Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 1, 2012

Yet again markets were gripped by ‘europhoria’ surrounding the latest EU summit and more announcements surrounding plans to save Europe. European Union leaders meeting in Brussels have agreed on a fiscal treaty that will allow for action against high deficit states and calls for members to introduce legislation to limit budget deficits. Markets rallied on the news even though these reforms actually do nothing to resolve the current debt crisis. Britain and the Czech Republic have declined to sign the pact. After having rallied to above 1.3200 yesterday, the Euro gains evaporated before once again rising in Europe today.

The Dollar Index rose yesterday by 0.2% yesterday as the USD gained across the majors. USDJPY continues to hover dangerously close to post war lows but is still managing to hold above 76.00. The inevitable sabre rattling and war cries from the Bank of Japan will intensify over the next few trading sessions but the question will be is “anyone listening and does anyone care?” In Europe, the dollar is falling as equity markets rise.

Yesterday, equity markets were soft. The S&P 500 closed 0.05% lower for its fourth consecutive loss, albeit small, as economic data failed to meet expectations. Consumer confidence came in lower than expected while the ISM business activity index came in lower than even the most pessimistic forecasts. Exxon Mobil fell more than 2% after reported sales trailed estimates and Amazon will open significantly lower today after profits fell more than 50%. European bourses are higher by almost 2% as manufacturing data from the US to China looks positive.

Equity markets have recovered from a soft start to the week with Asian shares rising on optimism surrounding the latest EU summit. After falling yesterday over Greek resistance to outside influence in its budgetary affairs, rising bond yields and the collapse of Spanair, European bourses are now higher by 1% mid session today. After losing ground yesterday for the third day as European leaders lectured to Greece over the nation’s second rescue package, S&P 500 futures are signalling a rise in trade today.

GOLD continues to show strong price consol-idation to gain slightly to hold around $1,740. The range overnight was $1,724 to $1,747. The price action played perfectly within our support and resistance levels.  In what is certainly a good sign for the metal, it managed to hold onto gains even as the USD rose and equity markets fell. The strong bounce off support at $1,725 has gold maintaining its short term bullish trend and we expect another retest of $1,750 imminently. We believe that gold’s status as a store of value and as a safe haven will come to a fore this year as prices ac-celerate towards $2000 by mid year. We remain strongly bullish. Last year we saw both the USD and gold perform better than mpst other asset classes and we continue to see the same trend this year. Look for support at $1,720 to be tested today. If this level holds, our short term bullish call on the metal will be confirmed.

Compass Global Markets

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 1, 2012

Yet again markets were gripped by ‘europhoria’ surrounding the latest EU summit and more announcements surrounding plans to save Europe. European Union leaders meeting in Brussels have agreed on a fiscal treaty that will allow for action against high deficit states and calls for members to introduce legislation to limit budget deficits. Markets rallied on the news even though these reforms actually do nothing to resolve the current debt crisis. Britain and the Czech Republic have declined to sign the pact. After having rallied to above 1.3200 yesterday, the Euro gains evaporated before once again rising in Europe today.

The Dollar Index rose yesterday by 0.2% yesterday as the USD gained across the majors. USDJPY continues to hover dangerously close to post war lows but is still managing to hold above 76.00. The inevitable sabre rattling and war cries from the Bank of Japan will intensify over the next few trading sessions but the question will be is “anyone listening and does anyone care?” In Europe, the dollar is falling as equity markets rise.

Yesterday, equity markets were soft. The S&P 500 closed 0.05% lower for its fourth consecutive loss, albeit small, as economic data failed to meet expectations. Consumer confidence came in lower than expected while the ISM business activity index came in lower than even the most pessimistic forecasts. Exxon Mobil fell more than 2% after reported sales trailed estimates and Amazon will open significantly lower today after profits fell more than 50%. European bourses are higher by almost 2% as manufacturing data from the US to China looks positive.

Equity markets have recovered from a soft start to the week with Asian shares rising on optimism surrounding the latest EU summit. After falling yesterday over Greek resistance to outside influence in its budgetary affairs, rising bond yields and the collapse of Spanair, European bourses are now higher by 1% mid session today. After losing ground yesterday for the third day as European leaders lectured to Greece over the nation’s second rescue package, S&P 500 futures are signalling a rise in trade today.

GOLD continues to show strong price consol-idation to gain slightly to hold around $1,740. The range overnight was $1,724 to $1,747. The price action played perfectly within our support and resistance levels.  In what is certainly a good sign for the metal, it managed to hold onto gains even as the USD rose and equity markets fell. The strong bounce off support at $1,725 has gold maintaining its short term bullish trend and we expect another retest of $1,750 imminently. We believe that gold’s status as a store of value and as a safe haven will come to a fore this year as prices ac-celerate towards $2000 by mid year. We remain strongly bullish. Last year we saw both the USD and gold perform better than mpst other asset classes and we continue to see the same trend this year. Look for support at $1,720 to be tested today. If this level holds, our short term bullish call on the metal will be confirmed.

Compass Global Markets

Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 2, 2012

Yesterday, manufacturing strength around the globe from prompted a rally in the markets as investor focus was diverted from the European debt focus. Manufacturing data in the US grew at the fastest rate in seven months while manufacturing in the United Kingdom rose to an eight month high. Gauges of manufacturing in China also improved and manufacturing in Europe contracted less than expected. Manufacturing in China showed a modest expansion beating market expectations of a contraction. The USD weakened across the board and Treasuries stopped a five day rise. with The EUR is trading at 1.3130 while the GBP is currently trading at 1.5830.

Further aiding the positive market sentiment is the expectation that the Greek private sector debt swap deal and the nation’s second financing deal will be completed in the next few days. However, the longer the negotiations drag on, the greater the likelihood of an extended fall in the Euro. The strongest performers  yesterday were the risk currencies. The Australian dollar has surged past 1.0700 while the Canadian dollar is once again trading above parity against the USD.

Equity markets powered ahead yesterday spurred by signs of manufacturing strength globally. The S&P 500 closed 0.9% higher at 1,394 with financial and commodity stocks leading the gains. Morgan Stanley rose more than 5% on news that it had won the lead manager role for the upcoming Facebook initial public offering. The appliance maker, Whirlpool, rose almost 20% as it projected higher than expected earnings. Asian stocks gained with the Hang Seng rising 2%. European stocks have lost earlier gains, falling from 6 month highs, as oil producers fell

 
GOLD continues to show strong price con-solidation to gain slightly to hold above $1,740. The range yesterday was $1,733 to $1,751. As we had expected gold had an attempt at the $1,750 resistance level a couple of times before easing back slightly to $1,743 this morning. The market is eyeing critical resistance just above $1,800 before a charge towards the all time high just above $1,900. Our end of second quarter target of USD2.000 on gold remains firmly in play. Gold is showing good price consolidation at the moment and a break out appears immi-nent. Nothing has happened overnight so we maintain our strongly bullish stance on gold in both the short and medium term,. We continue to hear of central bank diversification into the metal which continues to support and drive the price higher. Today, there will more than likely be a lull in liquidity and tightening of trading ranges as the market awaits tomorrow’s release of the US non farm payrolls data.

 
Compass Global Markets

Plans are only good intentions unless they immediately degenerate into hard work. ~ Peter Drucker Good morning. It’s that day of the month again, when everyone is waiting for the release of NFP report, which is expected by analysts to post a figure around 150k. Most currency pairs are trading quietly since yesterday, ahead of today’s Read More

© 2012 FX Trading Blog

The Brussels Summit ended yesterday with no favourable resolution for the Greek saga leaving the market showing its frustration on the EUR/USD driving it down to 1.3075.  Apparently German Chancellor Angela Merkel shared the same frustration with the Greek government’s failure to carry out its economic reform.  Euro found its base at 1.3135 during early Asian session and the theme today for Asia was sell dollar.  However moving towards the London session we may see EUR/USD take on a different theme in the form of volatility.  With a whole battery of macro data expected today from the Euro zone, it may be touch and go.  We have German retail sales (MoM); French Consumer Spending (MoM); German Unemployment Change; Italian Unemployment Rate; Eurozone Unemployment Rate.  In New York expect Chicago PMI and more importantly US Conference Board Consumer Confidence.  Euro support is seen at 1.3120 but the psychological level of 1.3000 is possible if all the ‘bad’ stars align.  Top side try for 1.3230.

Recap of the Latest Global News

After the U.S. Dollar sold off across the board late in North American trading yesterday, it appeared that some relief was on the horizon, with the Greenback clawing back in early Asian trading on Thursday. This was merely a short-term correction, and by the time European markets opened up, the higher yielding currencies continued to surge.

Ahead of yesterday, the U.S. Dollar was primed for a strong year; after the ill-advised policy decision, one that does little more than buy time for banks to shore up their balance sheets, the U.S. Dollar is poised to be one of the worst performing majors in 2012. The implications of the Fed’s decision go beyond this year, however. Now, with low rates indicated for the next two years, the groundwork for the American Lost Decade – no different than Japan’s – has been laid.

Of interest has been the price action displayed by gold, which has surged through the $1700 per ounce mark and maintained its gains ahead of trading in New York. To me, this is a clear indication that market participants are worried about the U.S. Dollar losing its value substantially over the next few months. The key to watch would be the short-end of the U.S. Treasury yield curve: if these rates turn negative, the demand for precious metals will pick up.

Commodities News

USD/JPY

 
The AUDUSD continues to soar and is nearing channel resistance (10700 today) as well as the October high at 10752. 10575 and 10620 are now supports.

Recap of the Latest Global News
By Cory Vi & Andrew Su on Jan 27, 2012

In a week that the Federal Reserve announced it would keep interest rates low through till at least 2014 and Bernanke said that policymakers are considering further bond purchases to boost growth, markets continued to celebrate as it appears that more free money is about to be pumped into the financial system. Treasury yields dropped to an all time record low as PIMCO’s Bill Gross predicted a third, fourth and fifth round of quantitative easing. The USD has, not surprisingly, taken a pounding over the week as the QE junkies got the fix they had all prayed for. The EUR is trading higher at above 1.3150.

The surprise news by the Federal Reserve had markets reprice the likelihood of further quantitative easing and sparked a flurry of activity by investors to revalue assets. In our opinion, the reaction in the markets has been overdone and we will likely see a retracement of the USD move in the coming sessions. The impact on riskier currencies such as the Australian dollar has seen it rally to as high as 1.0665 in trade today.

US equities fell yesterday after the Dow Jones rose to its highest levels since May 2008 during the day. Financial stocks where hit by worse than expected new homes sales data which showed a fall in December, for the first time in 4 months. US jobless claims rose while orders for durable goods rose more than expected. Asian stocks closed marginally higher while European stocks are soft as the Greek debt swap negotiations continue.
 

 
Compass Global Markets
 
 

EUR/USD spent the day consolidating after peaking at 1.3183 yesterday.  If the technical traders are right, we may have seen the high for a long while and the completion of a technical retracement which began from 1.2624 (16 Jan).  However we’re not totally convinced and we cautiously think 1.3244 may be the top if 1.2950 holds.  Fundamentally, the latest on the Greek saga is that the Institute of International Finance (which represents the creditors) and Greek officials continue negotiations and may well continue over the weekend. On the radar for the rest of the day is US Gross Domestic Product Q4 (annualised), GDP Price Index (1:.30 GMT) and the University of Michigan Confidence survey (14:55GMT). For US GDP, the market is expecting 3% (last 1.8%) and the Price index is expecting 1.9% (last 2.6%). For the U. Mich survey market expects no change from previous 74.  From now until the end of the New York session we see a range of 1.3023 – 1.3170.

EUR/USD traded within a narrow range during Asian session (1.3014 – 1.3041) today perhaps due to the Lunar Year celebration.  The same could be expected for the rest of the week for Asia if no surprises hit the market.  At the time of writing, euro spiked up to 1.5050 as German IFO was released. Market was expecting 107.6 but actual came out as 108.3 (last 107.3).  But the spike was very short-lived as it pulled back to the comfortable 1.3020 – 1.3040 zone awaiting for the US FOMC rate decision.  Economists expect no change from 0.25% but the risk may be that if the Fed is more dovish than what the market thinks, then you may see dollar selling in the pipeline.  For the rest of London and New York session, we are still waiting for 1.3145 and support at 1.2983.

Recap of the Latest Global News
By Cory Vi & Andrew Su on Jan 23, 2012
 
After rising to almost 1.3000 during the Asian session on Friday, it was one way traffic for the EUR in Asian trade. The common currency failed to hold onto gains despite the Institute of International Finance, the lobby group representing creditors negotiating with the Greek government, releasing a statement saying that “the elements of an unprecedented voluntary private-sector” accord are coming into place. An agreement will be vital and is a key milestone for Greece to receive further financing aid before it faces a EUR 14.5 billion bond payment in late March. However, the EUR is now staging a rally as European finance ministers meet in Brussels to discuss new budget rules and the Greek debt swap plan.
 
The Greek debt accord is by no means finalised as the terms for an agreement to swap old bonds with new 30 year securities which may pay coupons as high as 4.75%  have yet to be agreed. Furthermore, hedge funds holding Greek bonds may not accept the deal as they may look to a more imminent finalisation of their exposures by looking to trigger the payments from credit default swaps. At the same time Greek officials are also meeting with the ECB, EC and IMF, the “troika” on a new EUR 130 billion financing for the nation. Despite all the event risk in the markets, the Australian dollar continues to climb recording more highs against the EUR. It is now trading above 1.0525.
 
Equity markets in the US rose for the third consecutive week on continued better than expected economic data releases and good corporate earnings reports and the S&P 500 closed more than 2% higher for the week  with good earnings from Goldman Sachs and eBay countering fears over Europe. The Chinese New Year celebrations will see many markets in Asia closed this week. The Nikkei closed flat while the ASX 200 lost 0.34%. European bourses are mixed mid session with the DAX down 0.6% while the FTSE is higher by 0.25%. The markets continue to oscillate around more positive data out of the US while investors remain wary over the Greek debt negotiations.