name of the German detective in Inglorious Bastards.
b) The name of a secret plot to cause the break up of the EUR.
c) The name of the man at the Bundeathstar.
d) Not on TMMs Xmas card list.

20. The current market moves:

a) Are great, we are loving them.
b) Are a 12 yr old quant’s nightmare.
c) Are an excuse to shut up shop ’til Xmas.
d) Can be explained by feeding torn up news items into a rat’s cage and seeing which ones they devour and then vomit out of the cage.

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Breaking down today’s risk appetite

Filed under: Currency Charts — Tags: , , , , — admin @ 3:41 am

…dare I say potentially short-lived risk appetite??

Today, after what is looking like a very bullish open and a bad day for the dollar, I wanted to reexamine the uptrend in crude oil and if the aussie and loonie would follow that strength or if today’s price action was going to be more about the dollar’s weakness.

Thus far, into what has been a very strong day for the U.S. equities, my opinion remains the same: A strong holiday weekend of shopping (record-breaking actually) and bullish headlines (read: optimism) from Europe have fueled risk appetite…today.

The EUR/USD is far from any kind of downtrend transition, and arguably, the momentum (for today) has played out and is already exhausting. A confirmation of that was the 240-minute 34EMA Wave remaining unbroken as the EUR/USD climbed.

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Crude Oil Analysis for the Week of November 28, 2011

Filed under: Forex News — Tags: , , , , — admin @ 3:13 am

January Crude Oil closed lower for the second consecutive week but losses could have been worse if not for a strong comeback on Friday. The primary reason for the weakness throughout the week was concern that the European debt crisis would trigger the start of a global recession. As bearish conditions spread throughout the Euro Region, traders pressured the Euro, driving up the U.S. Dollar and lowering demand for the dollar-based crude oil market.

The soft crude oil market firmed up on Friday on the news that violence had erupted in Saudi Arabia. With unrest already taking place in Egypt and Yemen, the news that it had spread to Saudi Arabia led to speculation that an escalation of events may destabilize the country. Egypt and Yemen are small players in the oil game while Saudi Arabia is the world’s biggest crude oil exporter. Increased violence in this country would drive oil prices sharply higher on the fear that supply would be reduced.

Movement in the crude oil market is coming down to simple supply and demand analysis. If the Euro Zone problems continue to expand beyond the peripheral nations such as Greece, Italy and Spain then demand is likely to fall for crude oil, sending prices lower. “Risk-off” sentiment continues to drive investors into the U.S. Dollar, making crude oil more expensive to foreigners.

Since the markets are being driven primarily by the headlines from Europe and the Middle East, the impact of positive economic news from the U.S. has been diminished. This condition is likely to continue until Europe comes to a concrete agreement on how to manage its sovereign debt crisis. Up until now it’s been “all talk and no action”. Until this mind set changes, positive U.S. economic news is likely to have effect on the price of crude oil in my opinion. From now until the end of the year, Europe and other outside events are likely to set the tone in the market.

From a supply perspective this means that inventories are likely to remain high if Euro remains the key issue. If the emphasis shifts to the potentially explosive situations developing in the Middle East then the only thing that can be guaranteed is extreme volatility. What this market has come down to is this. If traders focus on Europe, the market is likely to weaken due to the stronger Dollar. If traders lean toward the possibility of supply disruptions in the Middle East then look for the market to rise.

In addition to the eruptions of violence in Egypt, Yemen and Saudi Arabia, traders shouldn’t forget about Iran. Last week the U.S. announced a plan to sanction Iran because it is producing military grade uranium in its nuclear plants. Late in the week, France called for a European embargo on crude supplies. With Iran controlling the Strait of Hormuz, oil prices could soar if there is a military confrontation.

Factors Affecting Crude Oil This Week:

Supply and Demand: The U.S. supply and demand situation comes down to which set of fundamentals speculators decide to follow. If they follow the headlines out of Europe and decide to trade on a weaker Euro/stronger Dollar scenario, then look for oil prices to weaken. If the events in the Middle East escalate into full-blown confrontation then look for higher prices because of supply disruption concerns.

European Sovereign Debt: Last week Portuguese and Hungarian debt was downgraded to junk status. In addition, the European Central Bank’s Italian bond buying campaign seems to have failed. With European leaders unable to come up with a plan to manage the spiraling debt situation, the problems are likely to worsen. Europe seems to be facing either a sovereign debt default or a major bank collapse. It is likely to be both. This would plunge the region into a recession and perhaps the world greatly lowering demand for crude oil.

U.S. Economy: If Europe falls, the U.S. is likely to face another recession. The Fed has done just about all it can to keep the economy afloat but there are some things it has no control over. U.S. economic news is not as important at this time and is not likely to move the market. Traders are focusing on Europe and the Middle East.

Middle East Conflicts: Egypt, Yemen, Saudi Arabia and Iran. What is it going to take to draw the U.S. into any one of these conflicts? While unlikely to move on the events in Egypt and Yemen, the U.S. has direct interests in Saudi Arabia and Iran. These scenarios have to power to drive oil prices sharply higher.

Source: http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Analysis-for-the-Week-of-November-28-2011.html

By. Oilprice.com

Adam Hewison’s Afternoon Financial Market Update & Technical Analysis

Filed under: Forex News — Tags: , , , , , , , — admin @ 3:09 am

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Adam Hewison’s Afternoon Financial Market Update & Technical Analysis

Euro, Aussie Dollar Start the Week Higher

Filed under: Technical Analysis — Tags: , , , , , — admin @ 3:07 am

“Never stand begging for that which you have the power to earn.” ~ Miguel de Cervantes Good morning. The dollar is pulling back as risk trade returns – both AUDUSD and AUDJPY recovering some of last week’s losses. The euro is following but the gains remain modest so far. Here’s a bunch of charts to start Read More


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Article Source | Post tags: AUDJPY, Australian Dollar, breakout trading, British Pound, Canadian Dollar, Dollar, EURAUD, Euro, EURUSD, GBPCHF, SNB, Swiss Franc, USDCAD

Daily Forex Fundamentals – November 28, 2011

Filed under: Currency Charts — Tags: , , , , — admin @ 1:28 am

What’s on the Economic Horizon

U.S. new home sales on tap
BOE inflation report to provide clues to policy moves?
Japanese retail sales expected to rebound

U.S. Dollar (USD)

Same story, different day! With risk aversion back in full swing, the dollar found itself on the winning side of the equation again. EUR/USD continued to fall, dipping another 116 pips to 1.3233, just as USD/JPY rallied 65 pips to 77.75. Read more…

Euro (EUR)

True to form, we saw a huge sell-off on Friday and sellers made an absolute killing. EUR/USD broke lower to close at 1.3233, down 116 pips on the day. Overall, the pair dipped 271 pips lower for the week, marking the 4th consecutive weekly loss. Read more…

British Pound (GBP)

GBP/USD ended the week on a sour note as it chalked up another set of losses last Friday. GBP/JPY, on the other hand, managed to end Friday in the green as it closed 66 pips up from its 119.47 open price. What’s in store for the pound pairs this week? Read more…

Japanese Yen (JPY)

Surprisingly enough, the yen performed poorly against its major counterparts despite the fact that risk aversion seized the markets once again. It lost ground against the dollar and the British pound and only managed to gain 2 pips against the euro. What gives?! Read more…

Canadian Dollar (CAD)

Talk about going looney for the Loonie! We saw some pretty wild moves on USD/CAD last Friday, as it was simply all over the place. After shooting up to as high as 1.0520, the pair broke lower at the start of the New York session, retesting former support at 1.0440, but only before rising back up to the 1.0500 mark. By the end of the day, the pair had closed at 1.0494, up 26 pips on the day. Read more…

Australian Dollar (AUD)

Down goes the Aussie! With risk aversion dealing heavy blows to high-yielding currencies, the Aussie had a difficult time finding buyers. When all was said and done, it finished 31 pips lower against the Greenback, with AUD/USD ending the week just a hair below the .9700 handle. Read more…

New Zealand Dollar (NZD)

Thanks to good ol’ risk aversion, NZD/USD slipped to a low of .7371, its lowest level in eight months. The pair was able to make a huge gap over the weekend though, as it opened at .7508. Let’s find out whether the Kiwi will be able to stay afloat this week! Read more…

Swiss Franc (CHF)

Along with its fellow European currencies, the Swiss franc tumbled when several euro zone nations’ credit ratings got downgraded last Friday. USD/CHF closed 115 pips up from its .9194 open price after hitting a high of .9331. EUR/CHF ended 47 pips up from its 1.2270 day open price. Read more…

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

In forex trading, you get better odds at securing pips when your fundamental analysis is complemented by technical analysis.

Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!

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