Market Review 3.12.12

Source: ForexYard


Higher-yielding currencies and commodities saw significant upward movement during overnight trading, as news that Greece was closer to receiving a new round of bailout funds encouraged risk taking among investors.

The EUR/USD advanced close to 60 pips during the Asian session, eventually reaching as high as 1.3046, while the price of gold gained close to $10 an ounce. Crude oil moved up close to $0.50 a barrel when markets opened for the week, eventually reaching as high as $89.23, before staging a downward correction during morning trading. The commodity is currently trading around the $88.80 level.

Main News for Today

US ISM Manufacturing PMI- 15:00 GMT

• The PMI is forecasted to come in slightly below last month’s figure
• A worse than expected final result could lead to losses for the USD/JPY as well as the price of crude oil

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

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Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Major Events This Week

By (Dublin) – The greenback and the yen have retreated for another week as risk appetite was boosted by the increased optimism of a resolution to the fiscal cliff in US. The US housing data remained the main highlight of the past week while the US pending Home Sales jumped by 5.2 percent, the disappointing new home sales were a blemish in the strong performance in the housing sector. Here are some major events that will affect the market this week.

Monday 3

The US ISM Manufacturing PMI data will be released at 1500hrs GMT. The index climbed in October to 51.7 after increasing to 51.5 in September. The market is expecting a drop to 51.5 percent.

Tuesday 4

The Australian and the Canadian rate decisions are the main highlights of the day. The Australian rate decision will be made at 0330hrs GMT while the Canadian one will be made at 1400hrs. The market expects the rate cut of 0.25 percent from the Reserve Bank of Australia. The Bank of Canada is expected to leave the interest rate unchanged.

Wednesday 5

The market will be waiting for the Australian GDP data which is expected to expand by 0.8 percent. The Australian economy expanded by 0.6 percent in the second quarter. In the US, the ADP Non-Farm Employment and the ISM Non-Manufacturing PMI will be released at 1315hrs and 1500hrs respectively. The market expects a strong rise in ADP Non-Farm Employment change, with 141,000 jobs expected to have been added in November. The ISM PMI is expected to decline to 53.8 this time.

The New Zealand rate decision at 2000hrs will be the last major announcement of the day. The market predicts a no-change in the interest rate.

Thursday 6

The Australian employment data will be released at 0030hrs where an addition of 200 jobs is expected to have been made last month. The UK rate decision will be the next big event on Thursday as the market waits to see if BOE will resume asset-purchases program, when the BOE Governor gives his autumn statement at 1200hrs. Eurozone rate decision will follow at 1245hrs where the interest rate is expected to remain unchanged. The last major event of the day is the US Unemployment Claims report which is expected at 1330hrs. Last report showed a declined by 23,000 in claims to 393k; this time, the market expect another decline to 381k.

Friday 7

The Canadian employment data will be the first major report followed by the US Non-farm Employment change which will be released together with the US Unemployment rate. US UoM Consumer Sentiment will be the last major report for the week which will be released at 1455hrs GMT.


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Charles Sizemore on Your Money With David Hays

By The Sizemore Letter

Last week I chatted with David Hays about the political crisis in Egypt and what it means for the United States and Israel, the infamous fiscal cliff, the nuts and bolts about how Fed stimulus works, Harry Dent and the Mad Hedge Fund Trader, the death of J.R. Ewing and more:

If you cannot view the embedded media player, please follow this link: Charles Sizemore on David Hays Radio.

The post Charles Sizemore on Your Money With David Hays appeared first on Sizemore Insights.

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(Video) Alcoa and Aluminum: Latest Price Action Suggests 2 Major Opportunities

Alcoa (NYSE:AA) and aluminum futures prices have “come into critical price areas.”

By Elliott Wave International

The editor of Elliott Wave International’s Metals Specialty Service, Mike Drakulich, has just recorded a new, free video forecast:

“Aluminum and Alcoa: Exciting Juncture (Nov. 29, 2012.)”

Says Mike (excerpt):

“This is the first video of what is going to be a series of videos on the industrial metals markets, as they come into critical price areas that may tell us the big [moves] I’ve been talking about in my daily analysis are getting underway — or, in fact, are underway.”

ALUMINUM: The video starts off by showing you “the big picture from 2008-2009 bottom.” Mike Drakulich walks you through the Elliott wave pattern since then and shows you how, off the recent high, the price has come down in a familiar ABC pattern. Moreover, the decline has retraced 62% of the previous rally — a key Elliott wave signature and important Fibonacci proportion.

Here is an abridged version of the aluminum chart from the new video:

What’s more, the price action in aluminum has just penetrated two key moving averages, the 50-day and the 200-day.

ALCOA (NYSE:AA): The second half of the video gives you a detailed look at Alcoa stock. Mike shows you that, going back to the same 2008-2009 period, AA has followed the price of aluminum very closely. You get a detailed view of Alcoa’s recent drop below a key support price level, plus the analysis of an important trendline the stock has been “flirting” with — which, if broken, should “open the gates” to a rare opportunity.

Mike Drakulich ends the video by saying:

“Bottom line, we have some really nice action in aluminum and Alcoa, and this is being seen across the board in many of the industrial commodities.”

Visit Elliott Wave International to watch the full, FREE video forecast on these two emerging trading opportunities.



Jeremy Grantham is Bailing Out of Bonds. Should You?

By The Sizemore Letter

He is too much of a gentleman to do it, but if there was ever a money manager who could say “I told you so” it would be Jeremy Grantham of GMO.  Grantham and his team warned of the dangers of the 1990s tech bubble years before it burst, and warned of the consequences of the 2000s housing bubble long before anyone else took it seriously.

But lest you think Grantham is a congenital permabear, he was also buying with both fists as the market was finding its panic bottom in 2008 and early 2009.

He doesn’t always get it right, and, frankly, some of his investment commentary—such as his warnings of a catastrophic global food shortage—inches into kooky territory.  But as far as large, high-profile money managers go, his track record over the past decade is hard to beat.

So what are Grantham & Co doing these days?

To start, they are dumping bonds.

In a recent interview with the Financial Times, Ben Inker, Grantham’s co-head of asset allocation, said that GMO has “given up” on the bond market, or at least on long-maturity government bonds.  Rather than hold Treasuries—which yield practically nothing at all maturities on the yield curve—GMO is preferring to simply sit mostly in cash for the non-equity portion of its portfolio.

Where else is GMO investing?  For the past several years, Grantham & Co have favored high-quality American and European multinationals, and this is the same approach Sizemore Capital has taken.  These blue chips would seem to offer the best risk / reward tradeoff at today’s prices, particular if they pay a decent dividend.  Emerging markets have been a favorite fishing pond as well, though Inker considers them “scary” due to the risk of a Chinese hard landing.

Interestingly, Inker is modestly bullish on Japan.  I consider Japan to be the potential short opportunity of a lifetime, so one of us is going to be wrong.  It’s generally bad policy to bet against GMO, but I am betting that this is one time with Grantham’s team is dead wrong.

Where does all of this leave investors?

If you own bonds in a mutual fund or ETF, I’d recommend you follow GMO’s lead and dump them.  Now.  At current yields, the pitiful return is not worth the risk of capital loss.  There is no upside from here.  At all.   As in “nada.”

If you own individual bonds that you have held for a long time, the story is a little more complicated.  Unlike a mutual fund, which has no maturity and is presumed to last forever, individual bonds do mature.  Assuming you didn’t buy your bonds at a premium, this means that you are guaranteed to at least get your original investment back.

If you are collecting a decent coupon from a bond you’ve held for a while, then there is little harm in holding it to maturity.  But if you’re the trading sort, then I’d follow Grantham and Inker and dump them.  There is better money to be made elsewhere.

This article first appeared on MarketWatch.  

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The post Jeremy Grantham is Bailing Out of Bonds. Should You? appeared first on Sizemore Insights.

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Monetary Policy Week in Review – Dec. 1, 2012: Fresh signs the global rate cutting cycle may be bottoming out

By Central Bank News

    Last week seven central banks took monetary policy decisions, with only one bank (Hungary) cutting policy interest rates while the remaining six (Angola, Israel, Albania, Thailand, Brazil and Mexico) maintained rates.
   Year-to-date, the 88 central banks followed by Central Bank News have cut rates about four times as often as they have raised rates. Policy rates have been cut 114 times and raised rates 28 times.
    There were further signs, this week from the major emerging market central banks of Brazil and Thailand, that this year’s cycle of interest rate cuts in response to global economic weakness could be starting to bottom out.
    After 10 consecutive interest rate cuts, Brazil’s central bank signaled that rates would now remain on hold for a long time as the domestic economy was improving.
    Thailand issued a surprisingly upbeat statement, saying the downside risks to growth were easing and the export sector, hit by low global demand, was now expected to recover in the first half of 2013 due to better global economic growth.
    Despite the more positive tone, it is clear the risks to global growth remain high, mainly from the political uncertainties surrounding the U.S. fiscal cliff and the euro area’s continuing efforts to solve its debt crises.
    Noting these significant risks and slow global growth that is containing inflation, Mexico’s central bank said it expects further policy easing in advanced and emerging economies.

ANGOLA 10.25% 10.25% 10.50%
ISRAEL DM 2.00% 2.00% 2.75%
HUNGARY EM 6.00% 6.25% 6.50%
ALBANIA 4.00% 4.00% 5.00%
THAILAND EM 2.75% 2.75% 3.25%
BRAZIL EM 7.25% 7.25% 11.00%
MEXICO EM 4.50% 4.50% 4.50%
 NEXT WEEK (WEEK 49) monetary policy committees at 12 central banks are scheduled to meet, including five developed markets: Canada, Australia, U.K., euro zone and New Zealand, three emerging economies: Morocco, Poland and Peru, and three frontier markets: Croatia, Serbia and Sri Lanka. In addition, Uganda’s central bank is also scheduled to decide its policy stance.   

CANADA DM 4-Dec 1.00% 1.00%
AUSTRALIA DM 4-Dec 3.25% 4.25%
UGANDA 4-Dec 12.50% 23.00%
MOROCCO EM 4-Dec 3.00% 3.25%
POLAND EM 5-Dec 4.50% 4.75%
CROATIA FM 5-Dec 6.25% 6.25%
UNITED KINGDOM DM 6-Dec 0.50% 0.50%
EURO ZONE DM 6-Dec 0.75% 1.00%
NEW ZEALAND DM 6-Dec 2.50% 2.50%
SERBIA FM 6-Dec 10.95% 9.75%
PERU EM 6-Dec 4.25% 4.25%
SRI LANKA FM 6-Dec 7.75% 7.00%