FOREX-ASIA: Euro steady but debt crisis overshadows sentiment

TOKYO — The euro steadied against the dollar in Asia on Friday but sentiment remained sour after Spain and France faced a sharp spike in borrowing costs as eurozone sovereign debt fears deepened.

The euro traded at $1.3468 and 103.66 yen in Tokyo against $1.3457 and 103.60 yen in New York late Thursday.

The dollar was flat at 76.96 yen compared with 76.98 yen.

Aggressive euro selling took a pause in Asian trade. The current sell-off feels like "it may just be a little bit over done in the near term," BNZ FX Strategist Mike Burrowes told Dow Jones Newswires.

Everyone is "bearish euro and talking about European breakups and bailouts and it feels like the news is all very negative," Burrowes said.

Investor concerns over the debt crisis gained momentum overnight in the wake of troubled new Spanish and French bond issues and rising borrowing costs for under-pressure countries such as Italy to dangerously high levels.

In a poorly received auction, Spain's treasury had to pay a record 6.975 percent when it raised 3.6 billion euros in a sale of 10-year bonds.

'Little reason for euro optimism'

France, the eurozone's second-largest economy, also was forced to pay sharply higher rates to raise 7.0 billion euros in new bond sales.

"Spanish and French government bond auctions Thursday provided little reason for euro optimism," Credit Agricole strategist Adam Myers said in a note to clients, adding that "they indicated a growing level of market stress".

Despite new governments taking over in Italy and Greece to push through key reforms, Italian benchmark 10-year bond yields once again topped 7.0 percent, a level considered as unsustainable.

In Italy, Prime Minister Mario Monti laid out radical economic reforms on Thursday aimed at cutting Rome's huge debt mountain, boosting growth and preventing Italy from dragging down the eurozone.

Fears of that the debt crisis may engulf bigger economies in the continent sent global stocks sliding.

The euro may remain downwardly biased against the dollar given ongoing worries about the eurozone sovereign debt crisis, said Osao Iizuka, head of FX trading at Sumitomo Trust and Banking.

The euro rose against the dollar, as a dearth of negative news about Europe's debt troubles helped stabilize the common currency.

NEW YORK - The euro rose against the dollar, as a dearth of negative news about Europe's debt troubles helped stabilize the common currency.
Newly-appointed Italian Prime Minister Mario Monti won a parliamentary confidence vote that gave him a broad mandate for economic reform. That helped drive Italy's bond yields back below 7%, the psychologically-charged level where Greece and Portugal were once forced to seek international assistance.

World Forex: Euro rises against dollar, as bond yields edge lower.

The euro rose against the dollar, as a dearth of negative news about Europe's debt troubles helped stabilize the common currency.
Newly-appointed Italian Prime Minister Mario Monti won a parliamentary confidence vote that gave him a broad mandate for economic reform. That helped drive Italy's bond yields back below 7 per cent, the psychologically-charged level where Greece and Portugal were once forced to seek international assistance.
Italy's roughly EUR 2 trillion debt is widely viewed in the market as too big to rescue, and the euro had dropped sharply when the 7 per cent yield was first reached last week.
Late Friday, the euro was at $1.3522 from $1.3456 a day earlier, according to EBS via CQG.
The common currency was supported by speculation that the European Central Bank and International Monetary Fund might find a way to collaborate in order to backstop Italy. Neither institution would confirm, but the idea appears to be gaining traction, analysts said.
The central bank has reluctantly agreed to use its emergency facility to buy distressed debt in a limited fashion. But the ECB and Germany are vociferously opposed to the central bank using its balance sheet to bail out indebted euro zone countries, or printing money in order to monetize the debt.
"It's basically printing money like the Federal Reserve's quantitative easing," said Chris Fernandes, vice president and foreign exchange advisor at Bank of the West.
A bailout of Italy "should be handled within the euro zone without the IMF, but certainly if they offered aid this would be a positive," Fernandes said.
Analysts say the euro zone's woes are far from resolved. As Italy has transfixed most investors, Spain's debt has also come under pressure. An auction this week saw the country's bond yields surge dangerously close to 7%, only tempered by heavy buying by the European Central Bank.
The euro's rally Friday "is all about wishful thinking," said Paresh Upadhyaya, FX strategist at Bank of America Merrill Lynch in New York.
So long as the ECB is the only buyer of troubled debt, bond yields will stay locked in a "decisive upward trend" that will hurt the euro and send investors into the relative safety of the greenback, Upadhyaya said.
However, the dollar faces problems of its own next week.
A Congressional committee has until November 23 to come out with measures to cut U.S. debt by $1.2 trillion over the next 10 years, or face automatic cuts. Democrats and Republicans on the committee remain far apart over the amount of new revenue to include in any deficit reduction package.
The dollar was at Y76.95 from Y76.98, while the euro was at Y103.90 from Y103.60. The U.K. pound was at $1.5801 from $1.5753. The dollar was at CHF0.9148 from CHF0.9221.
The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.026 from about 78.282.

Read more at: http://profit.ndtv.com/news/show/world-forex-euro-rises-against-dollar-as-bond-yields-edge-lower-188658?cp

Forex - EUR/USD up at the end of U.S. session

Forexpros - The Euro was higher against the U.S. Dollar on Friday.

EUR/USD was trading at 1.3525, up 0.50% at time of writing.

The pair was likely to find support at 1.3422, Wednesday’s low, and resistance at 1.3789, Monday’s high.

Meanwhile, the Euro was up against the British Pound and the Japanese Yen, with EUR/GBP gaining 0.18% to hit 0.8558 and EUR/JPY rising 0.39% to hit 104.01.

Forex: Yen ends week higher across the board

FXstreet.com (Córdoba) – The Yen was among the biggest gainers during the week and finished near weekly highs across the board. Despite the recovery of the USD/JPY during Friday’s American session, the Japanese currency managed to hold gains in the market.

Risk aversion boosted the demand for the Yen that rose sharply in the market particularly in the first three days of the week.

The USD/JPY moved slowly during most of the week and broke to the downside on Friday but it rebounded and quickly rose back from 76.61 to the 77.00 region, to end the week slightly lower. The US Dollar and the Japanese currency were the best performs in the market.

European currencies fell against the Yen for the second week in a row and finished considerably under the level of the last intervention by the BoJ. The retreated from October highs continues and EUR/JPY, GBP/JPY and CHF/JPY are approaching 2011 lows.

Similar pattern followed commodity currencies against the Yen but the Kiwi actually posted the lowest weekly close since July 2009 as the NZD/JPY ended the week hovering above 58.00.

Gold Binary Options Weekly Setup November 21–25 2011

Trading Binary options can be done on currencies, oil, stocks and gold. In this weekly section we will be focusing on gold binary options. This week, starting November 21st brings us amazing trading opportunities. The U.S. market is showing very positive signs which will probably impact gold prices.

This week there are no less than 9 events that can produce trading opportunities on gold binary options, and a unique 500$ Bonus Offer from 24option.com, for BOCrunch gold binary option traders.
These are the events for this week (all times are GMT) :

1. European Current Account: Monday, 09:00. Exp. -3.4B. -2.1B  or more, CALL on Gold. -7.4B or less, PUT on Gold.
   
2. U.S. Existing Home Sales: Monday, 15:00. Exp. 4.82M. 5.05M  or more, PUT on Gold.  4.77M or less, CALL on Gold.
3. U.K. Public Sector Net Borrowing: Tuesday, 09:30. Exp. 4.3B. 12.0B  or more, CALL on Gold. -2.0B or less, PUT on Gold.
4. U.S. Prelim GDP: Tuesday, 13:30. Exp. 2.5%. 3.0%  or higher, PUT on Gold.  1.8% or lower, CALL on Gold.
5. U.S. Unemployment Claims: Wednesday, 13:30. Exp. 387K. 390K or more, CALL on Gold. 385K or less,PUT on Gold.
6. U.S. Revised UoM Consumer Sentiment: Wednesday, 14:55. Exp. 64.6. 67.5  or more, PUT on Gold.  60.9 or less, CALL on Gold.
7. U.K. Revised GDP: Thursday, 09:30. Exp. 0.5%. 0.8%  or higher, CALL on Gold. 0.3% or lower, PUT on Gold.
8. U.K. CBI Industrial Order Expectations: Thursday, 12:00. Exp. -19. -10  or more, CALL on Gold. -28 or less, PUT on Gold.
9. Belgium NBB Business Climate:  Thursday, 14:00. Exp. -11.3. -9.4 or more, CALL on Gold. -13.0 or lower, PUT on Gold.

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These expected market reactions and setups are general market commentary. This is by no means any type of investment advice.

US Dollar at Make or Break Levels: Time to Surge or Tumble

Fundamental Forecast for the US Dollar: Bullish

• US Dollar recovers, Dow Jones FXCM Dollar Index eyes 9900
• Forex correlations show US Dollar proxy for Dow Jones Industrial Average
• Has the dollar put in a meaningful bottom and risk trends a top with recent technical developments?

The US Dollar surged against all currencies except the Yen, boosted by a financial market flight to safety as the US S&P 500 posted its worst weekly loss in two months. Continued turmoil in Europe was the scapegoat, and the lack of confidence in European sovereign debt markets continues to spread throughout the global financial world. Continued deterioration in market confidence favors further US Dollar gains against the Euro and other key counterparts.

The early-week release of minutes from the recent US Federal Open Market Committee (FOMC) may set the tone for the coming week’s trade, and it will be important to watch for surprises from the US central bank. The key question on traders’ minds is whether the FOMC is poised for further monetary policy easing. A recent wave of encouraging economic data has arguably lessened pressure on Fed officials to enact policy easing. Yet persistently high unemployment and the impending US election year make Fed easing entirely plausible.

Politics remain a hot topic as Europe struggles with fiscal debt, and the US Government debt may once again come into focus as a key deadline for debt negotiation looms for the US Congress. Markets were thrown into turmoil this past summer as the US Treasury faced the real possibility of defaulting through political deadlock.

Investor sentiment will once again be put to the test as the so-called Super Committee decides on sizeable deficit cuts for the world’s largest economy. The bipartisan group of US legislators must announce at least $1.2 Trillion in deficit cuts by November 23rd, else there will be automatic cuts to key government programs in 2013. The likelihood of said cuts remains low, however; Treasury bond traders would like to see a sizeable deal to bring the US Government’s debt under control. Market sentiment remains fragile amidst clear concerns over the sustainability of massive government debts in the Euro area. We could conceivably see similar concerns on US debt if deficits remain on their current trajectory and US Government debt grows at an unsustainable pace.

Investor sentiment remains fragile on the great deal of uncertainty surrounding financial markets. We have long argued that the US Dollar stands to gain on such uncertainty, and indeed we see many fundamental and technical reasons for fresh USDOLLAR highs in the week ahead. The key question remains: is the trade too crowded?

The most recent CFTC Commitment of Traders report shows that large speculators remain heavily net-long the US Dollar against the Euro and British Pound. In fact, traders are near their most net-short the Euro against the US Dollar since the EURUSD bottomed through mid-2010. Can we see the Euro plummet to fresh lows amidst such one-sided positioning? It seems possible. Yet there is considerable risk that any short-term corrections in the EURUSD and broader ‘risk’ could bring sharp short-covering rallies.

Forex Weekly Outlook November 21-25

The European debt crisis worsened, and a credit crunch is now feared. This resulted in a stronger greenback. US GDP figures, Unemployment claims and German Ifo Business Climate are the major events this week. Here is an outlook on the main market-movers ahead.
Apart from Germany,a bond sell off was seen in every European country. Will German bonds sell as well? Will the benchmark break? If this happens, the euro’s losses will accelerate. Last week Weekly jobless claims dropped to 388K indicating a gradual improvement in the US job market. Most other US figures were upbeat. These favorable figures give room for cautious optimism in light of the global financial turmoil. Will this improvement continue?
Let’s Start:

1. US Existing Home Sales: Monday, 15:00. Sales of existing homes dropped to a seasonally adjusted annual rate of 4.91 million from 5.06 million in August, a little below the 4.94 million predicted. These readings indicate that the slowdown in the housing market is continuing, partly due to tougher loan limits reducing the number of potential buyers. A small drop to 4.84 million is expected now.
2. US GDP (second release): Tuesday, 13:30. According to the first release, the US economy grew at a pace of 2.5% in Q3, faster than the very poor growth seen earlier in the year. This growth rate will likely be confirmed in the second release (or first revision). Any result will rock the markets, at a time when a global recession is feared.
3. US FOMC Meeting Minutes: Tuesday, 19:00. After pledging to keep rates low and launching Operation Twist, the last rate decision included no policy changes, even though one member wanted more monetary stimulus. What were the other member suggesting? What is awaiting us in the next meeting? This will be revealed in the minutes.
4. US Core Durable Goods Orders: Wednesday, 13:30. Orders of long lasting products, excluding transportation items, climbed 1.7% in September, above the 0.5% increase predicted. The increase occurred amid a government tax break and a 14% decrease in the value of the dollar which helped boost the US economy. August figures revealed a 0.4% decline. A small increase of 0.2% is expected now.
5. US Unemployment Claims: Wednesday, 13:30. The US job market is improving gradually as the number of people filing initial claims for unemployment benefits dropped to 388,000 last week below the 400,000 line and393,000 in the previous week. In case the number of claims succeeds to remain below 375,000 and Unemployment rate lower than 9.0%, we will witness a major improvement in the US Job market.
6. Euro-zone German Ifo Business Climate: Thursday, 9:00. German business sentiment dropped further, for the fourth month in October, reaching 106.4 after107.4 in September. These declines reflect the fear of businesses from a steep slowdown in the European economy. Nevertheless, German economy is in no fear of entering a recession. Another drop to 105.7 is forecasted.
7. UK Revised GDP: Thursday, 9:30.  After a very slow second quarter, the initial estimation of Q3 growth saw a rate of 0.5%. Is Britain recovering, or is this temporary? This second release will likely confirm the growth rate. Note that there is one more revision scheduled.

Another Week of Risk-Off, Yen in Demand

The Japanese yen was rising through this week as concerns about the European debt crisis returned to markets with new strength, reassuring that safe assets would be in high demand.
The surging borrowing costs of the European nations refueled doubts and fears among traders, driving them to the safety of the yen. There aren’t many choices for traders seeking for ”safe” currency as the franc basically lost its “safe haven” status after the Swiss central bank pegged it to the euro, while the dollar is under threat of more quantitative easing that would weaken the currency. The end of the week eased “risk aversion” sentiment, making the yen’s rally pause, but markets didn’t shifter to ”risk-on” mode.
The performance of the yen against the euro, the pound and the ”commodity” currencies was virtually the same. The Japanese currency rallied for the whole week, but the rally stalled on Friday. The performance of the Japanese currency against the dollar demonstrated a different picture. The greenback was also advancing during this week, but demand for the yen was higher, resulting of almost unstoppable drop of USD/JPY.
EUR/JPY opened at 106.68, fell to the weekly low of 103.39 and closed at 104.01. GBP/JPY was down from 124.24 to 121.49 and AUD/JPY fell from 79.88 to 76.95 this week. USD/JPY declined from 77.24 to 76.87.

Forex Market Outlook 11/18/11

World markets started out this morning in a very good mood as there is a new hope and belief that the Euro debt crisis is moving closer toward a resolution.  Lots of chatter from EU leaders has the market in an upbeat mode.  But has anything changed?  Not really.
And perhaps I am indicative of the American skeptic as others have caught on and are using this opportunity to “sell the rip” as I talked about on Wednesday.  So we are pulling back a bit from earlier highs on what has turned out to be the best morning we have seen in some time.
So far this morning bond yields in the troubled Euro zone countries are moving lower as the ECB has been buying debt to stem the massive selling that has taken place.  While this is not an official policy just yet with an agreed upon size and scope, they have done enough to stem the rise of yields.  ECB honcho Draghi is calling on the EU leaders to speed up the process of the EFSF and the market has become hopeful as a result.  In addition, the World Bank head said that the US and China would help support the region via the IMF once the Euro zone plan is in place and implemented.
There are also some good signs that the newly elected governments in Greece and Italy have the support necessary to enact the austerity that is needed to stabilize their economies and receive funding to help reduce deficits.  This is key to the whole rescue package working and the survival of the Euro, for without the ability to cut spending, no relief would be forthcoming.   
This morning is largely devoid of global economic data with the exception of PPI figures from Germany that came in slightly higher than expected, showing a monthly gain of .2% vs. the expected .1%.  The YoY figure at 5.3% was as expected.
In Canada, however, CPI data came in higher than expected prompting a rise in the Loonie (see chart of the day).  Core inflation in Canada came in at 2.1% vs. the expected 1.9% and the headline figure came in at 2.9% vs. 2.8%.  It must be noted though that both of these figures are still lower than last month’s readings so there may not be a push for any type of BOC rate change at this point.
But my feeling is that the only thing keeping us from a high-inflation environment right now is the Euro debt crisis and if that becomes “solved”, then we could see extremely high inflation, which unfortunately is exactly what Central bankers (especially our Fed) want to see.
Just yesterday Fed governor Dudley was speaking and said that the Fed could and would do more easing if need be.  This fear that further easing and Dollar depreciation could drive prices (particularly commodities) higher may force economic activity on the back of the consumer.
With oil prices just shy of $100 and the Fed potentially easing further, not to mention the demand need for heating oil as we approach winter, could drive inflation a lot higher.  Though it likely won’t show up on the radar as housing will continue to decline with people spending more money on food and fuel giving them less to spend on housing and discretionary items.
This is dangerous in a period of high unemployment as in my opinion higher prices do not drive economic activity but rather stifle it.  All this serves to do is “tax” the consumer and helps the government inflate their debt away.  The only way this encourages activity is if people have the real belief that they need to buy now for fear of higher prices later.  But the US consumer is tapped out and has come to the realization that they may have to do without.  Reduced bank lending has prevented the consumer from buying discretionary items (things they don’t need) and no one can use their house as an ATM any longer—if they still have a house!
With the debt Super-committee already poised to fail by all accounts so far, it is not so far-fetched to see why the Euro has held its value vs. USD.  At this point I an almost thankful for the Euro debt crisis, as the alternative may be a lot worse!