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Euro / US Dollar Currency Pair Approaching Resistance

August 2, 2010 By Chuck Leave a Comment

Sometimes you just have to love parabolic moves. Such as the one that has occurred within the past several hours in the EUR/USD currency pair and has pushed it ever closer to an important resistance level. Nothing like getting there in a hurry and getting it over with.

Note: Traders who are long the EUR/USD pair may want to begin thinking about protecting profits as the currency pair is getting closer to the resistance level.

Euro Dollar Currency Chart

Filed Under: Market Updates Tagged With: ,

Attention Turns To Spain – Bailout Needed?

June 17, 2010 By Chuck Leave a Comment

Step aside Greece, it is Spains turn in the spotlight.

European leaders meet in Brussels today amid growing fears that Spain, Europe’s fifth-largest economy, is preparing to ask for a bailout which would dwarf the €110bn (£90bn) rescue plan for Greece.

The Spanish government yesterday dismissed reports that it was already in discussions with the European Commission, International Monetary Fund and the US Treasury for a rescue package worth up to €250bn.

Officials in Madrid, Brussels and Paris were forced to deny that a Spanish bailout – which would take the European debt and euro crisis into a potentially dangerous new phase – was on the Brussels summit agenda.

“Spain is a country that is solvent, solid and strong, with international credibility,” said its Prime Minister, Jose Luis Rodriguez Zapatero. The European Commission spokesman said: “I can firmly deny [that a Spanish rescue is under discussion]. I can say that that story is rubbish.” {…} (The Independent)

Some odds and ends off the news wires concerning Spain over the past 24 hours:

> According to a credit analyst at Evolution Securities, Spain is large enough to wipe out the EU rescue fund. Says the relentless rise in Spanish bond yields is a similar pattern to what was seen in Greece at the onset of the crisis.

> Markets are convinced that some type of contingency planning is underway

> According to RBS economist Peruzzo, in his view there is no doubt that a backstop facility for Spain will be put in place should stress in the system remain.

> Theodora Zemek of AXA Investment Management said any rescue of Spain could have knock-on effects on the credit ratings of donor states, as Germany and France would risk going from AAA to AA.

> Notes spreads on 10-yr Spanish bonds rose to a post-EMU high of 224 bps/German Bunds as traders await a crucial auction by Madrid on Thursday.

Filed Under: Market Updates Tagged With: , ,

Will Greece Give Up On the Euro to Save Itself?

May 30, 2010 By Chuck

Could Greece abandon the Euro and go back to their own currency? That is exactly what the Center for Economic and Business Research is advising them to do.

The Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy.

The Centre for Economics and Business Research (CEBR), a London-based consultancy, has warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. The only way this can happen is if Greece returns to its own currency.

Greek politicians have played down the prospect of abandoning the euro, which could lead to the break-up of the single currency.

Speaking from Athens yesterday, Doug McWilliams, chief executive of the CEBR, said: “Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight. {…}

{…} McWilliams called the move “virtually inevitable” and said other members may follow.

“The only question is the timing,” he said. “The other issue is the extent of contagion. Spain would probably be forced to follow suit, and probably Portugal and Italy, though the Italian debt position is less serious.

“Could this be the last weekend of the single currency? Quite possibly, yes.” (Source: UK Times)

Filed Under: Greece, Market Updates Tagged With: , ,

Bloody Tuesday

May 25, 2010 By Chuck

Special post…

The U.S. stock market is set for a bloody open on Tuesday. At the time of this writing U.S. equity futures are down significantly with the S&P 500 futures down 2.7%. Dow futures will place the Dow Industrial Average at market open well below the 10,000 threshold.

At this moment I am seeing significant liquidation events taking place, and the global currency markets are in a state of complete disarray. Some dealer chatter currently centers around Spain, with a rumor circulating that a major bank in Spain has needed to borrow short term funding from the government. Additionally, other chatter surrounds Spanish hedge funds may be in trouble.

Also of note is the just announced Spanish bill auction results:

SPAIN DEBT AGENCY (TESORO) 3-MONTH AND 6-MONTH BILL AUCTION RESULTS

- Sells €1.06B in 3-month Bills, avg yield 0.645% v 0.549% prior; Bid-to-cover: 3.14X x v 3.3x prior
- Sells €2B in 6-month Bills, avg yield 1.26% v 0.736% prior; Bid-to-cover: 1.91X v 2.12x prior

The 6 month bill auction saw the average yield nearly double from the prior auction on growing economic concerns in Spain.

The European economic concerns have pushed the Euro further downward. The EUR/JPY has dropped to a 9 1/2 year low; lowest reading since November 2001.

Markets in Asia were also hit hard in the overnight session:

- Nikkei 225 Index -3.1% at 9,459
- Hang Seng Index -3.5% at 18,985
- Australia S&P ASX200 -3.0% at 4,265
- Shanghai Composite Index -1.9% at 2,622

S&P 500 futures are currently near a critical short term support level of 1040, which is the February 2010 lows.

S&P 500 Futures

 

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Plunge in Oil Prices Makes OPEC Worried – Guest Post

May 19, 2010 By Chuck

Psychological Plunge in Oil Prices Makes OPEC Nervous, Official Says

The plunge in oil prices in the wake of the euro crisis has OPEC worried. Qatar oil minister Abdullah bin Hamad Al Attiyah emerged as an unofficial spokesman for the oil cartel over the weekend in a series of news agency reports from the Gulf that signaled the group’s concern.

On Monday, as oil futures briefly dipped below $70 a barrel after settling Friday at $71.71, Al Attiyah told reporters that a price below $70 a barrel was too low for companies to maintain investment and expand capacity. Such investment is crucial to avoid a supply shortage in the future, Al Attiyah said.

He reiterated that following the lead of Saudi King Abdullah’s pronouncement about a “fair” oil price in December, OPEC officials want to see a price between $70 and $80 a barrel. At another industry event on Saturday, Al Attiyah told news agencies that the drop in oil prices was “psychological” and not based on fundamentals. He said the crisis concerning Greece and the euro was causing the drop and speculation about “contagion” would continue to depress oil prices.

“The whole world then started to ask the question about if it will move to other countries,” the Qatar minister said, according to agency reports. “We’re watching, with nervousness.” Qatar, one of the world’s leading producers of natural gas, is a relatively small oil producer, but is closely allied with the main Gulf producers – Saudi Arabia, Kuwait and United Arab Emirates. Concern about the future of the joint European currency continued to batter financial and commodity markets on Monday, as prices fell and the euro declined further against the dollar and other currencies.

At a meeting of the Arab OPEC members earlier this month, Kuwaiti oil minister Ahmad Abdullah Al-Sabah said a price below $65 a barrel would “ring a bell” for the oil cartel and could prompt them to hold an emergency meeting ahead of the next scheduled meeting Oct. 14. OPEC could react to a low price by cutting production, as it did in 2008 when the financial crisis lowered demand and sent oil prices plunging.

By. Darrell Delamaide for Oilprice.com who offer detailed analysis on Crude oil, Natural Gas, Geopolitics, Gold and most other Commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

Filed Under: Crude Oil, Market Updates Tagged With: ,

Gold Rises, Euro Still Dropping

May 11, 2010 By Chuck

Attempts to build confidence in the Euro currency are failing. Since last Sunday when the European Union announced the unprecedented $1 Trillion in loans and debt guarantees, the Euro has continued to decline.

5-11-2010 6-40-02 PM

The lack of confidence in the global financial system has pushed Gold to another new high, reaching $1,235 in Tuesday’s trading.

gold chart

S&P 500 futures are currently down 7.25 points at 1143

Filed Under: Market Updates Tagged With: , , ,

The Euro Has Been Saved – Someone Better Tell That to the Euro

May 11, 2010 By Chuck

A Trillion dollars to build up confidence in the European Union, and specifically the Euro currency…

I guess someone forgot to tell the Euro it has been saved.

Euro saved

Filed Under: Europe, Market Updates Tagged With:

President Sarkozy tells the World they are on Double Secret Probation

May 9, 2010 By Chuck

French President Nicolas Sarkozy said yesterday that they will “confront speculators mercilessly”.  European leaders are discussing steps to take to stanch the spreading debt crisis in Europe before markets open on Monday.

During a late-night meeting at European Union headquarters, the leaders described the debt crisis as “systemic,” but President Nicolas Sarkozy of France insisted that the bloc could defend the euro by directly attacking speculators.

Speaking at a news conference, Mr. Sarkozy vowed to “confront speculators mercilessly” and warned them that they would soon “know once and for all what lies in store for them.”

That kind of talk sounds familiar. Oh yea, it was Lehman CEO Dick Fuld who stated before the companies collapse that he was going to “burn the shorts”. That worked out real well, not.

Mr. Sarkozy would not elaborate on the plan that he claims will restore confidence in the Euro before the markets open on Monday, claiming that releasing plans would undermine its effectiveness.

In other words, Mr. Sarkozy has decided he will step inside the bear den and claim war. Much like when Dean Wormer proclaimed “double secret probation” to bring down the Delta Tau Chi frat house in the famous Animal House movie in 1978.

Some of the talk over the weekend is a massive capital injection into Europe’s banks, giving them the necessary buffer to withstand the shocks the system has been recently taking. Could this be Europe’s “big plan”? Or does Mr. Sarkozy truly have something up his sleeve that will rock the markets? He said that all 27 European finance ministers would hold an emergency meeting on Sunday afternoon.

“When the markets reopen Monday we will have in place a mechanism to defend the euro,” said President Sarkozy yesterday. “This is a full-scale mobilisation.”

Euro-zone leaders are attempting to get around objections from countries such as Britain by invoking Article 122 of the Lisbon Treaty, intended to enable a collective response to natural disasters. This does not need unanimous agreement. […]

Action is being called for because Spain and Portugal are showing the same early symptoms of crisis that Greece showed three months ago. Borrowing costs for indebted euro-zone countries have soared amid signs that market fears could spread across all EU countries, including Britain.

José Manuel Barroso, the European Commission President said: “We will defend the euro, whatever it takes.” […]

Sources: UK  Telegraph and NYT

 

Stay tuned…

Filed Under: Europe, Market Updates, Sovereign Debt Tagged With: , ,
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