FOREXYARD: Forex News Blog | |
- Investors Reluctant to Buy American
- Canada Drawing Heavy Foreign Investment
- Aussie Motor Vehicle Sales Depict Slowing Economy
- Euro Weaker as Merkel and Trichet Butt Heads
- Weekly Technical FX Preview – EUR/USD Fails to Close the Gap
| Investors Reluctant to Buy American Posted: 18 Jul 2011 09:05 AM PDT
Data released by Treasury International Capital (TIC) this afternoon underlined a growing trend among international investors. A reluctant to buy into American stocks and bonds has become more apparent as the US Congress falters on its debt limit talks ahead of the impending August 2 deadline. The TIC Long-Term Purchases report measures the difference in value between foreign securities purchased by US citizens and American securities purchased by foreigners. Expectations were for an increase from the previous month's reading of $30.6B to $48.4B. The reported value, however, witnessed a sharp slump with an actual reading of $23.6B. The news serves to highlight the hesitation present in this risk averse market, and a growing uncertainty in the future value of US investments should Congress default on its debt come August 2. |
| Canada Drawing Heavy Foreign Investment Posted: 18 Jul 2011 09:04 AM PDT
A report out of Canada early this afternoon pointed towards a significant rise in foreign investment within the Canadian economy this past month. The CAD may be seeing downward price action from regional woes and risk aversion, but data such as this highlights the relative stability of the northern giant's economic values. Statistics Canada published its Foreign Securities Purchases report which was expected to show a rise of approximately C$7.41B growth. The indicator measures the total value of domestic bonds, stocks, and money-market assets purchased by foreigners during the reported month. The actual figure came in at C$15.40B, trouncing forecasts and underlining the growth in capital markets across Canada which economists have discussed only mildly in the past few weeks. |
| Aussie Motor Vehicle Sales Depict Slowing Economy Posted: 18 Jul 2011 09:03 AM PDT
The Australian Bureau of Statistics (ABS) released its monthly report on motor vehicle sales this morning to reveal two conflicting data movements with an ominous under-tone. Though overall vehicle sales were up 1.3%, overturning the previous two months' negative movement, one category of vehicle sales portrayed an economy entering a slump. Passenger and sport utility vehicles (SUVs) rose collectively about 2.5%, seasonally adjusted, in June. But the "other" category of vehicles, which accounts for business vehicles like trucks, buses, vans, pickups, and delivery fleets, sunk by approximately 7%. Consumers may feel better about purchasing a car, but businesses aren't seen to be investing in their delivery infrastructure in similar fashion. These very minute signs point to an economy that may be slowing faster than many assume. |
| Euro Weaker as Merkel and Trichet Butt Heads Posted: 18 Jul 2011 04:15 AM PDT
The US dollar was off to a strong start this week as pressures in Europe have kept equities lower with banking stocks leading the plunge. Traders are expecting a report to show decreasing securities purchases of US securities but it could be the bond purchases from Europe that highlight the North American trading session. The euro began the week lower with the EUR/USD being sold off the as forex trading began in New Zealand with the pair gapping lower but failing to break the 1.4000 level. Last week's EU banking stress tests were mostly disregarded by financial markets given the criteria used was considered inadequate due to the yields for much of the periphery are trading at much higher levels than what was used in the stress tests. A Financial Times article highlights the major roadblock to a resolution in the European debt crisis as German Prime Minister Angela Merkel and ECB President Jean-Claude-Trichet butt heads. Merkel wants investor participation in a new bailout agreement while Trichet opposes any plan that would bring a default rating on a nation's sovereign debt. Trichet pledged to refuse to accept the debt of a nation in default in return for ECB liquidity provisions. This will likely be the driving theme as Thursday's EU emergency summit draws near. Currently EUR/USD support is seen at 1.4000 and move below here would likely target last week's low at 1.3840. To the upside the resistance line on the hourly chart that falls off of the June 14th high may contain and may offer better entry levels near 1.4150. European woes dragged riskier assets lower with the London FTSE 100 down 1% with banking stocks leading the declines though the Nikkei 225 finished up by 0.4%. Spot crude oil was lower at $96.80 from $97.50. Spot gold continued to push higher as the commodity climbed to above the $1,600 psychological resistance level, highlighting the tension in the financial markets. This afternoon the TIC long-term purchases report will be released and could continue to show further reserve diversification out of the dollar by central bank reserve managers, though this report may be overlooked by the ECB's Securities Markets Program (SMP). Rumors of ECB bond buying were circulating as the ECB may have attempted to support the sovereign debt of both Italy and Spain. Last week Italian bonds came under pressure amidst contagion fears. Today Italian 10-year bonds are approaching the dangerous 6% level as the European debt crisis seems further than ever from being resolved. Read more forex trading news on our forex blog. |
| Weekly Technical FX Preview – EUR/USD Fails to Close the Gap Posted: 18 Jul 2011 12:11 AM PDT
EUR/USD After a gapping lower to start last week the pair moved below the 200-day moving average and on the subsequent rebound the EUR/USD found resistance at its 100-day moving average, a previous level the pair struggled to close below between the months of April and July. While the rebound higher was sharp the failure of the pair to move above the 100-day moving average and to close above the opening gap signals weakness in the pair. Initial support is found at last week's low at 1.3870 followed by the rising trend line from the June 2010 low which comes in at 1.3750. A break here is significant as it would compromise the long term uptrend for the euro, exposing the 50% retracement level at 1.3410. To the upside last week's high at 1.4290 is the first resistance followed by the falling resistance line from the May and July highs at 1.4490.
GBP/USD The GBP/USD price collapsed only to find support at the 38% retracement level of the May to April move at 1.5780 while the rebound higher was capped at the neckline from the head and shoulders reversal pattern. Positive divergence is found on the RSI-14 as the price made a new low but the RSI did not. This signals a potential warning sign for sterling bears. Resistance is located at 1.6230 off of the falling trend line from the April high. Above this level the previously broken trend line from the May to April move at 1.6330 will come into play. To the downside a break of 1.5780 would signal a resumption of the downtrend and would target 1.5650 which has served as both support and resistance in October and in December of last year.
USD/JPY The USD/JPY downtrend resumed with a vengeance last week as the pair broke below the 80 yen "line in the sand" and the support from May 5th at 79.55. This level has now turned into resistance as often happens to previously broken support levels. Only last week's low at 78.46 and the bottom of the long term wedge from Sept 2004 at 77.60 (not shown) stands in the way of the all-time low at 76.11.
USD/CHF The Swissie has moved in one direction and one direction only. The pair made a halfhearted attempt close above its 50-day moving average and moved sharply lower from there setting a new all-time low at 0.8082 which serves as the initial support level. Any move higher may find resistance at 0.8275, the falling trend line from the February high which comes in at 0.8450, and 0.8550.
Read more forex trading news on our forex blog. |
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