GOLD our move to a neutral stance on gold in the short term has been validated over the past week as the strong uptrend has clearly stalled. The range overnight was $1,724 to $1,751. Gold looks likely to maintain this range for the short term as investors seek further developments and clarification of the situation in Europe. Gold opens the morning at $1,732. Given our neutral short term bias we expect more of the same with gold expected to maintain recent ranges for now. It will only take some form of even minor shock, most likely emanating from Europe or the Middle East to propel the price above strong resistance at $1,750. For today, we are unlikely to initiate any trades given the high event risk associated with announcements that may come from any one of the parade of cast members involved in the Greek drama. We clean break of $1,755 will have us buy while a test of support at $1,720 will see us enter into a short term long position.
Recap of the Latest Global News
By Keagan York on Feb 9, 2012
European finance ministers have convened an emergency meeting in Brussels today as the Greek government continues to struggle to finalize of terms of its next rescue package. The ministers will meet with IMF chief Christine Lagarde but no agenda has been announced. Meanwhile, the caretaker government led by Prime Minister Papademos is locked in intense talks with its coalition partners to finalize terms on the package which is crucial if Greece is to meet a EUR 14.5 billion bond payment on March 20. Papademos is also holding talks simultaneously with the so called ‘troika’. In the absence of further developments the EUR has firmed to trade at 1.3260.
The unprecedented action by central banks around the world to intervene in the markets has clearly impacted in a positive way on volatility in the markets. The move by the Federal Reserve to announce that it will keep interest rates low until 2014 and the action of other institutions globally to increase liquidity in the financial markets has seen volatility reduce significantly this year. The risk on/ risk off moves encountered last year with multi percentage moves in assets prices on what seemed like a weekly basis have now subsided. Investors appear happy to undertake a wait and see response. The Australian dollar continues to perform extremely well in this environment and opens today at 1.0800.
Central bank action and intervene have clearly impacted on share market volatility. Once again markets were relatively subdued. The Dow Jones is still trading at its highest levels since 2008 as investors tread water in anticipation of some sort of a resolution in Greece. Finance and technology stocks gained the most on the S&P 500 which closed 0.22% higher at 1,350. Earlier in Europe, bourses closed relatively flat with the DAX down 0.08% to 6,749 while the FTSE lost 0.24% to 5,876.
Commodities News
Both the Bank of England and the European Central Bank (ECB) opted to leave their respective benchmark lending rates unchanged. The ECB rate will remain at 1.0 percent, while the Bank of England rate was held steady at 0.5 percent.
The rate announcements came just hours before the news was made public that the Greek coalition government had reached a deal on spending cuts paving the way for a second emergency bailout for Greece. The rescue package is valued at 130 [...]
Read the full article on forexblog.oanda.com.
U.K. manufacturing increased in December by five times more than economists forecasted, and the total trade deficit shrank to the smallest since 2003, pointing to signs of economic strength at the end of last year.
According to the Office for National Statistics, factory output increased 1 percent from the previous month, and out of 13 categories of U.K. manufacturing, four fell on the month and nine rose. Transport equipment rose 3 percent and the manufacture of food, beverages and tobacco…
Read the full article on forexblog.oanda.com.
It was another night of ‘deal or no deal’ ahead of the ECB and BoE rate announcement this morning. Price action has been choppy, influenced mostly by a higher than expected Chinese CPI inflation print (+4.5%) and the fear that the Greek coalition talks were to end in no agreement being quickly followed by reports of a tentative agreement. None of this did anything to impress, nor promote enthusiastic risk taking. Apparently in Greece, the issues regarding supplementary pensions or [...]
Read the full article on forexblog.oanda.com.
Greek Finance Minister Evangelos Venizelos is in Brussels today. He brings an incomplete deal on austerity measures to Euro zone finance ministers, and they must decide whether Greece has already done enough to receive a bailout package needed to prevent the country default. Venizelos said he hoped they would make a positive decision. “A Greek default will not be on the agenda of today’s emergency finance ministers’ meeting, which starts at 6 p.m. in Brussels”, said a euro zone official.
A [...]
Read the full article on forexblog.oanda.com.
The euro seems to have a mind of its own today being the best performer out the risk currencies, reaching levels we haven’t for 2 months. Perhaps statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt has helped boost confidence in the single currency and as Greece and the troika are putting the finishing touches on the terms required for a 130 billion-euro ($173 billion) bailout package. The market is looking at the ‘outcome glass’ as half-full. Technically if today’s low of 1.3244 (38.2% fib level) holds and euro continues with the momentum, the 50% retracement is within reach at 1.3435. At this time it may be ripe to look for rallies to sell for the long term.
The euro seems to have a mind of its own today being the best performer out the risk currencies, reaching levels we haven’t for 2 months. Perhaps statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt has helped boost confidence in the single currency and as Greece and the troika are putting the finishing touches on the terms required for a 130 billion-euro ($173 billion) bailout package. The market is looking at the ‘outcome glass’ as half-full. Technically if today’s low of 1.3244 (38.2% fib level) holds and euro continues with the momentum, the 50% retracement is within reach at 1.3435. At this time it may be ripe to look for rallies to sell for the long term.
Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 8, 2012
Markets rallied yesterday for no apparent reason other than that the Greek government’s negotiations with the troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, hadn’t broken down irrevocably. Greek PM Papademos postponed a meeting with his coalition partners for the second consecutive day as terms for the second aid package remain unresolved. The expectation of the markets is that final terms are being completed for the EUR 130 billion rescue package today. The package has been under discussion since July and we are somewhat surprised at international investors’ patience and optimism. It appears that statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt have done the trick for now and the EUR rallied to as high as 1.3289 today.
In news that seems to have been largely ignored by the markets, Fed Chairman Bernanke made comments that the US unemployment rate understates the weakness in the US labour market and that he was particular troubled by the very high levels of long term unemployment. The USD continues to weaken across the board with the commodity currencies such as the AUD and CAD making strong gains.
Yesterday, the Dow Jones rose to its highest levels since May 2008 on hopes that the situation in Greece will soon be resolved as a final draft of the conditions of the second bailout package is completed. Coca Cola shares rose 1% on better than expected earnings and 7 out of 10 groups in the S&P 500 rose. The S&P 500 closed 0.2% higher at 1,347. Asian share markets rose more than 1% while European bourses are higher by 0.5% in mid session.
Recap of the Latest Global News
By Cory Vi & Andrew Su on Feb 8, 2012
Markets rallied yesterday for no apparent reason other than that the Greek government’s negotiations with the troika, made up of the European Commission, the European Central Bank and the International Monetary Fund, hadn’t broken down irrevocably. Greek PM Papademos postponed a meeting with his coalition partners for the second consecutive day as terms for the second aid package remain unresolved. The expectation of the markets is that final terms are being completed for the EUR 130 billion rescue package today. The package has been under discussion since July and we are somewhat surprised at international investors’ patience and optimism. It appears that statements from Sarkozy and Merkel that Greece will not be allowed to go bankrupt have done the trick for now and the EUR rallied to as high as 1.3289 today.
In news that seems to have been largely ignored by the markets, Fed Chairman Bernanke made comments that the US unemployment rate understates the weakness in the US labour market and that he was particular troubled by the very high levels of long term unemployment. The USD continues to weaken across the board with the commodity currencies such as the AUD and CAD making strong gains.
Yesterday, the Dow Jones rose to its highest levels since May 2008 on hopes that the situation in Greece will soon be resolved as a final draft of the conditions of the second bailout package is completed. Coca Cola shares rose 1% on better than expected earnings and 7 out of 10 groups in the S&P 500 rose. The S&P 500 closed 0.2% higher at 1,347. Asian share markets rose more than 1% while European bourses are higher by 0.5% in mid session.