Forex Market Updates & Commentary

Silver back into the channel
Ireland’s Noonan on the Wires
USDJPY moves higher on better data. Resistance tested
Factory Goods rise 3%. Stronger. Durable Goods revised to 2.9% from 2.5%
US Justice Dept to announce Deutsche Bank Mortgage fraud
GBPUSD consolidates at lower levels after sharp move lower
The UK BRC Shop Price index rises by 2.5% YoY
Hoenig: Likelihood economy will continue to grow
EURUSD back toward unchanged on the day.
USDJPY tests lows post central bank intervention
Feds Hoenig says easy liquidity can cause an asset bubble
Gold tests the 100 hour MA today and finds buyers
Bobbys Corner-Open Market-May.3.2011
US Factory Orders Due at 10AM
The NY Opening Forex Commentary for May 3rd 2011

Posted: 03 May 2011 07:43 AM PDT

Silver has kept a consolidation/corrective tone today. The price did move higher in the Far East session after holding support against retracement support at 43.63 at the end of trading yesterday. The inability to extend above the upper channel trendline at $45.50 (see chart above) gave profit takers the reason to lighten up on positions. The price rotated back to the downside and is now below the 38.2% of the most recent surge to the upside at the 43.58 level.

The $42.60 level was the low from the early trade yesterday. The $42.00 level was the high area from April 11th. The $41.66 level is the 50% of the move up from March 15th low (see hourly chart above).

Ireland’s Noonan on the Wires

Posted: 03 May 2011 07:35 AM PDT

Says:

Irish debt level ‘very high’
Irish growth to remain subdued
Markets will determine how much we can borrow
Irish debt is ’sustainable’
Comparisons with Greece ‘false’
Not in the same category as Greece, Portugal
‘Things are better than on track’ so far this year
‘So far, so good’ on fiscal deficit this year

USDJPY moves higher on better data. Resistance tested

Posted: 03 May 2011 07:07 AM PDT

The USDJPY has reacted higher off the better US Factory Orders data and looks to test the 100 bar MA on the 5 minute chart at the 80.90 level. The level is the 38.2% of the move down today and near the 100 bar MA on the 5 minute chart. A move above should look to test 81.00 where the 200 bar MA (green line) is found.

Factory Goods rise 3%. Stronger. Durable Goods revised to 2.9% from 2.5%

Posted: 03 May 2011 07:01 AM PDT

Ex Transportation rise by 2.6% vs 0.6%.. Non Defense rose 3% vs 1.3% last month. The numbers are stronger than expected across the board.

The prior month was revised up for Factory orders to +0.7% from +0.1%.

The USDJPY has reacted higher and looks to test the 100 bar MA on the 5 minute chart at the 80.90 level.

US Justice Dept to announce Deutsche Bank Mortgage fraud

Posted: 03 May 2011 06:53 AM PDT

GBPUSD consolidates at lower levels after sharp move lower

Posted: 03 May 2011 06:32 AM PDT

Yesterday, the GBPUSD gave clues for a potential move (see GBPUSD non-trending in a 10 pip range by CLICKING HERE). The non-trending nature of the market was a prelude to a trend like move.

The PMI Manufacturing data helped by coming in weaker today coming in at 54.6 vs 57 expectation and the market focus was exclusively on the GBP. As NY day gets going, the dollar is getting more attention and the GBPUSD has rebounded a bit. The pair has a nice floor at the 1.6467 level but it also has a ceiling against the 1.6502 to 1.6507 area. A move above the area will be needed to push the price toward the 100 bar MA on the 5 minute chart (blue line). That level currently comes in at the 1.6528 level. Above that 1.6540 is the 38.2% of the days range. Trend traders will be watching this key level for clues today. If a trend move is fully supported, the market typically finds sellers against this level. Above that the 1.6563 and the 200 bar MA (green line) at the 1.6578 level are the targets.

On the downside, a break of the 1.6467 level has close by support at the 1.6454 level which is the 50% of the move up from the April 18th low to the high on April 28th. This level slowed the decline today and will likely continue to provide support given the already sharp decline today.

The UK BRC Shop Price index rises by 2.5% YoY

Posted: 03 May 2011 06:24 AM PDT

This is up from 2.4% last month. The report was released early. It was not expected.

The report represents the change in the price of goods purchased at British Retail Consortium (BRC) member retail stores.

Hoenig: Likelihood economy will continue to grow

Posted: 03 May 2011 06:21 AM PDT

Sees high likelihood for continued growth. He warned of the adverse outcome from high deficits and he opposes efforts to politicize the Fed.

He feels that liquidity not at point to cause financial shock and that the Fed needs to calm inflationary fears.

Hoenig is a hawk but not a voting member of the FOMC this year.

EURUSD back toward unchanged on the day.

Posted: 03 May 2011 06:11 AM PDT

The 1.4829 level was the closing level from yesterday and the EURUSD is looking to test that level. The midpoint of the move down from the NY high yesterday is also at the level at the 1.4828. The market should find some sellers from profit taking. However, be aware that before the US Unemployment report, the ECB has its interest rate meeting on Thursday and although the central bank is not expected to change rates, the comments from Trichet could continue to be hawkish. This highlights the Fed/ECB split that keeps the EURO more in demand. ECB have raised rates. The US Fed continues to wait for an “extended period of time”.

There is also some talk in the market about a commentary from a US consulting firm who says they see the ECB looking toward 2% rate by the end of the year.

USDJPY tests lows post central bank intervention

Posted: 03 May 2011 06:06 AM PDT

The USDJPY his testing the low from the post central bank intervention. The level comes in at 80.69 and the price has been knocking on the door. Although it would seem that if there was interest to buy USDJPY at the level a month or so ago, that enthusiasm may not be there now. The reason is the intervention forced the market up to a high of 85.51 in the interim. That surge should have given Japanese exporters the ability to hedge positions. So although the 80.69 level is a technical level to lean against, a break below does not imply intervention expectations. On the daily chart below the 80.24 (low from October 2010) and 79.88 level would be the next target (61.8% of the move higher).

Feds Hoenig says easy liquidity can cause an asset bubble

Posted: 03 May 2011 05:45 AM PDT

He sees a need to withdraw excess liquidity slowly
A rapid withdrawl could cause a shock to the system.
Would like to see separation between banks/investment banks

Gold tests the 100 hour MA today and finds buyers

Posted: 03 May 2011 05:31 AM PDT

The 100 hour MA was tested on several occassions today. The last two hourly bars saw the price dip below the level but no momentum could be established and the price rebounded. On the topside the 38.2% of the move down comes in at the 1548.39 level. On the initial move to the upside today, the price moved Fibonacci level. When the price fell back below the 38.2% level the market found sellers against the level on the next move higher.

The ability to hold the 100 hour MA gives longs from below confidence against that level. The 1548.39 level will need to be breached to solicit more buying. A test of the level in the NY session should be telling for the markets bias. Needless to say, Gold remains a safe haven currency. Global tensions and uncertainty should keep the pair supported. The buying against the 100 hour MA are a clue that buyers remain. What traders have to be aware is that there could be points where profit takers come in. So define risk against key technical levels and look for targets (like the 38.2%) to provide confidence in the directional bias.

Bobbys Corner-Open Market-May.3.2011

Posted: 03 May 2011 05:28 AM PDT

Good Morning:

Commodities dropped for the 2nd day, equity markets are lower, and the USD rallied a bit overnight.
1 year US Treasury yields fell to a record low-and US Futures are lower at this time.

After yesterday’s early knee jerk reaction to the death of Osama bin Laden, the markets are settling back in as they assess the impact of the May 1 death.

India’s central bank rose interest rates .5%, which is higher than expected, as they look to tame inflation.
Japan was closed overnight for a public holiday.

Asian equity markets were mostly lower-as is Europe’s. US Futures are also lower at this time.

Oil:$112.26 Gold:$1538.10