Forex Market Updates & Commentary

EURUSD makes new highs
New home sales 323K higher than expected. Richmond Fed comes in -6 (Weak)
Existing Home Sales and Richmond Fed Index to be reported at 10 AM ET
Fed’s Hoenig (hawk and non-voting member) on newswires
Greek default swaps soar to record
GBPUSD tests 100 hour MA resistance at 1.6172. 100 day MA eyed too
EURUSD tracking slowly above the 100 bar MA
Silver moving higher away from 100 day MA
The NY Opening Forex Commentary for May 24th/FXStreet Webinar at 11 AM/Traders Education 4 PM
ECB’s Bini Smaghi
Euro falls after Greek opposition leader Samaras says rejects new austerity plan.
Lipstok on the wires………………….
$/CAD testing hourly resistance @ .9769
EU ind. new orders -1.8% vs. the expected -1.1%
UK Public Sector net borrowing

Posted: 24 May 2011 07:16 AM PDT

New home sales 323K higher than expected. Richmond Fed comes in -6 (Weak)

Posted: 24 May 2011 07:00 AM PDT

The Home Sales data is better than expected and the supply of homes is down to 6.5 months. This suggests that supply is being sopped up.

Meanwhile Richmond comes out much weaker at -6 vs 9 expected. This is the lowest level since april 2009.

Shipments -13 vs 6 last month
New Orders -15 vs 10
Order backlog -19 vs -1
Cap Util. -12 vs 2
Vender Lead time 5 vs 18
Employ 14 vs 14
Avg workweek 0 vs 7
Wages 6 vs 22

Existing Home Sales and Richmond Fed Index to be reported at 10 AM ET

Posted: 24 May 2011 06:56 AM PDT

New Home Sales are expected to show an unchanged reading of 300K. The month supply came in at 7.3 months last month, down from 8.2 months in February. There is little incentive for New Home construction with the supply of foreclosed properties still high.

The Richmond Fed Manufacturing Index is expected to show a decline to 9 from 10 last month. The recent high was 25 in February and December. The higher oil/commodity prices has kept the indices more on the weak side of late not just in the US but globally as well.

Overall, the data should be weaker which could keep the dollar on the defensive. With key techinical levels in the EURUSD (at 1.4112) and the GBPUSD (at 1.6172). The market may tip it’s hand. Be prepared for some added volatility as the key levels influence.

Fed’s Hoenig (hawk and non-voting member) on newswires

Posted: 24 May 2011 06:53 AM PDT

Feds Hoenig says banks should be confined to loans and deposits and not trading. He does not comment on the economy or interest rates, but may comment in any Q & A session afterwards. Hoenig is a hawk (advocates higher rates) but is an non voting member of the Fed board.

Greek default swaps soar to record

Posted: 24 May 2011 06:36 AM PDT

A report on the newswire says that Greek default swaps have soared 96 basis points to a record level. This increases the chance of default to 71% within 5 years. The chart below shows the yield on Euro 5 year bonds. The Greek 5 year bonds are making new highs today.

With the EURUSD up on the day and near the high, the market seems to be comfortable with the situation. However, for bears, the rally may be an opportunity. As most of those who follow me know, I require a technical reason to trade. The price has found resistance against the 38.2% of the move down from the May 20th highat the 1.4112 level on two occasssion today. This techinical level helps define risk in case the market ignores the spike in rates and the credit default spike higher, and instead focuses on other fundamental influences (or technical influences) that may force the price higher.

The market does not always do what it should do. As a result, defining risk with a technical level is ways to keep risk to a minimum and avoid large losses in your trading.

GBPUSD tests 100 hour MA resistance at 1.6172. 100 day MA eyed too

Posted: 24 May 2011 06:21 AM PDT

Earlier today this MA was tested and the market found sellers. The pair is back up testing again at the 1.6172 level. This level has the 50% Fibo level at 1.6180 right behind it. This makes the area a difficult nut to crack but will likely encourage the bulls if broken. Until then however, the temptation to take profit should keep the market balanced.

The GBPUSD is up despite a higher government deficit and a Moody’s potential downgrade of 14 UK lenders. Typically, this would solicit sellers but the price rebounded sharply off the lows.

Another key level to watch as we head toward the close, will be the 100 day MA. That moving average comes in at 1.6160 today. Yesterday was the first close below the MA level since January 11, 2011. The lack of follow through selling is a disappointment today. A close above the level will encourage the shorts to perhaps cover their positions and wait.

EURUSD tracking slowly above the 100 bar MA

Posted: 24 May 2011 06:03 AM PDT

The EURUSD is slowly moving higher today tracking the 100 bar MA in the process. The pair found earlier resistance against the 38.2% retracement of the move down from the May 20th high. That level comes in at the 1.41124 level. A move above this level will be needed to keep the bulls in charge.

So the bias is bullish. The target at the 1.4112 level needs to be breached.

Silver moving higher away from 100 day MA

Posted: 24 May 2011 05:49 AM PDT

The Silver bottomed on May 12th at the 32.31 level, 11 cents short of the 50% retracement of the move up from the Feb 2010 low to the high. The price is also moving away today from the 100 day MA which comes in at 35.07 today. Staying above this level keeps the bulls in charge.

The hourly chart show consolidation with the 100 and 200 hour MA converging with the price in late trading yesterday. The price in the Far East session started to use the 100 hour MA as support and has since pushed away from the 100 hour MA. Typically, when the 100 and 200 MA converge with the price, you get a move away. That move is choosing the upside.

The next target is the high from May 13th at $36.44. A move above this level opens the door for $37.31 and the $37.96 level. All represent points where the price had resistance or support since the beginning of May. The 38.2% retracement of the move down from the April 28th high at $49.49 comes in at $38.87 and also remains a potential target, if the price is able to remain above the 100 hour MA and continue to reach and surpass the respective targets along the way.

The NY Opening Forex Commentary for May 24th/FXStreet Webinar at 11 AM/Traders Education 4 PM

Posted: 24 May 2011 05:15 AM PDT

ECB’s Bini Smaghi

Posted: 24 May 2011 03:35 AM PDT

ECB will do whatever is needed to hit inflation goal; will ensure inflation goes back under 2%.
Greek debt haircut not inevitable, would only make problems worse.
Successful Greek program includes hard steps at the beginning.

Euro falls after Greek opposition leader Samaras says rejects new austerity plan.

Posted: 24 May 2011 03:07 AM PDT

Lipstok on the wires………………….

Posted: 24 May 2011 03:00 AM PDT

Restructuring of Greek debt is a question that shouldn’t be on the table any more.
It’s a problem that Greece hasn’t done enough to carry through fiscal repair measures, has fallen behind schedule.
Essence reprofiling would still be the same as restructuring and that is not on the agenda.

$/CAD testing hourly resistance @ .9769

Posted: 24 May 2011 02:16 AM PDT

The pair is having trouble breaking upward through the 23.6% line. If resistance holds, .9755 is the bottomside target; a move higher could see us towards .9792.