Asia Session – May 31, 2010 11:22 PM

May 31, 2010

          With the US and UK holidays over , we saw Asia come in and continue the trend of late, selling Euros. An article in a UK paper saying that the ECB is warning of another waves of losses by Euro zone banks started the pressure on the Euro and it continued through  until support in the 1.2240-50 zone stopped the slide in Eur/usd. Risk was sold across the board as Gbp, Aud and Nzd  traded lower. Equities moved lower as well with Asian stocks slipping, and European and U.S. futures trading lower as well. Strong Retail Sales out of Australia seemed to relieve some fears as risk was bought again, for a moment, then the risk off  theme started again as Aud/usd traded  to a low near .8370. We’ll have to wait and see if Europe will come in and continue the risk aversion or reverse the trend.
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Forex Trading Forecast: Expect More Volatility This Week

May 31, 2010

Currency trading on the FX market

Today should be a relatively calm trading day, with U.S. markets closed for Memorial Day, and with London closed down for a bank holiday. Once markets in Germany and France close, it is unlikely that we will see much movement.

However, warns GFT’s Kathy Lien in FX360, this should not be mistaken for a permanent situation. The forex trading forecast calls for a very volatile week, once Monday is over and trading resumes as normal on Tuesday:

Traders should not mistake the expected dip in volatility on Monday for a quiet trading week because it will be the calm before the storm. Not only will the Fitch announcement hang over the market next week and raise fresh concerns about the outlook for the Eurozone and the attractiveness of euro denominated investments, but the economic calendar is jammed packed with market moving data. …

There is a very good chance that the major currencies will break out of their recent ranges and provide new trading opportunities. 

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Asia Session – May 31, 2010 12:34 AM

May 30, 2010

Not much to convey for today’s Asia session as both the UK and the US will be out for holidays later and the day was a quiet one…The Euro was once again brutalized on Friday after a downgrade of Spanish debt by Fitch from AAA to AA+, bringing it to lows near 1.2270 to end the week. The pair was able to regain some composure today after a quick dip to 1.2260; the pair came close to 1.2330 before softening ahead of the London session. The rise in the battered European currency could be attributed to end of month flows as well as short covering, and it is safe to assume that once again any rallies will be hammered back down as they have been of late. Full text » | Technorati | Stumble It!

Euro Falls Back in Forex Trading After Rally

May 28, 2010

Currency trading with EUR/USD

Earlier in trading, the euro posted gains in forex trading. Risk appetite picked up a bit, sending the euro up to 1.24 against the U.S. dollar on relief about events in Europe.

However, uncertainty is returning to the financial markets, and the euro has slipped back below the 1.24 level, and is trading rangebound for the most part.

EUR/USD is showing the effects of the latest news about personal spending from the U.S. Even though personal income increased, spending did not, indicating that U.S. consumers are interested in shoring up their personal finances, rather than spending money to shore up the economy.

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Time to Slow Down and Evaluate Your Forex Trading Positions

May 28, 2010

Forex trading forecast

Now may be the time to slow down and reassess your forex trading positions. With so much going on right now, it is little surprise that U.S. economic data has been relegated to second-tier status in terms of market moving news.

This might mean that now is a good time to take a deep breath and contemplate what happens next. The forex trading forecast is expected to be relatively quiet, with fairly small moves on the currency market. Yesterday’s risk rally has petered out, but risk aversion hasn’t completely taken over yet.

GFT’s Kathy Lien offers some insight in FX360 on what you might consider this weekend, which is expected to be relatively quiet:

Between the oil spills in the Gulf, the possibility of war in North Korea, speculation about China dumping eurobonds and the chaos in European markets, the fact that secondary U.S. economic data are the only event risks this week should give investors the chance to square up their positions early and take the weekend off to reassess their exposures.

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Commodity & Currency Outlook

May 28, 2010

An early check on the commodity and currency markets with Boris Schlossberg, of GFT Forex; Peter Beutel, of Cameron Hanover; Tom Pawlicki, of MF Global.

London Session – May 28, 2010 6:06 AM

May 28, 2010

Unsurprisingly the better tone in the S&P index over the past couple of sessions has allowed for some relaxation in the levels of the VIX index.  Also suggestive of less tension in the market is the tapering off of the gains in libor and the increase in US rates across the curve relative to levels seen at the start of the week.  That said, the levels of both the VIX and Libor remain elevated and US rates are very low by historical standards.  In absolute terms the level of tension in the market is still high and the uncertainty with respect to the levels of debt and in particular the exposure of European financial institutions suggests that choppy conditions could persist for some time yet.  Full text » | Technorati | Stumble It!

Asia Session – May 28, 2010 1:52 AM

May 28, 2010

China couldn’t save the Euro today as the currency continued to decline from earlier NY highs of 1.2390 as optimism soured heading into the holiday weekend. Yesterday’s optimistic news out of China that the country would continue to invest in the Euro Zone helped pull the pair up from lows near 1.2200 to the aforementioned 1.2390 highs, dragging global equities higher in a robust day for risk. As mentioned, the bids in the Euro evaporated was Asia rolled in for the trade day, as investors looked ahead to the look three day holiday weekend in the US with a cautious foreboding.  The Euro saw its value drop from 1.2370 to 1.2280 against the dollar and from 112.70 to 111.90 against the Japanese yen. Traders continuing to sell Euro rallies could also be attributed to the Euros decline. Full text » | Technorati | Stumble It!

New York Session – May 27, 2010 6:09 PM

May 27, 2010

The word that China was not reviewing its European asset allocations and that it would continue to invest on the Continent sparked a global rally in risk assets that continued through North American trading.  There was a slight dip in risk early on in NY after US data reports disappointed.  US 1Q GDP was revised lower to 3.0% from the preliminary 3.2%, the opposite of the expected revision to 3.4%.  Also, weekly US jobless claims fell less than expected, dropping back from 474K to 460K, less than the estimated 455K and remained at frustratingly elevated level.  Risk assets pulled back for an hour or two, but once floor trading got going, risk was back on.  US and European stock markets surged about 3.0-3.5% higher on the day as commodities also rebounded.  WTI Crude oil future added on to rise to about .50/bbl.  US Treasuries were sold and yields jumped 17 bps higher 3.36% on the 10-year notes, about 30 bps higher than the lows seen earlier in the week. Full text » | Technorati | Stumble It!

Risk Rally in Forex Trading

May 27, 2010

U.S. dollar falls as forex traders look for higher yields

Yesterday, financial markets plummeted on the news that China might begin selling off European debt. However, Beijing has denied those rumors. As a result, the euro is being propped up in forex trading, and a risk rally is well underway.

The U.S. dollar is heading lower as forex traders look for higher returns for their investments. Investors are largely ignoring the news that Quarter 1 GDP had to be revised downward — something that would normally spark some risk aversion.

Not today, though. Investors are so relieved about the news regarding China, and also about the new regarding Spain’s austerity vote, that they are ready for a little risk. As a result, the euro is rallying in forex trading, buoyed up by the positive news.

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