Wednesday, December 1, 2010

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

Live education class Thursday December 2nd 4pm

Posted: 01 Dec 2010 07:25 AM PST

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The next FXDD live education class with Greg Michalowski and Shawn Powell is this Thursday December 2nd at 4pm est/ 21:00gmt >> Click here to register

ISM comes in close to expectations. Does not surprise to the upside

Posted: 01 Dec 2010 07:03 AM PST

New Orders 56.6 vs 58.9 last month
Employment 57.5 vs 57.7 last month
Production 55.0 vs 62.7 last month
Inventories 56.7 vs 53.9 last month
Order backlog 46.0 vs 46.0 last month
Prices Paid 69.5 vs 71.0 last month.

Overall a bit of a disappointment in that it did not surprise to the upside.  The Chicago PMI was better and global increases in PMI over the last 24 hours created an anticipation of good news.  The USDJPY has dipped  a bit but not materially. Support at 84.20.  The EURUSD has gotten a more substantial boost back to the 200 day MA level at the 1.3124 level.

Overall, today is characterized by fundamental crosswinds.  The market interpreted news and hopes of Bond purchases by the ECB as positive. US data was better - especially ADP, but now ISM is a bit of a disappoint.  All points to the choppy market conditions today.

ISM Data Stays Put While Construction Spending Rises 1%

Posted: 01 Dec 2010 07:01 AM PST

ISM Manufacturing:    Survey:  56.5       Actual: 56.6          Prior: 56.9

ISM Prices Paid:    Survey: 71.0         Actual:  69.5          Prior: 71.0

Construction Spending (MoM):     Survey: -0.3%         Actual: .7%       Prior:  0.5%      Revised: %

“The Moment of Truth”: Deficit-Panel Chiefs Urge Tax, Spending Changes. .

Posted: 01 Dec 2010 06:47 AM PST

A commission created by President Obama is scheduled to announce their recommendations for deficit reduction going forward. The report is likely to be met with harsh criticism but is intended to be a framework and also to be a wake up call to the seriousness of the US budgetary issues that face the nation now and into the future when entitlement programs will balloon without a tax base to support it.  The proposal includes:

  • 200,000 Federal job cuts by 2020 (10% of the workforce)
  • 4 trillion in deficit reduction by 2020
  • Reduce the Deficit to 2.3% of GDP by 2015
  • Overhaul tax code
  • Cap govt revenue at 21% of GDP
  • Reduce total debt to 40% of GDP by 2035

The changes are expected to become a blue print for debate

Some specific which are targeted:

  • Capping the deduction for mortgage interest to loans less than $500,000 and no deduction for 2nd homes. 
  • Capital Gains and dividends taxed at normal income rates
  • Limit the ability to deduct health insurance payments pre-tax

To offset these tax incentives which would hurt consumers and housing there are proposals for tax relief.  Specific details were not released.

Regarding entitlement programs, the proposals include:

  • Raising the normal retirement age to 68 by 2050 and 69 by 2075
  • Hardship for people who can’t work beyond the age of 62 and other exemptions for low income wage earners
  • Medicaid and Medicare cuts “across the board”

The implications for the currency markets?  Overall, this exercise is a wake up call for change.  It does not enact any change and there will be long debates.  As a result, it’s impact will be minimal. 

The market was focused on the good in the EUROZONE but has shifted back to the dollar strength with the better employment from ADP providing the good.  The ISM Manufacturing comes out at 10 AM. The market is likely expecting something better than expected. The Chicago PMI surprise to the upside yesterday so the good is likely expected to be reflected in the national report today. 

CLICK HERE FOR A REPORT FROM THE Wall Street Journal.

The NY Morning Forex Commentary. Reviews economic releases and the key technical levels

Posted: 01 Dec 2010 06:10 AM PST

EURJPY tests key 100 hour MA resistance at 110.47

Posted: 01 Dec 2010 05:48 AM PST

US ISM Manufacturing, Prices Paid & Construction Spending Data at 10AM

Posted: 01 Dec 2010 05:45 AM PST

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EURUSD breaks above 200 day MA at the 1.3124 level

Posted: 01 Dec 2010 05:41 AM PST

Nonfarm Productivity Stays the Same & Unit Labor Costs Drop Slightly

Posted: 01 Dec 2010 05:32 AM PST

Nonfarm Productivity:    Survey: 2.3%         Actual:  2.3%        Prior:  1.9%       

Unit Labor Costs:    Survey:  -0.2%         Actual:  -0.1%         Prior:  -0.1%

ADP Employment Change Rises

Posted: 01 Dec 2010 05:21 AM PST

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Bobbys Corner-Open Market-Dec.1.2010

Posted: 01 Dec 2010 05:17 AM PST

bob-slade-forex-2-150x200Good Morning:

Improved global economic data along with improved credit spreads in Europe , pushed risk appetite higher in Asia and in earlyEuropean trading. 
China manufacturing rose to a six month high, German Retail Sales rose to a 2 year high, but the best data of all came out of the UK where the PMI Manufacturing data printed at 58.0  versus 54.8 which was expected.  This data from the UK shows that the UK industrial sector is showing strong growth-as this is the third month in a row that posted an increase. 
Portugal had a bill auction in which the government sold 500 million euros of 12 month bills.  The auction was recieved better than expected-which attracted bids 2.5 times the amount offered.  Rumors are building that S&P may look to cut the country’s credit rating on concerns that they too may need to seek a “bailout”.

World equity markets along with US Futures are higher this morning.

Oil:$85.50                                                               Gold:$1393.10  

TIME FOR EST. PRIOR
7:00A.M. MBA MORTGAGE APPLICATIONS 26-Nov 2.10%
7:30A.M. CHALLENGER JOB CUTS YoY NOV. -31.80%
8:15A.M. ADP EMPLOYMENT CHANGE  NOV. 72K 43K
8:30A.M. NONFARM PRODUCTIVITY  3Q F 2.30% 1.90%
8:30A.M. UNIT LABOR COSTS 3Q F -0.20% -0.10%
10:00A.M. ISM MANUFACTURING NOV. 56.5O     56.9O
10:00A.M. ISM PRICES PAIS PAID NOV.       71.O     71.O
10:00A.M. CONSTRUCTION SPENDING MoM OCT. -0.30% 0.50%
2:00P.M. FEDS BEIGE BOOK        

HAVE A GREAT DAY & GOOD LUCK

ADP comes in stronger at 93K vs 70K expected

Posted: 01 Dec 2010 05:16 AM PST

The revision was to 82K from 43K last month.

+14K Goods Producing
+79K Servicing Producing
+16K Manfacturing

The talk is employment is moving in the right direction with the changes being more broad based.

This is the largest in 3 years and the 10th straight increase for the series

Spain aims to raise 14 B Euros from asset sales

Posted: 01 Dec 2010 05:16 AM PST

In an attempt to alleviate some of the budgetary problems down the road (and borrowing constraints perhaps), Spain has announced they are looking to make some asset sales that would raise 14B Euros

The NY Opening Forex Commentary looks at the major pairs

Posted: 01 Dec 2010 05:10 AM PST

ECB speculation of increased bond purchases supports the EURUSD

Posted: 01 Dec 2010 05:09 AM PST

The EURUSD is being supported today by rumblings in the market that the ECB will announce an increase in the bond purchases at tomorrows scheduled ECB meeting (7:45 AM ET). The market is interpreting this action as the band aid for the bond markets which have been hurt lately as a result of decreased confidence in countries like Ireland, Portugal and Spain. This is in contrast to normal market reaction whereby increase QE type actions are currency bearish (at least until that time the announcement is made). Be aware that if done, the reaction higher for the EURUSD may be positive initially but may then lose its bullish luster. Of course we will be watching the technical clues from the tools we use to determine the bullish or bearish bias. This will define the risk and make sure that if the market does not do what is expected, we don’t get hurt. Be aware. Be prepared
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