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Friday, March 30, 2007

Huge moves in every pair!

To close out a week of uncertainty, the majors did not disappoint with quick moves in the market. The dollar fell sharply across the board after the US government said it will levy new duties on imports of coated paper from China. A Commerce Department official said this move reversed an old policy of not applying duties to subsidized goods from non-market economies. In price action, the EUR/USD pushed to 1.3400 before falling back to close at 1.3337. Earlier in Friday’s US session, the Dollar gained only slightly after a run of US economic data came in better than expected. Core PCE rose 0.4% in February, showing core inflation risks remain high. Personal income and consumption both increased 0.6%, better than expectations. And Chicago PMI surprisingly climbed from 47.9 to 61.7, well beyond a forecasted 49.2 reading. Later in the day, however, the University of Michigan consumer sentiment number fell from 91.3 to 88.3 for March, its lowest level in six months. The GBP/USD rallied to 1.9716 before closing near the 1.9675 mark. The Yen had quite possibly the best price action today, starting out near the 117.70 level and before staging a steady rally up to 118.30 before the rapid sell-off occurred. The low was produced less than 15 minutes after the high, and then bottomed out at 117.20 before closing at 117.83. Have a great weekend!

David Hilgeman, XPRESSTRADE Analyst

Asian Equities Up, Yen Rebounding

On Wednesday, the Japanese Yen lost ground as Asian equity markets helped calm investor concerns over carry trades, the price of oil and geopolitical concerns. Mounting tension from the UK in the Iranian standoff is producing a quite a shake-up in the currency markets. Read More.....

Sharp Threads

Cotton – May Cotton finished 52 points higher on late buying yesterday, marking the sixth consecutive positive trading day. Cotton demand has been steadily declining, but traders have been speculating that attractive grain prices may cause a decline in Cotton acreage. Read More.....

Something for everyone in this morning's USDA report!

The "Report of the Century" for Grain traders has appeased both bulls and bears, with bulls cheering a lower-than-expected Soybean seeding figures and bears harping on the sharply higher Corn planting intention. First, the figures: Read More......

All Eyes on Crude Oil

The global markets ended Thursday mixed, as an edgy day in Crude Oil effected markets everywhere. Crude Oil should remain a focal point as long as tensions remain high between Iran and the U.N. Economic data and Merger and Acquisition news are still getting their fair share of attention, but when Crude gets jumpy so do the indexes. Read More....

Thursday, March 29, 2007

Wall of Worry!

Nearby Crude Oil futures continue to climb, with the lead month May contract jumping over $2 per barrel on continued fears that the current standoff between Iran and Great Britain over Iran's capture of 15 British sailors will potentially affect Oil supplies from the Persian Gulf. Read More....

Any Hope on the Horizon?

After the early morning European sessions ended, price action took a backseat and slow trading set in. Initial jobless claims coming out of the US are back down below 310,000, but tracking a gradual rise as the boost in February faded just as the January dip ended. The levels suggest some slight loosening in the labor markets, as the 4-week average reached a 16-month high in early March. Continued claims are on an upswing as well, with the weekly level at a 14-month high the same week. This provides a nearly real-time read on the labor market, as the low 4.5% unemployment reflects the broader measure of net hiring. Today’s economic indicators offered insight on two of the market’s top areas of interest – growth and employment. Traders, however, were not as enthusiastic about the data. The principal release for the session was the final measurement of fourth quarter economic growth. Economists expected the final revision to match the first one with a 2.2 percent annual growth rate. Perhaps the modest outlook caught traders off guard, but when the actual print posted higher at 2.5 percent, the USD found small gain. Currently, the EUR/USD is holding at 1.3332 and the GBP/USD is hovering at 1.9620.

David Hilgeman, XPRESSTRADE Analyst

Creeping Euro

The Euro crept higher this morning on better-than-expected Euro-Zone numbers. German unemployment hit a five-year low, with rolls reduced by –65K from –43k expected, while the retail sector also performed better, rebounding to 53.4 from 49.8 the month prior. Read More....

Big Day for Grain Traders on Friday!

Grain traders have had Friday, March 30th marked on their calendars for months, as the USDA releases its first estimate for prospective planting intentions of US producers. The stakes are especially high this year, as the surging demand for Ethanol has traders wondering if enough acres will be dedicated to Corn production to meet demand. Read More.....

Crude Inventories Drop

Crude Oil – May Crude Oil finished $1.15 higher yesterday, aided by bullish inventory data and geopolitical concerns. Crude Oil inventories had a surprise drop of 0.9 million barrels compared to consensus estimates of a rise of 1.6 million barrels. Read More.....

Wednesday, March 28, 2007

FX Daily Wrap Up

The EUR/USD had great movement today. With growing concern about the health of the US economy, Federal Reserve Chairman Ben Bernanke spoke to the Joint Economic Committee of Congress today in an attempt to quell fears. In response to questions seeking clarification of Fed policy, Bernanke stated that the Fed has not shifted away from fighting inflation, but is looking for more room to maneuver in an environment of heightened risk, posed in part by risky mortgage loans. The Central Bank threw markets into confusion last week after omitted a phrase from its policy statement that had been included in several of its earlier statements. Today’s speech triggered a decisive shift in the markets towards a bull Dollar, but most likely only a short-term swing at best. In price action, the EUR/USD shifted lower from the high of 1.3372 and dropped to the current 1.3309. Meanwhile, the USD/JYP pair hit a low of 116.35 before making a small rebound to 116.86 in light trading.
David Hilgeman, XPRESSTRADE Analyst

The Joys of 24-hour Trading

Oil traders who left for the day after the 1:30 PM trading pit close missed out on a sudden $5+ rally in May Crude Oil just before 4:00 PM central time yesterday, as rumors flew of an attack on a US ship in the Persian Gulf. The attack was denied by US officials, but the damage was done and the Crude Oil market is now starting to build a "risk premium" into prices. Read More....

Night Moves

The United Kingdom showed a bit of unexpected price action from a slew of data. Fourth Quarter GDP figures were revised lower to 0.7% from the expected 0.8%, and the Nationwide Housing survey showed a slowdown in price appreciation. Read More.....

Iran Rumors, Tensions in Play

Dow – Stocks suffered their second consecutive setback, with the June Dow dropping 49 points. After the disappointing New Home Sales number on Monday, the housing market showed further weakness with the S&P/CS Housing Price Index declining for the sixth consecutive month with a drop of 0.6 percent. Read More....

FX Daily Wrap Up

Endless wave

In what appears to be an endless wave of negative US news, today followed suit with the March Consumer Confidence index printing a 107.2 which is 3.6% lower than the estimates. The Consumer Confidence survey measures a monthly survey of 5000 households to ascertain the level of consumer confidence. The report can occasionally be helpful in predicting sudden shifts in consumption patterns, though most small changes in the index are just noise. It is important to note that only index changes of at least five points should be considered significant. The index consists of two sub-indexes, consumers' appraisals of current conditions and their expectations for the future. Expectations make up 60% of the total index, with current conditions accounting for the other 40%. The expectations index is typically seen as having better leading indicator qualities than the current conditions index. What today’s release did to the markets is drop the Dollar further against the majors. Just after the announcement the EUR/USD pushed to a high of 1.3366, then fell only slightly from that high to the current 1.3346. Against the Pound the US Dollar made slight gains from an early morning high of 1.9696 then finished out the American session at 1.9655. In the news tomorrow we have the release of the Durable goods Orders and Initial Claims, which are two highly popular indicators.

Have a great evening!

David Hilgeman XPRESSTRADE Analysis

Tuesday, March 27, 2007

Aussie Rules!

Australian Dollar – June Aussie Dollar futures rose 55 points to close at record highs. The Aussie has benefited from the recent run-up in commodity prices, namely Copper. Australia is a raw material rich country and home to some of the world’s largest mining companies. Read More.......

Euro Rate Hike?

This week has the possibility of a Euro-Zone Rate hike to 4.00%, only 125 basis points away from the US Dollar. This is a significant number because the possibility of a US rate cut in the up-coming months, and this clearly shows that a Euro bull might remain in effect for the foreseeable future. Read More.....

The Battle for the Beans!

Current ample supplies vs. lower planted acres, these are the issues facing Soybean traders deciding if the next move will be bullish or bearish. Currently, world Soybean stocks are more than ample, with record crops expected out of Brazil and Argentina keeping world buyers at bay, as they await lower prices as the South American harvest progresses. Read More....

A Perfect "10"

Sugar futures continue their slide, with the most active May contract falling below the 10 cent level as continued ample supplies and fund liquidation selling exert continued pressure on the market. Not even higher Crude Oil prices could keep prices from falling, with sell-stops being uncovered below key support at 10 cents. Read More....

Monday, March 26, 2007

A Moving Start!

This week has started off with a bit of unexpected movement in the NZD/USD pair. A rather large whipsaw occurred, initially dropping the pair 30 points in less than 15 minutes on what is suspected to be carry trade liquidation. Read More...

Copper keeps climbing!

Copper futures are continuing their bullish ways, with rising prices in Shanghai and dwindling stocks in London Metal Exchange warehouses starting to make base metal bears nervous. Comex Copper in New York moved to 3 ½-month highs on Friday, on what some traders believed was short-covering buying. Read More....

Friday, March 23, 2007

An Eventful Week with an Uneventful Ending

Friday's trade can best be summed up as quiet, with no major shakeups moving the indexes. Even 15 British Naval Sailors being abducted by Iranian troops could not rattle the markets. Most of the world's indexes finished with slight gains, capping off a week-long rebound. Read More....

What A Week!

This week had such a slow start one would not have expected such a major swing during the week. To top off the roller coaster, the Existing Home Sales reported an unexpected improvement, posting a gain of 3.9% for February and a revision of 2.7% for January. Home re-sales appear to be turning stronger with gains in four of the last five months, as the level is now 7% above the September cyclical low. Lower mortgage rates and prices help improve affordability and, accordingly, demand. Unsold inventory reached a seven-month high in October and looks to be retreating. The large stock of supply is leading the price decline. Median prices have shown annual declines since August and stand at -2.3% lower year over year in February. In price action, this allowed the US Dollar to take back a bit of its loss from Wednesday’s Fed announcement. The EUR/USD hit a high for 2007 and 2006 this week at 1.3410, but then the US Dollar recouped much of its loss and is going to close out the week near the 1.3285 level. Against the Yen, the USD/JYP hit a low of 117.38, only to push back again and close just above 118.00. Early next week, New Home Sales and Consumer Confidence numbers will be released. Have a great weekend.

David Hilgeman, XPRESSTRADE Analyst

Crude Rallies

Crude Oil – Crude Oil rallied over two dollars on positive guidance from the Fed and higher refinery production, which is expected to work down recent inventory builds. Refinery use is believed to have bottomed out, and, coupled with a wide crack spread, may support Crude Oil prices. Read More....

A bull market in the making?

That is the opinion of some traders looking at the Cotton market. Currently, Cotton is among the least loved of the Softs complex, with weak current demand causing US inventories to build. In fact, US Cotton exports are running at just over 63% of USDA expectations so far this marketing year. Read More....

Three in a row!

That’s the bullish chant from Natural Gas traders, as the lead month April contract posted its third consecutive higher close, with prices moving to 2-week highs. Higher cash prices supported the market early in the session, with the benchmark Henry Hub trading 28 cents higher this morning. Read More....

Thursday, March 22, 2007

Beating a dead horse

With so much news focused on the US Dollar, it’s hard to not sound like a broken record. The US Dollar has been used as a benchmark currency since World War II, in a decision to try and help the war-torn countries stabilize in the world economy. In recent years the Dollar has been beaten back, and reserves all over the world have been shifting a section of their stash away from the US Dollar. While this has caused alarm for the patriots, it has made for sound practice worldwide. The concept of not holding all your eggs in one basket has been taken to heart, as reserves diversify with other major currencies like the Euro and Yen. In recent months, the US Dollar has been laboring under the stresses of both the domestic economy and pressure mounting from international policy makers. This has increased the bearish tone on the Dollar stemming from weak US reports. While this may be an overly simplistic view of the US economy, recent news events have pulled the benchmark down to a new 2007 low against the Euro. The latest news to take its toll on the Greenback was Wednesday’s Fed announcement. Although the actual reading was well in line with expectations, the comments afterward were more bearish than expected. The bias for a tightening USD has fallen away, and the Fed may look to reverse its position and loosen rates in the near future. Currently, the EUR/USD is trading at 1.3333 as we head into the Asian sessions.

David Hilgeman, XPRESSTRADE Analyst

Dollar soft after Fed Announcement

The EUR/USD is pushing new highs after yesterday’s direction change from the FOMC. After the announcement, the Greenback quickly faded to fresh multi-year lows just shy of 1.34 versus the Euro, and multi-month lows around 1.97 against the Sterling, as market participants began discounting the prospects for a Fed rate cut over the coming months. Read More....

Fed Leaves the Door Open

Ten Year Notes – The treasury market is trading lower this morning, disappointed that the language in the FOMC statement was not suggestive of a rate cut in the immediate future. The strength in US equities yesterday and overseas this morning has also tempered fixed income enthusiasm, as traders cannot justify price advances. Read More....

All is right with the world?

That was the opinion of stock traders yesterday, after the Federal Reserve left interest rates unchanged at 5.25%. More importantly, the Fed removed the "tightening" bias from its statement, and renewed talk that the next Fed move would be a rate cut rather than a hike. Read More....

Wednesday, March 21, 2007

What Wasn't Said Was All They Needed To Hear!

Although last night's activity in Asia and Europe was muted, the U.S. markets continued the weeklong rise in strong fashion. The rally came in the wake of this afternoon's Fed decision to leave rates unchanged at 5.25% for the sixth straight session. The unchanged rate was widely expected, leaving full focus on the accompanying Fed statement. Read More....

O My FOMC

The FOMC meeting came and went, and with it went the US Dollar. While the Fed’s decision not to raise rates was largely expected, the markets nevertheless seemed shocked by the outcome. Before the Fed news hit the wires, the EUR/USD was still holding in congestion between 1.3290 and 1.3325. Upon the release, however, the EUR/USD pair shot up another 80 points to a high for the day at 1.3388. Looking further into the meeting’s minutes, it appears that the Fed has agreed that the economy is showing signs of a decline. This notion lead to a sharp drop in the US currency, and might have pushed the tightening bias out of the mindset of the Fed. Against the Australian Dollar, the news resulted in a 75-point gain, producing a new multi-year high. The Pound also pushed up 100 points and is currently trading at 1.9686.

David Hilgeman, XPRESSTRADE Analyst

FX Markets Today

News coming out of the Asian session was light last night due to the Japanese national holiday. When the London markets kicked in, a large push for the Pound sent the GBP/JYP to a multi-day high over the 231.00 mark before retracting a bit to the current 230.74. Read More....

Fuel for thought!

Crude Oil futures have been in a bit of a slump of late, as spot prices continue to trade below the $60 per barrel level on fears that world economic growth may be stalling. However, a surging Gasoline market amidst concerns that supplies will be tight this summer has some traders looking for Crude prices to rebound in the next few months. Read More.....

Bonds Quiet Ahead of Fed Decision

Bonds – June Bonds are sitting 5 ticks lower in quiet trading this morning ahead of the Fed rate decision. Although consensus opinion is that the Fed will leave rates unchanged, Bond traders will be looking more closely at the announcement’s accompanying comments. Read More....

Tuesday, March 20, 2007

Gear Up

Traders are gearing up for another round of fundamental news while the markets are looking at a pre-news bearish pull. Today’s release of housing data showed a stronger rebound than expected after the -14% January plunge which hit a 9-year low. Building permits were up as well, mirroring the housing starts as a lagging indicator. The 38% plunge has been a significant drag on growth, as further risk surrounds the defaults coming from subprime borrowers. Fixed long-term mortgage rates now hover in the low 6% range, and downward price pressure on homes leave sales finding some stability as a return to positive construction waits for the huge supply of unsold homes to evaporate. Housing starts are a measure of the number of residential units on which construction is begun each month – a start in construction is defined as the beginning of excavation of the foundation for the building and is applied primarily to residential housing. Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Tomorrow, Crude Oil Inventory numbers will be released, along with the FOMC policy statement. On Thursday, Initial Claims and leading indicators will also give direction to the market. In the world of price action today, the Yen had a bit of a decline against the US Dollar. Starting the day, the pair was trading at 117.80 before pushing down to 117.21 off of uneventful comments from the BOJ. It is widely expected that Japan will raise rates soon, but it did not happen in last night’s release. This week should pick up as the heavy news is released. David Hilgeman, XPRESSTRADE Analyst

Chocolate Thunder!

New York Cocoa futures soared to new contract highs this morning, as fresh speculative buying coupled with a weaker US Dollar against the British Pound put bulls firmly in control. Today's rally sent Cocoa futures to highs not seen since May of 2003. Read More....

Fed Focus

S&P - Stocks had a stellar day yesterday despite all of the recent debt and economic concerns. Focus now turns to the Fed, with many market observers now calling for the Central Bank to slash interest rates. Inflation fears have become secondary, with recent debt and housing data painting a scarier picture. Read More...

Rates Remain in Place, but Yen Might Fall

As predicted, the Bank of Japan held interest rates steady today. Japanese monetary officials stated that the economy continues to expand moderately, but also noted that consumer inflation remains low. These words made many traders believe that the Central Bank is unlikely to tighten further before Japanese parliamentary elections in July. Read More....

The Dollar Dilemma?

Traders are expecting the US Dollar to continue its choppy trading action against both the Euro and Yen until the end of this month's FOMC meeting on Wednesday. Yesterday, the Greenback shook off a weak confidence reading from the National Association of Home Builders. Read More....

Monday, March 19, 2007

Bulls didn't eat their Wheaties today!

Chicago Wheat futures continue to struggle, falling to lows not seen since September, as lower-than-expected weekly export figures coupled with a wet weather forecast for the central and southern plains have bears in control. Read More....

FX Daily Wrap Up

The Greenback pulled modest gains against the majors today after a seven-day losing streak. With most of the world’s largest currencies trading in extremely tight ranges today, it would be hard to characterize the Dollar’s gain as anything but weak. This might be the start of a short-term Dollar bull while the market is expressing indecision. Last week’s EUR/USD cross produced a new high for 2007 and so far we have only seen a modest retraction. If the trend continues against the Dollar, it could easily top 1.3348, which was last years highest mark. Fears out of the US range from the subprime mortgage market to Greenspan’s comments regarding a possible recession. Tuesday has a small amount of news with Housing Starts and Building Permits. Housing has been in the news as of late, with many analysts predicting a further decline. In other more positive news, Japan is not expecting a rate hike in the up coming BOJ release this week, but is expecting a bump in the foreseeable future. The BOJ is widely expected to rise by another 25 basis points right before the parliamentary elections. The EUR/USD is currently trading 1.3292, and the USD/JYP is trading at 117.48. David Hilgeman, XPRESSTRADE Analyst

Yen Consolidation

Japanese Yen – The Yen is currently in a period of consolidation after flying high earlier this month. The Yen has benefited from the unwinding of carry trades in late February and early March, but has been under pressure recently as traders have re-established the carry trade. Read More....

Light Start after Last Week’s Wild Ride

Trading in the majors is relatively light so far as pairs consolidate from last week’s turbulence. A brief recap includes the Euro shooting to a new 2007 high, and the Yen taking some gains against the US Dollar as well. The Bank of Japan releases its monetary policy decision tomorrow. Read More.....

Pork plunge!

Bears are feasting on Lean Hog futures of late, with the most active April contract losing nearly $4 last week as high slaughter rates and weak pork cutout values continue to weigh on cash Hog prices. This combination is giving traders a reason to sell Hog futures, which are trading at a nearly $2 premium to the CME 2-day Lean Hog index, reading 62.27 as of March 16th. Read More....

Friday, March 16, 2007

Bears go Hog Wild!

Lean Hog futures fell to 2-month lows this afternoon, as lower Cash market prices and technical selling combined to send prices tumbling. Missouri direct Hog prices were reported $1 lower this morning, setting an early negative tone for the market. Read More.....

New High for the Euro

The Euro flew to a new high against the US Dollar, pushing over the 1.3300 level on its way to 1.3338 before settling down for the weekend at 1.3310. If this trend continues, it’s possible that the EUR/USD pair will break the 2006 high of 1.3348. While there appeared to be no definitive reason for the push, one possible contributor was the long-term Euro bullish implication of rising labor costs in the Euro-Zone. This is likely to force European monetary authorities to remain vigilant in their fight against inflation, and will most likely force the authorities to consider further rate hikes in the upcoming months. On the US side, a weak manufacturing sector survey from the Philadelphia Federal Reserve showed very unconvincing numbers. Combined with the largest month-over-month decline in Empire Manufacturing readings, these results suggest that the contraction in housing may be moving into other parts of the US economy. Former Fed Chairman Alan Greenspan seemed to confirm this possibility with his comment that subprime rates may have a larger-than-expected impact, warning that rising defaults in subprime mortgage markets could spill over into other parts of the economy. Other crosses like the USD/CHF hovered around 1.2110 before sliding to 1.2030. GBP/USD broke a range that has been in place since the beginning of the month, but did not produce a new low for the year. As we head into the weekend, the Dollar is holding at 116.73 against the Yen and .6970 against the New Zealand Dollar. Have a great weekend!

David Hilgeman, XPRESSTRADE Analyst

Bernanke's Dilemma!

Inflation is rising. The economy is slowing. The Dollar is weak. The mortgage market is in turmoil. These are the issues facing Federal Reserve Chairman Ben Bernanke as the Fed governors prepare to meet next week. They face something of a no-win situation. Read More......

Euro Soars to a New High

A number of different factors helped the Euro break above the 1.3300 mark last night and soar to a high of 1.3338, trumping the current 2007 record. If the trend continues, it is possible that the EUR/USD pair will break the 2006 high of 1.3348. Read More....

Spoiled Beef

Live Cattle – April Live Cattle suffered its fourth consecutive day of losses on technical selling and lower grain prices. Lower demand for choice beef prices and below-average seasonal demand added to the selling pressure. The Weekly Livestock Slaughter report shows that dressed weights are down 17-19 pounds from last year, which is supportive of prices. Read More....

Thursday, March 15, 2007

Commodity funds becoming vegetarian?

It sure appeared that way, with large speculative funds acting as key sellers in the Live Cattle market this morning as bear spreading and long liquidation selling dominated trade. Bulls were in control early in the session, as firm cash sales and follow-through buying from April's strong close yesterday supported the market early. Read More....

ICE taking over?

The big news today for many traders is a bid from the Intercontinental Exchange (ICE) to purchase the Chicago Board of Trade (CBOT). Last October, it appeared to be a done deal that the Chicago Mercantile Exchange would buy out the CBOT for $8 billion, but now this hot ticket has apparently been placed back on the auction block at a 10% premium. While this might not affect the forex markets directly, it marks a significant historical ending to one of the oldest exchanges in the US. In other news, economic releases did little to move the markets. Market participants digested the PPI, TICS and Empire manufacturing indicators, all of which are big market movers in their own right and yet fairly useless in current market conditions. The highly-anticipated Consumer Price Index initially produced a bullish indicator, as headline inflation jumped 1.3 percent for the month of February and the core equivalent doubled expectations with a 0.4 percent increase. Upon closer inspection, however, the possible effect on Fed policy was a mixed bag, with few comments to back up the number. On the one hand, the 2.5 percent annual pace of price growth is still well below the rate seen in 2005 and the first half of 2006 that initially put the Central Bank on its habit of quarter-point rate hikes. Alternatively, the annual core report unexpectedly held its 1.8 percent. In terms of updated expectations for the CPI data tomorrow, the initial outlook for a slight pick-up in the headline numbers seems to be well-supported by today’s PPI and yesterday’s import price index. The EUR/USD was trading in timid ranges around 1.3215, moving only a bit higher to close out the American sessions at 1.3234.
David Hilgeman, XPRESSTRADE Analyst

Red Hot Metals!

Metal bulls have taken a liking to the Copper market of late, as improving fundamentals and fresh Chinese buying have traders clamoring for the "red" metal. Copper stocks at London Metal Exchange warehouses continue to decline, with the exchange announcing a 1,625 metric ton decline this morning. Read More....

No Safe Haven for Now

Bonds – June Bonds have been trading in a choppy range for the last two weeks, after appearing to make a run to new contract highs. Although Bonds have been a safe haven for investors, many traders would like to see a rate cut happen before the market can make a push beyond recent highs. Read More.....

The Land Down Under is Rising!

With all the turmoil in the markets today, ranging from carry trades unwinding to mortgage rate disruption, it is nice to see that old fashion news can still move the market. This was the case for the Australian Dollar. New growth jobs in the country posted a solid rise of 22K for February. Read More.....

Wednesday, March 14, 2007

Cold Coffee

Lead-month May Coffee fell to 4 ½-month lows this morning, as producer selling tied to active Central American exports continues to put pressure on prices. The market is ignoring a small Brazilian 2007-08 crop, preferring to focus instead on ample supplies coming from Vietnam and now Central America. Commodity funds have been lightening up on their net-long positions of late, shedding over 4,000 contracts last week. Read More.....

Searching for footing.

The US Dollar struggled today to find its footing in the marketplace. While the Dollar posted a sound 100-point gain against the Japanese Yen, other pairs were left in stagnating ranges. The EUR/USD stalled out at 1.3190 before pushing to a high of 1.3244 – one of the bigger moves on the day. With relatively little news for the day, most market participants honed in on the Current Account numbers out of the US. According to the government’s number, the deficit shrank from $229.4 billion to $195.8 billion in the three months through September 2006, which is the slightest shortfall since the third quarter of 2005. In addition, traders and analysts took a look at Export prices. Though not a market-moving release, export and import prices are a useful indication of inflation pressures created by changes in foreign exchange rates. For example, when the Dollar is strong, import prices tend to be under downward pressure. If an item in Japan costs 800 Yen and the exchange rate is 117 yen to the Dollar, the US Dollar amount is $6.84. If the US Dollar then strengthens to Y140, the US Dollar amount will fall to $5.71. Because US exports must compete with foreign goods, there is also downward pressure on export prices when the Dollar is strong. Last but not least, volatility returned to GBP/USD when a 35-point consolidation band above 1.9220 turned into a 150-point rally to 1.9370. David Hilgeman, XPRESSTRADE Analyst

Slowdown Drags Everything Down

Dow – Stocks took another tumble yesterday as a result of poor February retail sales and continuing subprime fears. In addition to the previously reported troubles at New Century, Accredited Home Lenders disclosed that it needs capital to continue writing loans and H&R Block is delaying reporting earnings due to the subprime fallout. Read More....

Quiet Night for Forex

Last night was fairly quiet with relatively light trading. One big mover, however, was the New Zealand Pound. The NZ Pound is something of a diamond in the rough that many traders seem to undeservedly overlook. The NZD/USD tends to have broad swooping trends with fewer whipsaws than many of its counterparts – the30-minute chart reveals good trending patterns over a 24-hour time period. Read More....

Well Oil?

Crude Oil futures were not immune to the sharp sell-off in the US stock market yesterday, as concerns about the subprime mortgage market’s potential to slow the US economy have Oil traders fearing a recession. This concern was echoed by a senior OPEC official yesterday before the group’s meeting in Vienna on Thursday. Read More.....

Tuesday, March 13, 2007

Sub-prime Stock Indexes!

Stock index futures posted sharp losses this afternoon, as weaker-than-expected US retail sales figures, combined with continuing concerns about the sub-prime lending sector and the US housing market, have traders moving into a defensive mode. Read More....

Lackluster Day

The US Dollar had another weak performance today, as retail sales numbers posted below estimates on factors ranging from bad weather to higher gasoline prices. A .1% print for the US Retail Sales report left many traders wondering if the Dollar is going to slip further. Among the many points of interest in the report, the housing sector was hard hit again, with building material sales dropping to a multi-month low, and furniture and electronics dropping 1.7 percent and 0.3 percent, respectively. From price range in the majors, it was clear to see that the market was in a range before the US data hit the wires. After the release, the Euro rallied up to the 1.3220 level, before the Greenback pushed back to close out the American sessions at 1.3191. The Pound had a weak gain off the US news, but lost it down the stretch and is currently trading at 1.9292. Last but not least, the Japanese Yen added to its advance, after the USD/JPY slipped below 117.25 on its way to 116.36.

David Hilgeman, XPRESSTRADE Analyst

Crude Prices, Sub-prime Woes Drag Down Stocks

S&P – The S&P is down this morning on weaker-than-expected retail sales and comments from the International Energy Agency. Retail sales rose 0.1 percent both total and ex-auto versus expectations of 0.3 percent for both. Meanwhile, the IEA stated that it would like to see OPEC raise production limits. Read More...

Cattle topping out?

Live Cattle futures have been on a stampede of late, with the lead month April contract at 3 ½-year highs. Soaring cash Cattle prices and sharply higher beef prices have been the catalysts behind the "bull" run. Reports of $99 cash trades have producers raising their offers to $100 or more, but they have yet to find buyers. Read More.....

It's a bit of a bear

A bit unexpectedly, factors fell into place for a bearish short-term setup on the US Dollar. The Dollar is suddenly facing trouble against the Euro based on German news releases, including an investor confidence number that rose to an 8-month high, hitting 5.8 against 2.9 for the month prior. Read More.....

Monday, March 12, 2007

Oil Slick!

Crude Oil prices broke below the $59 level to nearly 3-week lows this afternoon, as a warm-up forecasted for the eastern half of the US has traders believing US refiners will have ample time to replenish Heating Oil and Gasoline stocks. Read More.....

FX Daily Wrap Up

The British Pound took a bit of a dive against the world today off of disappointing PPI numbers. UK PPI inflation gauges printed essentially within expectations, with input costs declining by –1.1% and output inching a bit higher to 2.2%. But the news was basically neutral for the Pound, as markets continue to forecast that the Bank of England will stand pat on rates for the time being, continuing to observe the impact of the last hike to 5.25% in January. Against the US Dollar, the initial drop lead to a 155-point US gain, but the Pound recouped much of the loss through slow trading and is finishing out the US trading sessions at 1.9324 – only 20 pips below the open. While the GPB/USD held steady, the major winner today was the Swiss Franc, which fought and gained over 200 points against the Pound to close at 2.3650. The Commerce Department’s retail sales report for February is due at 7:30 CST tomorrow, and its importance has been built up among fundamental traders. Economists are predicting a 0.3 percent rise in sales last month, but the projection is a bit of a mixed bag. Purchases of autos and consumer goods are expected to spoil as poor weather weighs on maxed out spending habits, while gasoline prices will likely spur a rise in the numbers as higher fuel prices lifted the overall value of sales. A surprise from this indicator could very well trigger a much bigger move. David Hilgeman, XPRESSTRADE Analyst

Chocolate Cravings?

Cocoa futures have been well-supported the past several months, with traders fearing a sharp reduction in Cocoa supplies this year due to less-than-ideal weather in the West African growing regions and poor quality supplies coming out of the Ivory Coast -- the world’s largest Cocoa producer. Read More....

Falling Pound

At the start of the forex week, the Euro and Pound gained back much of last week’s loss against the US Dollar. Stronger-than-expected numbers out of the US – including a surprising 4.5% print for the Non-Farm Payroll report sent the Dollar into a temporary bull market that had produced an almost 100-point gain to close out trading. Read More....

Sour Crude

Crude Oil – Crude Oil futures are down again this morning after falling the previous two sessions. Warm temperatures are expected to curb Heating Oil demand in the Northeast by over 10 percent, and OPEC is not expected to curb production any further until it can gauge how the expected global economic slowdown will affect demand. Read More....

Friday, March 09, 2007

Strong Employment Numbers Disappoint Treasury Bulls

10-Year T-Note – The treasury market has broken down after this morning’s employment report. The 97,000 gain in payrolls came in just short of expectations for 100,000, but the January number was revised higher to 146k from 111k, and the unemployment rate dropped to 4.5 percent from 4.6 percent. Read More....

Cattle futures bulldoze through 100.00

Pandemonium ensued in the Live Cattle pit this morning, as sharply higher cash Cattle trades took traders by surprise. Packers bid prices up yesterday, with cash sales as high as $98 per hundredweight being reported – a jump of $3 that sent Cattle bears running for the exits. Read More....

Employment numbers are out and lower than estimates

The Non-Farm Payroll report was released at 7:30 CST this morning, along with the US Unemployment Rate. Non-Farm Payroll posted a lower-than-expected print with 97K reported for the month of February, its weakest growth in over two years. Read More....

No rate cut yet!

Analysts were spot on this morning, as US non-farm payrolls rose by 97,000 jobs in February, nearly meeting the average consensus of a 100,000-job gain. The Labor Department once again revised upward the job totals for January by 35,000 jobs and December by 20,000 jobs. Read More....

Wednesday, March 07, 2007

No news is good news

A small break in the action today proved to be a bit of relief for some traders, as the majors went somewhat flat. One minor market mover today was the Summary of Commentary on Current Economic Conditions, commonly known as the Beige Book. This report is published eight times per year, with each Federal Reserve Bank branch gathering information on current economic conditions in its District through reports from bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by district and sector, and an overall summary of the twelve district reports is prepared by a designated Federal Reserve Bank on a rotating basis. Most Federal Reserve districts reported modest expansion in economic activity since the last report, but several noted some slowing. For example, New York characterized growth as well-maintained, but with a few signs of deceleration. In addition, St. Louis said that activity increased more slowly than in the previous period, Boston reported some softening, and Dallas said economic activity continued to decelerate. On the other hand, Philadelphia reported slightly improved economic conditions. This report had only a small effect on the markets today, but did lead to a Greenback sell-off and a 60-pip profit for the Euro. Currently, the EUR/USD is trading at 131.81, which is also today’s high. David Hilgeman, XPRESSTRADE Analyst

Traders re-energized in Soybeans!

Soybean futures posted solid gains this afternoon, as fund buying and short covering ahead of Friday's USDA supply/demand report boosted prices. Higher Crude Oil futures and stabilization in world stock markets were also contributing factors in bringing bulls back into the Bean market. Read More....

Gold Shines

Gold – Gold futures finally had a positive day yesterday after dropping five consecutive trading days. Inflation fears have subsided for the time being, and many are calling on the Fed to lower interest rates due to weakening economic indicators, a move that would be Dollar bearish and conversely Gold bullish in the near future. Read More......

Silent Night

With all of the turmoil over the past few days, the markets were relatively quiet last night. Forex pairs appear to be recovering their composure, while equities are enjoying a cautious rally. The US Dollar climbed back above the 116.00 level against the Yen after falling to a 12-week low from this past Monday’s buyout. Read More....

Fuel for thought.....

The Crude Oil market has been relatively tame in light of the wild ride stock and currency traders have experienced the past several days. Lead-month April Crude is still favoring the bull camp with prices failing to hold below psychological support at $60. Yesterday's release of EIA world supply/demand estimates was deemed moderately favorable, despite lowering world demand by 100,000 barrels per day (bpd) in 2007. Read More.....

Tuesday, March 06, 2007

FX Daily Wrap Up

March 6, 2007

The US Dollar remained relatively flat today, despite bearish numbers from the US. The Commerce Department’s Factory Orders for January posted a considerable 5.6 percent decline, the largest monthly drop in over 6 years. Traditional wisdom reasons that this information would push the market in a bullish direction, but the market ignored most news out of the US and posted very modest gains immediately following the release. The January ISM manufacturing activity report and the Durable Goods Orders report had a similarly minimal effect on the majors. Just like the other numbers, the broad contraction in demand came as companies attempted to work off excess inventories, especially in the construction and automotive industries. The only real point of interest showed a stronger-than-expected reading in the February ISM, and has signaled that it is more than possible the next release will be quite similar. The US Dollar held its own, posting only a tiny 20-pip loss to the Euro and increasing slightly against the Yen. Tomorrow’s releases include Crude Oil Inventories and Consumer Credit. Taken by themselves, these are fairly decent indicators of the strength of the US economy, but the big items this week will be Thursday’s Non-Farm Payroll and Unemployment rates. Currently, the EUR/USD is trading at 1.3121 as we head into the Asian sessions.
David Hilgeman, XPRESSTRADE Analyst

Indestructible Yen?

Japanese equity markets showed signs of rebounding, which has appeared to slow down the seemingly indestructible Yen. Late last night and into this morning, the Yen has fallen against all its counterparts, and has for the moment stalled its relentless attack on the majors. Read More....

Sour Crude

Crude Oil – Crude Oil futures fell for the second consecutive day as demand came into question with an expected slowdown in global economic growth. Yesterday’s ISM manufacturing report disappointed Crude bulls for two reasons: manufacturing and production are slowing and manufacturers’ inventories are beginning to build up. Read More...

Turnaround Tuesday?

That is a possible explanation for this morning's higher stock index futures. In addition, a rally in Asian security markets – particularly Japan – has given buyers a badly needed boost of confidence so far today. Read More....

Monday, March 05, 2007

Bulls Sour on Sugar!

Raw world Sugar futures fell sharply this morning, giving back Friday's gains on trade and fund liquidation. Falling stock markets overseas and a continued unwinding of Yen "carry trades" spurred a commodity-wide sell-off this morning. Weakness in the energy sector also contributed to selling in the Sugar ring. Read More....

FX Daily Wrap Up

While many of the markets are cooling off as we head into the afternoon and evening sessions, it does not appear that the overall atmosphere of high volatility has waned. Many pairs today had more than 100-pip ranges from what appears to be further unwinding of carry trades – the Yen was no exception, falling into another steep rally against its higher-paying counterparts. A small exception for the day was the US Dollar, which held its current position and posted a modest gain of 20 pips against the Yen while most “big” currencies dropped. News out of the US was bearish, with a disappointing ISM service sector report. Following up on the better-than-expected manufacturing number last week, today’s service gauge was quite a bit below expectations – forecast predicted a dip to 57.1 for the indicator, but was instead met with a 54.3 posting. While this was still above the 50.0 growth-contraction level, it is also the slowest pace of expansion since April 2003. Overall, the US Dollar was on top with most traders ignoring the recent news reports. Looking to the near east, the EUR/JYP cross had a bit of an odd day today as the Yen produced gains up until 8:00 AM CST, took a drastic turn in favor of the Euro, then reversed again and closed out in slight favor of the Yen. Part of the large swing could not be explained, but it appears when the majority of the market makers in the Far East went home for the evening, the tides turned and the Euro made small gains until the correction ran its course. Currently, the USD/JYP is trading at 115.86, and the EUR/JYP is at 151.73

David Hilgeman, XPRESSTRADE Analyst

Stocks Try to Recover, Gold Continues to Lose Ground

Equities – Stocks are sharply lower this morning as global economic panic continues. Global stock indices tumbled overnight with fears of a US slowdown taking a toll on the markets. Stock index futures did manage to get a little bit of a bounce after sharply selling off. Read More...

Bulls getting burned by Coffee!

The downtrend is alive and well in the Coffee market, with aggressive exports out of Brazil and Vietnam combining with fund liquidation to keep prices falling. Last week, the most-active May Coffee futures lost 5 cents per pound. It appears that Brazilian producers are willing to accept lower prices for their current inventory in order to free up space in warehouses for the upcoming harvest. Read More....

Unexpected Volatility

This week has started off with a bit of unexpected volatility. From early trading yesterday, the EUR/JYP has declined further with a large move of over 350 pips. The European Central Bank has clearly signaled its intentions to raise the Euro-zone interest rates to 3.75% at this Thursday’s meeting. Read More.....

Friday, March 02, 2007

In a nutshell – volatility, volatility, volatility.

This week we saw the reemergence of the Rising Sun, as the Japanese Yen finally made good on its promise to increase its value. For months, concerns about carry trades have kept the Yen in an almost a redundant pattern, with large investors buying the Yen only to turn around and invest the sum in a currency with much higher interest. If news or any fear of a rise in the Japanese currency occurs, investors quickly sell off causing the Yen to weaken further. Then when fears diminish, buyers rush the market to continue with business as usual. This week Japan had strong numbers, while the rest of the world posted weaker sentiment. In addition, once carry trades started to unwind, the train just kept chugging and finally bottomed out below 117.00 for the first time since December. Another factor that boosted the Yen this week was the decline of the equities in the Far East. Profiting from an over 8% loss in the Chinese stock market, the Yen took over 400 points away from the US Dollar in a severe slide. This was the scenario of a perfect forex storm. Strong internal numbers combined with a major news break lead to a wonderful rise in the Yen. As we look to the weekend, the USD/JYP finished out at 116.83, the EUR/JYP closed at 154.13, and the GBP/JYP was at 227.02.

Enjoy the Weekend!

David Hilgeman, XPRESSTRADE Analyst

Copper Gone Wild!

Copper – May Copper ended the day slightly higher after a volatile day of trading. There have been a number of conflicting fundamental events causing wild ranges this week. On the one hand, analysts fear that China’s economy will slow down significantly. Read More....

And the British Pound Keeps on Giving

With major economic news releases finally drying up for the week, the British Pound gave back over 100 points to the US Dollar and the Euro. Out of the Euro-zone, retail sales in Germany plunged more than expected in January as higher prices took their toll on consumers – German data has become one of the biggest indicators for the Euro-zone. Read More....

Looking for a Tourniquet

Stock indexes continue to bleed the ground red, as the March Dow futures hemorrhage another 50 points in overnight dealing. Tuesday’s sell-off has left equities listless and range-bound between 12300 and 12100. Overnight, the March Dow traded from 12162 to 12294. Read More.....

Thursday, March 01, 2007

Income Up, Spending Up, Prices Up, Dollar Recovering

Consumer income and spending rose more than expected for January. The Commerce Department reported personal income was up 1% for the month, while many economists were expecting a rise of a modest .3%. Spending by consumers rose by only .5%, much less than the .7% gain from December. Spending accounts for almost two-thirds of the nation’s economy, so this number is closely-watched. The main part of the release is also called the PCE core deflator, a section of the report which measures the prices paid for consumer goods. Posting a higher increase of 2.3% - compared to 2.2% from December – shows us that inflation might not be as subtle as previous reports have shown. All of this information combined to push the market towards a bullish Dollar. As we head into the evening sessions, the USD rose against the Euro and with a 40-pip gain, while the USD/JYP held at 117.58. David Hilgeman, XPRESSTRADE Analyst

Stocks Stop the Bleeding

Equites – The stock market mounted a comeback, with the March Dow advancing 175 points after getting pummeled the prior trading day. Fed Chairman Ben Bernanke gave an upbeat assessment of the economy, in spite of signs of a slowdown from recent economic indicators. Read More...

What's wrong with Gold?

Until this morning, Gold futures have been caught in long liquidation mode, with large speculators liquidating their long positions to free up capital to meet liquidity issues in the stock and bond market. Conventional wisdom usually holds that investors flock to the Gold market in times of financial concern, but the exact opposite has occurred over the past few days. Read More....