Monday, June 30, 2014

GBP/USD and news

 GBP/USD   Daily
13::30 GMT - GBP's Pressed on into the 1.7050~ ceiling to set up a well-defined trade at the s/t and larger scale boundary here- either:     short from 1.7050-60 (back to 1.6950 (with break down potential there), or: long on a fast move through 1.7060.

The monthly poll of 51 fund managers and chief investment officers in the United States, Britain, Europe and Japan showed the average recommended exposure to equities in global balanced portfolios rose to 51 percent from 50.8 percent.
This small increase came at the expense of allocations to bonds, which were down to 35.6 percent from 35.9 percent a month earlier.
Allocations to cash and alternative investments such as hedge funds remained unchanged at 5.7 percent and 5.6 percent respectively. Property investments were also slightly higher at 2.1 percent, advancing further after having reached their highest levels since June 2011 last month as investors sought out the yields offered by commercial real estate.
Within global equities portfolios, the average allocation to North American stocks rose to 42.1 percent from 41.5 percent while investors also hiked exposure to British stocks to 11.9 percent from 11.5 percent.
This came partly at the expense of equities in the euro zone, where economic recovery is seen as further off than in Britain and the United States.
Extra stimulus from the European Central Bank, which cut its deposit rate to negative earlier this month, and hints from Federal Reserve Chair Janet Yellen that rates are likely to stay low, are fuelling demand for riskier assets such as equities.

Sunday, June 29, 2014

Market gaps stock market news

Stock market gaps in price are great because they are both the action of a strong supply and demand
imbalance and the picture of new trends, greed, and fear buy buyers and sellers can be spotted when
you know how to trade them. Not every gap sends the same message or represents the same opportunity so traders need to structure them into an understandable check list or trading plan. Once this is done, you can use this information to spot the price action of very novice buying or selling and be there to take the low risk, high profit, and high probability trade. 
Market gaps

Friday, June 27, 2014


 USD/JPY  Daily
12::55 GMT - The USD's traded sideways for the London session but stillretains the steep am. fall from 101.70~/ Thur's pivot; 101.45         resistance caps and keeps us facing  lower s/t; the 101.40-70 range is open for a fill-in trade higher IF the USD picks uplater. Decline off the 102.00 pivot looks headed for 101~/ the YTD

USD/CHF  Daily
13::35GMT - Earlier recovery failed just ahead of the 0.8940/45 res.   and prices have come under pressure again. Despite the recent action, we think  the 0.8906 recent low may hold awhile longer. In due course, though, we should see a break with next target at 0.8895. Initial res. is at 0.8938/45.N.I.

 GBP/JPY  Daily
13::35 GMT - Slow trade back into this pm. extends the week's decline; GBP edging fresh lows now but still (just) holding above 172.50/ the  mid-Jun separation (which remains bullish positioning.)

Wednesday, June 25, 2014


 USD/CHF  Daily
13::25GMT - Mkt. has dropped to the 0.8906/9 lows which are holding so far. Bounce res. is at 0.8930 and, while prices hold below here, we   think further decline will follow. Next downside targets are at 0.895 then 0.8860. The higher res. is at 0.8945.N.I.

The dollar fell against major currencies Wednesday after the third and final revision for gross domestic product arrived far lower than economists expected, suggesting the U.S. economy's recovery has further to go before the Federal Reserve will raise interest rates.
The greenback dropped versus the yen to JPY101.68 from JPY101.92 before the number's release, now down 0.3%. Meanwhile, the euro jumped to as high as $1.3652 from $1.3616, up 0.3%.
The Commerce Department lowered the rate of GDP contraction for the first quarter to 2.9%, marking the sharpest pullback since the recession ended five years ago. Analysts had expected a contraction rate of 2%, and the actual rate was much lower than the second revision of 1%.

Monday, June 23, 2014

The Japanese yen Gold 6/23

The Japanese yen is firm on Monday, as the pair trades in the low-101 range. On the weekend, BOJ Governor Haruhiko Kuroda said that that the central bank’s monetary stance had led to economic growth but inflation remained below target. Japanese Flash Manufacturing PMI improved in May, pushing above the 50 line which separates between expansion and contraction. In the US, today’s highlight is Existing Home Sales.
Speaking at the International Economic Association in Jordan on Sunday, BOJ Governor Kuroda sounded upbeat about the Bank’s quantitative and qualitative easing policy, introduced in April 2013. Kuroda noted that growth had improved and deflation curbed, but that inflation was around 1%, well short of the target of 2%. The BOJ had hoped to reach its inflation target by 2015, but Kuroda acknowledged that this goal would take longer, and BOJ would continue its current stance of large-scale monetary easing.
Gold is stable on Monday, following sharp gains last week, when the metal gained about 2.8% against the dollar. The metal remains above the $1300 level as the fighting in Iraq continues. On the release front, today’s highlight is US Existing Home Sales, a key event.
The fighting in Iraq continues, as militants linked to al-Qaeda have overrun the north of the country. The insurgents are only about 60 kilometers from the capital of Baghdad, and the situation has quickly escalated into a major crisis for both the Iraqi and US governments. Over the weekend, US President Barack Obama said the crisis could spread to other countries in the region. The turmoil in Iraq, a large oil producer, has pushed the price of gold above the $1300 level, as the metal is considered a hedge during periods of geopolitical instability.

Friday, June 20, 2014

Gold prices Crude oil

Gold prices not straying far from unchanged levels in early U.S. trading Friday. Prices did poke to a nine-week high overnight. Traders are taking a breather after Thursday price action that saw gold gain nearly $50.00 and silver add over $1.00 in value. It been a very good week for the gold and silver market bulls, and they still have technical momentum on their side. August Comex gold was last down $1.00 at $1,313.00 an ounce. Spot gold was last quoted down $7.40 at $1,313.50. July Comex silver last traded up $0.107 at $20.76 an ounce.
Crude oil prices have rallied sharply recently on worries about Iraqi crude oil exports being reduced, and on concerns the violence in Iraq could spread to other Arab nations. The U.S. dollar index hit a four-week low Thursday in the wake of dovishly construed U.S. monetary policy comments from Fed Chair Janet Yellen on Wednesday. These two key outside markets are in a near-term bullish posture for the precious metals and other raw commodity markets.

GBP/USD 6/20

GBP/USD is showing little activity  as the pair continues to trade in the mid-1.70 range late in the European session. On the release front, British Public Sector Net Borrowing hit a six-month high, as the deficit swelled in May. In the US, markets are open on Friday, but there are no US economic releases on the calendar, so we can expect thin trading of GBP/USD. The British pound pushed above the key 1.70 level on Thursday, gaining on strong UK manufacturing numbers. CBI Industrial Order Expectations jumped to 11 points, easily beating the forecast of 3 points. It was the indicator’s best showing since last November, and points to more robust UK manufacturing sector. Retail Sales, the primary gauge of consumer spending, was unable to keep pace. The indicator came in with a weak reading of -0.5%, its first decline since January. The pound managed to shrug off this poor reading since it matched the forecast.

Thursday, June 19, 2014

Dollar Index Trading

The dollar index is much like any stock market index and is conceived from a group of currencies valued against the dollar itself in a price weighted format. The forex currencies involved are the Euro,  British Pound,  Japanese Yen, Swedish Krona, Canadian Dollar and the Swiss Franc. However there were far more currencies in the European Union before the establishment of the Euro single currency, the Euro carries the greatest price weighting in the dollar index which is understood by traders, which is 57.6% of the entire index with 13.6% to the Yen, 11.9% to the Pound, 9.1% to the Canadian Dollar, 4.2 to the Krona and 3.6% to the Swiss Franc.
The contract is called  the Dollar Index Futures and the trading symbol is DX. The contract itself trades on ICE exchange Intercontinental Exchange and is valued at any given time as shown: $1000 x The Index Value.  This would be an example if the DX was trading at 80.89, this would make the value of 1 contract to be $80,809. The margin required to trade this product on ICE, is set by the exchange itself and at the present time $880 per contract, this will give traders some leverage to trade with.  A single tick up or down is worth $5.00 profit or loss.
Dollar Index Trading

Gold and silver

Gold and silver also got a boost from continued violence in Iraq, as well as rising tensions between Ukraine and Russia. Workers at Iraq's largest refinery said Thursday that rebels had taken over most of the facility, in what has become a test of Baghdad's ability to protect a pillar of the country's oil-rich economy from a Sunni Muslim insurgency. In Ukraine, a NATO official said the alliance is seeing a buildup of Russian troops near the country's border, describing the development as a "very regrettable step backwards." Some investors buy gold in times of economic or geopolitical uncertainty, believing the metal will hold its value better than other assets.

The Federal Reserve

The Federal Reserve continued to trim its QE program, reducing the scheme by $10 billion, to $35 billion/month. If all goes as planned, the Fed could wind up QE in the fall. The Fed also hinted that interest rates will continue to stay low for the foreseeable future, which likely means that we won’t see any rate hikes before the first quarter of 2015. With regard to economic activity, the Fed noted that the recovery is continuing, but it reduced its forecast of economic growth to 2.1-2.3%, down from an earlier forecast of around 2.9 percent. The bottom line? There were no dramatic items in the Fed statement, with one analyst describing current Fed policy as “steady as she goes”.On the inflation front, CPI moved up modestly, posting a gain of 0.3%. This was the strongest gain we’ve seen since January 2013. CPI followed suit, climbing to an eleven-month high. The index rose to 0.4%, beating the estimate of 0.2%. The Fed policy statement took note of the weak inflation levels, which are nowhere near the Fed’s target of 2%.

Wednesday, June 18, 2014

Major currencies

The major currencies are in a holding pattern on Wednesday, ahead of today’s US Federal Reserve’s policy statement. USD/JPY is no exception, trading at the low-102 range. In economic news, the Bank of  Japan released its monetary policy meeting minutes. Japanese Current Account remained steady in May, easily beating the estimate. In the US, the Fed is in the spotlight, with a policy statement and a follow-up press conference. There are no Japanese releases on Wednesday.
All eyes are on the Federal Reserve on Wednesday, as the US central bank will release a policy statement later in the day. The Fed is expected to trim its QE program by another $10 billion, which would reduce the asset purchase scheme to $35 billion/month. The big question is when the Fed will raise interest rates, but Fed chair Janet Yellen is unlikely to shed much light on that issue. If, as expected, QE is wound up in 2014, we could see a rate hike in the first half of 2015. However, cuts to QE are dependent on the health of the US economy, which continues to move in the right direction, despite some bumps in the road.

Tuesday, June 17, 2014

GBP/JPY Daily,, EUR/USD Daily

 GBP/JPY  Daily
14::15 GMT - Another balanced range day was been trading into this pm. but GBP's just now started to run at the recent 173.35 high to        threaten  breakout at both the Jan-May overhead trend and at previous (Jan-May) highs, looking for a significant breakout.  In that event  the obvious target is the 174.85 YTD high. Cut back  through 172.50 today/Wed. cancels.
 EUR/USD   Daily
14::30GMT - Though there has not been much follow through s/term,  balance of risk has probably switched to the downside with the break  of 1.3540. Lower reference area comes at recent lows at 1.3502/10 then 1.3475/85.  Res. is  at 1.3580/87

Australian dollar

The Australian dollar has posted losses on Tuesday, as the pair trades in the low-0.93 range early in the North American session. On the release front, the RBA released the minutes of its last policy meeting, and New Motor Vehicle Sales posted a modest gain of 0.3%. In the US, Building Permits softened in May but CPI releases beat their estimates.
The news out of the US was mixed on Tuesday. Building Permits dropped to 0.99M, well below the estimate of 1.07M. On the inflation front, CPI moved up modestly, posting a gain of 0.3%. This was the strongest gain we’ve seen since January 2013. CPI followed suit, climbing to an eleven-month high. The index rose to 0.4%, beating the estimate of 0.2%. Meanwhile, Building Permits dropped sharply to o.99M, well below the estimate of 1.07M.

Monday, June 16, 2014

USD/CHF Daily 6/19

USD/CHF  Daily 6/19
13::30 GMT - Mkt. has still been unable to break higher and prices havedropped back last several hours. Initial sup. is still at Fri's low   at 0.8956 and the mkt. should rebase around there. Lower sups. are at 0.8951 then 0.8935/40. Res. is at today's high at  0.9013.N.I.

The Japanese yen has edged lower on Monday, as the pair trades in the high-101 range late in the European session. It’s a quiet schedule on Monday, with no major releases. In Japan, today’s sole event is the BOJ Monthly Report. In the US, there was good news as the Empire State Manufacturing Index posted another strong reading. Capacity Utilization Rate and Industrial Production met expectations. There were no surprises from the BOJ, which released a policy statement on Friday. The central bank said expansion of the monetary base would continue at its current level of JPY 60-70 trillion per year. This follows remarks from BOJ Governor Haruhiko Kuroda last week, who noted that the easing measures have led to the economy moving in the right direction. However, the monetary moves have hurt the yen, which continues to trade at very high levels against the dollar, and this trend is likely to continue.

Gold is firm

Gold is firm as we start the new trading week. The spot price stands at $1280.21 per ounce in Monday’s European session. The precious metal had a strong week, gaining about 2.9% against the US dollar, as fighting continues between insurgents and government forces in Iraq. On the release front, today’s highlight is Empire State Manufacturing Index. The markets are expecting another strong reading. On Friday, US key numbers were weak, as PPI and UoM Consumer Sentiment both softened in May.
In Iraq, militants linked to al-Qaeda continue to progress towards the capital of Baghdad after capturing key cities on the weekend. The insurgents have seized control of the northern oil city of Kirkuk, which could hamper oil production and exports from Iraq.  Gold prices have reached three-week highs, as concerned investors continue to snap up gold, which is considered a hedge during periods of geopolitical instability.

Friday, June 13, 2014

Japanese Prime Minister Shinzo

Japanese Prime Minister Shinzo Abe unveiled a plan on Friday to cut the corporate tax rate below 30 percent in stages to help pull the economy out of two decades of sluggish growth and deflation.
Investors have been scrutinising whether Japan can substantially lower the corporate tax rate – among the highest in the world to spur growth in the world’s third-largest economy. Abe also needs to strike a delicate balance between stimulating growth and reining in snowballing public debt, twice the size of its $5 trillion economy.The corporate tax cut is a major issue to be included in the government’s key fiscal and economic policy outline, which will be finalised around June 27 along with a detailed “growth strategy” of structural reforms.“Japan’s corporate tax rate will change into one that promotes growth,” Abe told reporters, adding that he hoped the lower burden on companies would lead to job creation and an improvement also for private citizens.


 USD/CHF  Daily
Decent recovery last few hours after mkt. held between the0.8950 and 60 sups. Res. is still at 0.9011 and, if the mkt. does  break to a new high, next focus is 0.9035. If the rally is to continue, 0.8975/80 should contain the current setback.

Thursday, June 12, 2014

Trading Forex Pairs

The second component of what makes a good pair to trade is the spread. Having a 100 pip ATR doesn’t do you a lot of good if the spread is 50. Does not usually happen but you get the idea. However traders would like to see a ratio of the spread to the daily ATR of about 1:50 or more. What this means is that if a particular currency pair has a spread of two pips, You would like to see at least a 100 pip ATR. Often this is very easy to achieve, but in our current market it doesn't happen too often.
Best Forex Pairs

U.S. dollar

The U.S. dollar remained little changed against most of its major rivals Thursday after the release of slightly disappointing numbers for May retail sales and weekly jobless claims.
The data pointed to a slowly improving U.S. economy and was unlikely to prompt the Federal Reserve to raise interest rates sooner than expected.
The dollar held steady against the yen at 102.04, while the euro traded flat at $1.3534.
The Commerce Department reported Thursday that retail and food sales rose 0.3% in May from the previous month to $437.65 billion, and were flat when gasoline and autos were excluded. That compares with expectations of sales rising 0.7% in total and 0.4% excluding autos.
In addition, the Labor Department said that initial claims for unemployment benefits rose by 4,000 to 317,000 in the week ended June 7, while economists had forecast 310,000 claims.
While the numbers were below expectations, they were expected to do little to convince investors that the Fed will move forward its timing for raising interest rates, said Michael Woolfolk, senior currency strategist at BNY Mellon. Higher rates would boost the dollar against rivals, as it would increase investors' returns in dollar-denominated assets.

Wednesday, June 11, 2014


USD/CAD is steady in Wednesday trade, as the pair trades below the 1.09 early in the North American session. This is the first time that USD/CAD has been in 1.08 territory in over a week. In the US, it’s a quiet day, highlighted by Crude Oil Inventories. There are no releases out of Canada on Wednesday.
There was more good news on the US employment front, as JOLTS Job Openings jumped to 4.46 million, up sharply from 4.01 million a month earlier. This easily beat the estimate of 4.04 million, and comes on the heels of a positive Nonfarm Payrolls last week. We’ll get a look at Unemployment Claims on Thursday, with the markets expecting a slight improvement compared to the previous release. There has been only one Canadian release so far this week. Canadian Housing Sales hit 198 thousand in May, easily beating the estimate of 185 thousand. This points to strong activity in the Canadian housing sector, a critical component of economic growth. We’ll get look at Manufacturing Sales, the highlight event of the week, on Friday.


AUD/USD has posted modest gains on Wednesday, as the pair flirts with the 0.94 line early in the North American session. The Aussie is on a roll, having gained about 150 points in the past week. On the release front, Australian Consumer Sentiment bounced back with a gain in May. In the US, today’s highlight is Crude Oil Inventories.
On Wednesday, Australian Consumer Sentiment posted a modest gain of 0.2%, bouncing back after a sharp decline of 5.6% a month earlier. This was welcome news, as the consumer confidence indicator posted only its second gain of the year. Earlier in the week, CPI jumped 2.5% in May, a four-month high. The strong reading edged above the estimate of 2.4%. NAB Business Confidence came in at 7 points, as the indicator continues to move upwards. Meanwhile, ANZ Job Advertisements took a tumble, posting a sharp decline of 5.6%, its worst showing in three years. We could see some stronger movement on Thursday, with the release of Employment Change and the Unemployment Rate.
There was more good news on the US employment front, as JOLTS Job Openings jumped to 4.46 million, up sharply from 4.01 million a month earlier. This easily beat the estimate of 4.04 million, and comes on the heels of a positive Nonfarm Payrolls last week. We’ll get a look at Unemployment Claims on Thursday, with the markets expecting a slight improvement compared to the previous release.

Tuesday, June 10, 2014

The Australian dollar

The Australian dollar continues to improve, having gained about 140 points in the past week. Australian CPI jumped 2.5% in May, a four-month high. The strong reading edged above the estimate of 2.4%. NAB Business Confidence came in at 7 points, as the indicator continues to move upwards. Meanwhile, ANZ Job Advertisements took a tumble, posting a sharp decline of 5.6%, its worst showing in three years. We’ll get a look at further employment data on Thursday, with the release of Employment Change and the Unemployment Rate.

The Canadian dollar

The Canadian dollar is little changed Tuesday as an absence of any economic data or other domestic drivers leaves it at the mercy of fluctuating trading flows in the market.
The U.S. dollar is at C$1.0908 Tuesday, from C$1.0905 late Monday, according to data provider CQG. A report from BMO Capital Markets in London said the U.S. was weaker against its Canadian counterpart and nearly touched support at C$1.0900 early during the London morning.
"But a material chunk of that weakness in the pair appeared to be in part driven by EUR/CAD downside, particularly with U.S. yields rather well supported," BMO said. "In other words, the extent of isolated USD weakness behind the move in USD/CAD appears to have been rather limited."
There was more activity in the euro/Canadian dollar cross, with the common currency down by about 0.4% against the loonie since late Monday.
BMO said that with very little on the North American data calendars, Canadian dollar players will stay focused on the euro's fluctuations against the Canadian unit. Softness in that pair does look like it is going to make it a struggle for the U.S. dollar to obtain C$1.0950 in the immediate future

Monday, June 9, 2014


AUD/USD is steady on Monday, as the pair trades in the mid-0.93-range early in the North American session. It’s a quiet start to the week, with no US releases on Monday. RBA Governor Glenn Stevens will address a San Francisco Federal Reserve symposium. Early on Tuesday, we’ll get a look at Australian business confidence, employment and housing data.
In the US, employment numbers were solid late last week. Unemployment Claims and Nonfarm Payrolls, both key indicators, met market expectations and helped the dollar hold its own against the euro. Unemployment Claims came in at 312 thousand, slightly above the estimate of 309 thousand. Nonfarm Employment Change met modest expectations on Friday, adding 217 thousand new jobs. The estimate stood at 214 thousand. The Unemployment Rate stayed pegged at 6.3%, beating the estimate of 6.4%.

Japanese yen

The Japanese yen has edged higher on Monday, as the pair trades in the mid-102 range. On the release front, Japanese Final GDP jumped 1.6% in Q1. Current Account posted a surplus for the first time in eight months. Monday’s highlight is Tertiary Industrial Activity, with the markets bracing for a sharp decline in May. In the US, there are no releases on Monday.
Key Japanese releases continue to impress. Final GDP soared 1.6% in Q1, a huge improvement from the weak gain of 0.2% in Q4. The estimate stood at 1.4%. Current Account also looked sharp, posting a surplus for the first time since September. The indicator came in at 0.13 trillion yen, which was short of the estimate of 0.23 trillion. The strong numbers have reinforced the BOJ’s contention that the improving economy will be able to weather the sales tax hike which took effect in April.

Thursday, June 5, 2014

Gold slumped EUR/USD sank

Gold slumped 28 percent last year on speculation the Federal Reserve would ease stimulus as the economy strengthens. Data due tomorrow may show the U.S. added 215,000 jobs in May, after a report yesterday found service industries grew at the fastest pace in nine months last month, sending the Standard & Poor 500 Index of equities to a record.
The cut was much needed and much anticipated, Andrey Kryuchenkov, an analyst at VTB Capital in London, said today .Bullion will continue trading against the dollar with the press conference ahead and the U.S. nonfarm payrolls tomorrow.
Gold for August delivery lost 0.1 percent to $1,243.30 an ounce by 7:56 a.m. on the Comex in New York. It reached $1,240.20 on June 3, the lowest since Jan. 31. Futures trading volumes were 30 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery slipped 0.1 percent to $1,243.05 in London, according to Bloomberg generic pricing.
EUR/USD sank to a fresh four-month low of 1.3503 after ECB President Draghi unloaded his bag of easing tricks onto the market. It has since stabilized above 1.3530, helped by Draghi's comment that he has now reached the lower bounds of interest rates. EUR/USD is now at 1.3563 and the breakout level on the downside was 1.3580, so any break back above here could see some weak shorts head for the exit.

Wednesday, June 4, 2014

Precious metals, commodities

Traders know the price will change in the different markets. Precious metals, commodities, and currencies are all subject to the same movements of supply and demand and news especially gold.  Many will often see prices drop or go up after a company meets expectations for news. The demand for the shares prior to the release overwhelmed the supply. Sellers will see this and move up prices they were asking for shares. Buyers in  an attempt to own shares, will raise the amount they are willing to pay for them.  The Stochastic Oscillator indicator indicates where prices are closing within a range. You can see the changes in price as this type of news happens.
If precious metals, commodities, and currencies are showing a bullish trend that traders expect to continue they would expect the share price to close at or near to the high of the day or the high from several days. If price closes away from that high, then the buying pressure has weakened, or selling pressure gained. Thus  it is not good for the traders holding the precious metals like gold, commodities, and currencies long. If there is a close that occurs far from the highs, it would show a sell signal on the oscillator.
Precious Metals Gold Investment

U.S. trade deficit

The U.S. trade deficit widened to its highest level in two years in April as imports hit a record high, suggesting trade could be a drag on second-quarter growth. The Commerce Department said on Wednesday the trade gap increased 6.9 percent to $47.2 billion. That was the largest since April 2012 and followed March’s revised $44.2 billion gap.
Economists polled by Reuters had expected the deficit to widen only to $40.8 billion from a previously reported $40.4 billion shortfall. The government also published its annual benchmark revisions with Wednesday’s data. When adjusted for inflation, the deficit increased to $53.8 billion from $50.9 billion in March.Trade subtracted almost a percentage point from first-quarter gross domestic product. The economy contracted at a 1.0 percent annual pace in the first three months of the year.
Imports increased 1.2 percent to an all-time high of $240.6 billion in April. Imports of automobiles, capital goods, food and consumer goods all hit record highs in April. Futures advanced as much as 0.8 percent in New York. Crude stockpiles fell by 1.4 million barrels last week as supplies at Cushing, Oklahoma, the delivery point for WTI, slid 300,000 barrels, the American Petroleum Institute said yesterday. Government data today is forecast to show a 250,000 barrel drop nationwide, according to a Bloomberg News survey. Oil companies concerned over fighting in Libya eastern city of Benghazi are evacuating workers, state-run news agency Lana reported.
Gold is poised to climb for a second straight day after a private report showed U.S. companies added fewer jobs than forecast in May, boosting demand for the precious metal as a haven investment. The 179,000 increase in employment was the smallest in four months and followed a 215,000 gain in April that was less than initially estimated, according to the ADP Research Institute. Gold gained 3.5 percent this year through yesterday amid concern that U.S. economic growth was stalling.Prices slumped 28 percent in 2013 on concern that the Federal Reserve would trim stimulus as the labor market improved. Through June 2, the metal fell for six straight sessions, the longest slump since August, as U.S. equities rose to a record.

Tuesday, June 3, 2014

GBP/USD 6/3/2014

GBP/USD is steady on Tuesday, as the pair trades in the mid-1.67 range late in the European session. On the release front, British Construction PMI slipped in April, dropping to a seven-month low. Nationwide HPI dropped to 0.7% in May, matching the forecast. In the US, there are just three releases, highlighted by Factory Orders.
It’s not often that a key indicator drops and magically recovers a day later. However, this was the case with ISM Manufacturing PMI. The well-respected ISM Business Survey Committee reported on Monday that the key index had softened in May, but has since corrected its reading. The index actually improved to 55.4 points in May, up from 54.9 points a month earlier. As well, Final Manufacturing PMI and ISM Manufacturing Prices improved. This points to an expanding manufacturing sector, which is good news for the recovery. The markets will be hoping for more good news from today’s highlight, Factory Orders.

Gold Prices

Market consensus is for Federal Reserve to start hiking rates from the middle of next year. A review of gold's price performance during the past five episodes of Fed tightening reveals mixed results. Rising rates between 1988 and 1989 coincided with considerable declines in gold prices; the mid- and late-1990s showed relatively benign performance; while gold rallied strongly during the periods between 1986 and 1987 and the early 2000s.

One key feature of the previous tightening cycles was high US inflation. In particular, consumer inflation increased sharply in the late 1970s and early 1980s to as high as 14.8%. This compares with average inflation below 2% over the last five years. Tame inflation in spite of unprecedented easing by the Fed has tempered market expectations for future inflation - right now investors are not too concerned about the threat of rising pricing pressures. Nevertheless, UBS economists have been flagging the upside risks.

Monday, June 2, 2014

May manufacturing index

May manufacturing index shows a broad pullback across sub-components with no bad weather to blame. The declines erase gains made in April, which many economists had attributed to a bounce back from a wintry 1Q. The production subindex slips to 55.2, its lowest since February, while the employment subindex falls to 51.9 after rising to 54.7 in April. One of the only gainers was the price index, rising to 60 from 56.5, with 31% of respondents saying they're paying higher pries for supplies


The decline in both EUR/USD and GBP/USD in recent weeks has pushed them into oversold territory, and triggered bullish trading signals on BNP Paribas's STEER model. The bank sees fair value for EUR/USD at 1.3740 and recommends a long position at market, with a stop down at 1.3520. GBP/USD's fair-value is 1.6954, longs from 1.6750 are favored with a stop down at 1.6578. GBP/USD now trades at 1.6748, EUR/USD 1.3610.