Futures Fundamental Analysis

The Euro suffered overnight as talks between Euro-zone finance ministers did not come to a conclusion that brought clarity to the market. Euro-zone officials remains deeply divided over the issue of how much participation there should be by private credit-holders with Germany on one side demanded extending maturities of Greek debt, while France and the ECB are on the other side calling for any solution to avoid a “credit event” or default.   With meetings ending acrimoniously, investors had to ponder the possibility of an disorderly Greek default, a worse case scenario that caused traders to abandon the single currency and move towards the relatively safe haven of the USD. Investors also shunned periphery Euro-zone debt with the cost of credit default swaps for Greek, Portuguese and Irish debt hit new record highs. The EUR had been climbing at the beginning of this week, but that rally looked more like a correction to the downswing from last week. We now look to see if the EUR continues its declines this week, as it...

The euro fell in early European trading following a Bloomberg report that yesterday’s meeting of Europe’s finance ministers in Brussels failed to resolve the differences between the ECB and Germany. After two days of euro gains this puts the pressure on the 17-nation currency once again and may be the driving factor in today’s trading. Yesterday’s high at 1.4500 stands as short term resistance for the EUR/USD while a clear breach below 1.4320 could open the door to test the 1.4000 level for the second time in as many months. Today’s Economic Data Releases: GBP – Claimant Count Change – 08:30 GMT Expectations: 7.1K. Previous: 12.4K. Cable looks weak based on yesterday’s doji candlestick and the pair’s failure to rise above the recent falling resistance line from the May 31st high. Resistance is located at 1.6425 while the trend line off of the May 2010 low comes in today at 1.6200. A break here and the pair could test the neckline of a potential...

The euro fell on Wednesday on fears Greece might not implement another round of austerity measures aimed at reducing the country's massive debt. At the moment, the euro lost 0.457% of its value against the U.S. dollar to trade around $1.4377. At the same time, the euro retreated against the Japanese yen, falling 0.325% to ¥115.86. The euro has been once again shaken by Greece. The Eurozone's troubled economy is preparing for a vote on the next round of austerity measures, whose goal is to cut the government's massive budget deficit. The Greeks are sending a clear message to the government that its citizens have had enough of cuts as they prepare for a general strike. Protesters plan to gather outside the parliament building and encircle it in an attempt to prevent the MPs from entering the building. Protesters are not the only problem for the government, however, as some members of the ruling party have decided to vote against the...

The euro underwent another hectic week, but this time it ended much lower. The upcoming week consists of more scrambling towards a resolution for the Greek crisis, and important indicators. Here is an outlook for the European events, and an updated technical analysis for EUR/USD. While Trichet did signal a rate hike in July, everything else he said was euro-bearish: high uncertainty, distancing himself from the debt crisis, and a hint about the high exchange rate. Time is running out for Greece, and it is not a good time for European leaders to be in a deep rift. We have meetings of economy ministers this Wednesday, towards the summit next week. Let's start. Update: German Banks are volunteering to participate in bailout as pressure mounts. EUR/USD daily chart with support and resistance lines marked. Click to enlarge: Jean-Claude Trichet talks: Monday, 14:00. Even though it is a long weekend in many European countries, the president of the ECB will speak in a conference in...

The Asian session saw some strong risk appetite as equities gained and news that China was going to increase its investment in New Zealand helped to send the Kiwi and the Aussie soaring during the early part of the global session.   From New Zealand Herald: “China’s enormous sovereign wealth fund, the China Investment Corporation, may have set aside up to 1.5 per cent or about $6 billion of its massive foreign exchange reserves to invest in New Zealand assets, including government bonds, companies and potentially dairy farms. The 1.5 per cent figure was suggested by a well placed source, alongside the likely scenario that the China Investment Corporation has been a heavy bidder of late in the bond tenders run by the New Zealand Debt Management Office (NZDMO), the government’s debt manager. From ChannelNewsAsia: “New Zealand has agreed with Beijing it will double its exports to China in four years, the deputy prime minister told reporters in Hong Kong Thursday. “They’re currently NZ$10 billion ($8...

Coming Up Today (all times GMT) USD Advanced GDP (12:30) USD Initial Claims (12:30) USD Pending Home Sales (14:00)   The long awaited post FOMC Meeting Press Conference came and went last night with nothing new really being said and no changes in the horizon. The key remarks were that the FED will leave record low rates for an “extended period” (which basically means there is no exit strategy) and that the FED’s $600 billion QE2 program will end as expected in June. Fed Chairman Ben Bernanke noted that the US is experiencing high unemployment, a weak housing market, and rising energy costs but didn’t give much details in how the FED’s policies with ease the situation in the future. What Bernanke did do, was explain in detail how supply and demand works and why much of the current difficulties are out of the FED’s control. Forex traders used the news to continue selling the dollar as it became apparent that the FED has no immediate...

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The dollar consolidated against the Yen after moving higher during 10 of the last 11 trading sessions. Higher rates in the US based on stronger inflation figures and better than expected economic data, has dollar bulls salivating. The US, Japanese interest rate differentials have been driving the currency pair. Today the markets needed to absorb news of higher than expected Wholesale Price inflation. The Producer Price Index (PPI), rose a seasonally adjusted 0.8% in January from December, according to the Labor Department. The majority of the rise was in energy prices. Core PPI, which excludes food and energy, increased 0.5% last month. Economists expecting a 0.9% increase in overall producer prices and a 0.2% increase in the core index. This follows a greater than expected increase in import prices yesterday. Higher inflation leads to higher yields in the long end of the interest rate curve, which has pushed the US - Japanese 10 year yield spread to 100 basis points. Additionally in...

SINGAPORE/WASHINGTON, Nov 2 (Reuters) - The U.S. Federal Reserve is expected to resume a programme of large-scale asset purchases to try to revive a faltering economic recovery. KEY POINTS: -- The Fed will issue a statement on Wednesday around 2.15 p.m. EDT (1815 GMT) following a two-day meeting of its Federal Market Open Market Committee, which sets policy. -- Analysts widely expect the Fed to resume purchases of longer-term Treasuries. They generally project purchases of around $500 billion over about 6 months. -- The Fed cut its main policy rate to near zero in December 2008 and later eased again by buying $1.7 trillion in assets. -- Fed Chairman Ben Bernanke has said long-term asset purchases are an effective way to lower borrowing costs when rates are near zero, but a programme of this size and scope is untested and many worry further expansion of the Fed's balance sheet sets the stage for inflation or another asset bubble. -- THE FED'S TOUGH DECISION;   COMMENTARY: HIDEO KUMANO, CHIEF ECONOMIST,...

Once again, the volatility returned to the market and the mixed sentiment is evident, yet in a blunt reasoning, the dollar’s freefall which was extensive and overrated is gradually coming to terms to the economic reality. The dollar is surely dominating the scene today and gains for greenback are the most across the board. The dollar index which gauges the performance for the federal currency against its six major rivals was trading higher into the European session ahead of data queued for release form the United States. Currently, the index is hovering around 77.80 areas after recording the low of 77.55 and the high of 78.13. The index is aiming to extend the upside recovery which started last week, where over weekly basis we can see the recovery signals and reversal on momentum indicators from oversold areas. The index is now hovering around the 76.4% correction for the last upside rally from the trough at 74.26 to the high at 88.70 around 77.60...