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The Week Ahead - Euro Giving Back

Last week the Central Banks of England, Australia, and the Euro zone held rates steady - as expected. The US Trade Balance contracted to -$58.2 Billion according to the latest numbers released on Friday.

Most of the "Majors" closed the week just about where they started - except for the Yen which saw continued strength.

This Week

Below is a Consolidated Summary of Scheduled News Events that I am watching. for the "Week Ahead"  Note: All times are listed in US Eastern Time Zone and there are other scheduled events that I may not have listed.

Jerry's Watch List - US News for May 12 - 16 (in Brief)

Mon	N-A
Tue	8:30: Import/Export Prices and Retail Sales 10:00: Business Inventories
Wed	8:30: CPI 10:30: Crude Oil Inventories
Thu	9:00: TICS 10:00: Phili Fed
Fri	8:30: Housing Starts 10:00: Consumer Sentiment

Jerry's Watch List - International News for May 12 - 16 (in Brief)

Mon	4:30: UK- PPI & Trade Balance 7:01: UK - Housing Data
Tue	4:30: UK - CPI - RPI - Housing Price Index 19:50: JPY - CGPI & Current Account 20:30: AUD - Consumer Sentiment & WPI
Wed	2:40: EUR - French CPI 4:30: UK - Wages & Employment Data 18:45: NZD - Retail Sales
Thu	2:00: EUR - German GDP and CPI 2:45: EUR - French GDP 5:00: EUR - CPI and GDP for Euro Zone 18:45: NZD - PPI 19:50: JPY - GDP
Fri	00:30: JPY - Ind Production 1:00:  JPY - Household Confidence 2:45:  EUR - French Employment Data 5:00:  EUR - Trade Balance

Technically Speaking - Looking at the Charts

Focus on the EURO - US Dollar - (Click on the Charts  to Enlarge)

The 4 hour chart above shows the Euro retracing. A new downward trend channel has developed and an interesting point is that as of this posting, is that the Euro is approaching resistance at the top of the trend channel. 

The Daily chart below shows a strong support line going back to August. 

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Interest Rate Watch - Oil Ready For Final Spike?

What's Trichet Going To Do - Or Say?

The Bank of England – BOE, and the European Central Bank seemed to cast a cloud over the currency markets on Wednesday. Expectations that both Banks will hold rates steady on Thursday left traders with a relatively tame trading day. The chart below shows an unusually quiet GBP-USD pair  trading a very tight 30 pip range for the NY Session.

 

Chart Above - Pound Trades in Tight 30 Pip Range Ahead of Rate Announcements

 

Oil – Ready for a Blow Off Top?

I hear more and more speculation that Oil has no overhead resistance and will soon be spiking to heights of $150 - $200! Could we be ready for a blow off top? Usually when there is chatter of unlimited, unbelievable prices (Do you remember the books titled like “Dow 30,000” just before the Tech Bubble Burst?) this helps the bulls to run over the cliff at full speed - faster than Wylie Coyote! Further, there is also talk of raising margin requirements for the Oil pits that would potentially slow down the speculation.

The question is -  is the current price above $120 sustainable and valid? Economists looking for high prices to curb demand are detached from the reality that the high price of oil is a weak US Dollar issue - as all Oil is settled in US Dollars. The sooner Hank Paulson and Ben Bernanke acknowledge, accept, and react to this fact - with paying more than lip service to a strong dollar - the sooner we all will pay less for gas and oil.

 

When The Going Gets Tough, ... Filler Up – and Charge It!

The US consumer is continuing to spend on credit with a surprise number of over $15Billion! This is way above the consensus expected range of $3B to $7.5 Billion. The report coming at 3pm Eastern time could be viewed as good or bad depending on your angle. The currency markets ignored it completely. Could it be that the middle class is filling their gas tanks with plastic?

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Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 or 30 Minute Consultation.

Technically Speaking - Dollar - Gold

 

US Dollar - Time For a Real Rally?

There is plenty of speculation as to what Jean Claude Trichet will do with the Euro zone's interest rates. Depending on who you listen to the ECB may move rates up, down, or keep them steady. To his credit, Trichet keeps us guessing with statements that he is concerned about inflation and slowing growth.  Hypothetically - All it would take is a clear policy statement from JCT of staying steady - or for a shock a mention of dropping rates - and the US dollar will be able to roar back.

 

Pound Predictions?

Looking at the Weekly chart (above ckick to enlarge) for the Pound Sterling vs. US Dollar you can see that a Head and Shoulder pattern may be completing if price was to drop to the 1.9100 range. This would complete the right shoulder. If that happens - you will have a bounce or break off the supporting neck line. A Dollar Rally will be confirmed if this neck line is broken.

 

US Dollar Poking Holes in the Swiss Cheese?

The USD-CHF (above) is usually a good indicator of Dollar Direction. The chart above shows the 100 SMA has held as resistance quite well - but a solid break above that line - would have it also break above the current up trend channel. If that happens, it could signal a real Greenback rally against  the British Sterling and the Euro.

 

Meanwhile Back in the Darkened Gold Mines

 

Gold - Giving Traders the Shoulder - Heading Lower?

While Oil is posting lifetime record Highs, and the US Dollar shows a lack of direction, Gold is showing a chart pattern that might be bearish. The Daily chart of Street Tracks ETF GLD shows a Head and Shoulders Pattern with a broken neck line. The neck line coincides with the key 61.8% retracement level support level making this line quite significant if it is violated again. The 200 Period Daily SMA is currently at just about 81. GLD typically trades at 1/10th of the spot price.

 

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Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 or 30 Minute Consultation.

Fed Cuts Rates - Jobless Grows - Dollar Confusion

When Bad News is Good

The US Dollar rallied Friday morning as the Non-Farm Payrolls Report - NFP showed a net loss of only -20,000 jobs. This negative growth of jobs was a positive surprise as it was much better than the expected job loss range of -150,000 to -25,000K .

Euro Double Bottoms at 1.5400 - click to enlarge chart

 

Gold and Oil Up - Despite Dollar Rally

Usually we see a very clear inverse correlation between the US Dollar vs. Oil and Gold - However as of this posting Oil is up over a Dollar at 113.73 and Gold is Up at $855 - So go figure. Yesterday Treasury Secretary Henry Paulson stated once again his "long term" strong dollar policy.  Reuters is quoting Paulson saying, "I'm a strong dollar man" - please....

Planned Confusion: Now You See It... Now You Don't

15 minutes before the NFP report the Fed announced that in conjunction with the ECB and the Swiss National Bank they increased their liquidity arsenal from $50 to $75 Billion available through the TAF or Treasury Auction Facility. That's an an extra $25 Billion between friends! They are also increasing the "Frequency" of the auctions. This unexpected announcement caused some confusion to an already tense trading world awaiting the NFP. Was this timing planned? The FED clearly watches CNBC for direction (not to mention the Futures) - perhaps they wanted some attention just before NFP? I think they should pay attention (and a consulting fee) to Rick Santelli :>)

Waiting Game For Clarity? Read - Fed Minutes

Transparency used to be quite clear with Ben Bernanke, but it appears as if the guessing game is on! Wednesday the FOMC led by Ben Bernanke cut interest rates the expected .25 lowering it's bank rate to 2.0% - However, the Fed left no hint of future policy.. leaving my previous post on April 30th correct - stating that we will have to wait until May 21st for the FOMC minutes report to see what was discussed. Again - restating my previous post, the next FOMC scheduled announcement is not until June 25th - leaving the window open for surprise announcements.

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Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 or 30 Minute Consultation.

FOMC - After GDP and ADP - Then NFP on Fri

A New Rant - For The Day!

I Have a Solution

Let the World Bank and the IMF forgive the United States Debt!

The Real FOMC Consensus Will Have to Wait for May 21st!

It appears as if the consensus is for a .25 cut from Bernanke and team this Wednesday afternoon. There are a few people echoing my pleas for the past few months that the Fed should pause - and maybe even raise rates. But the odds of that happening are pretty slim. No - the news being made today will actually have to wait until May 21st when the consensus that counts, "The Minutes" of the last two days Fed meetings are released.

A More Predictable Surprise Before the Fed Announcement?

The ADP report precursor for Friday's Non - Farm Payroll report is due out at 8:15 today - followed 15 minutes later by the US GDP report at 8:30. This GDP could be a shocker if it goes negative. The consensus for GDP growth is that the number will barely be positive and will likely be the worst GDP report in recent memory. If this does happen, it will make the Fed's job harder to decide which poison to dispense to the economy and cause more speculation ahead of the 2:15 interest rate announcement.

A Long Time Between Now and Next FOMC Meeting

The next scheduled FOMC meeting is not until June 25th! That's a long time in this current environment.... I'd bet an Amero or two that there may be a surprise between now and then that might cause a rate change between meetings - highlighting the

Dollar Dances as Core Prices Rise – Home Values Drop

So the Dollar is staging a rally and Showing Strength? Let's see the currencies are ticking wildly before the European Open.  The Euro-USD is currently ticking at 1.5578 and the Pound -Dollar is at 1.9634 - Oh Yes - Here is proof - We can take comfort in the dollar strength as it is still above parity against the Canadian Loonie! So in that respect - I agree the Dollar is in Rally Mode - Party on Garth!

"No Magic Wand To Wave" - W = Double Bottom...

President Bush was quoted today as saying that there is no magic wand to wave to bring the cost of oil down.....(I'll be nice)  How about a strong US Dollar George????  I mean Mr. President.... watching his Rose Garden press conference today was frightening - This man has no clue - Let's talk about batteries, and switch grass for a while - and Nuclear Energy as a solution in say.. 2013 - after the Mayan Calendar runs out....... (Have they ever figured out where they are going to store the nuclear waste yet?)  I'd be happier if they just tell us an asteroid the size of Montana - Not Hannah  was coming straight at us! (The distractions are crazy these days - can anyone find Obama - I mean Osama - For a few Billion Dollars - someone should be able to find him! The US wastes about  $12 Billion a Month "over there" - Please show me on What! -  or just get it Wright! )

The Interest Rates That Really Matter - Unaffected

To me - these interest rate decreases the Fed has implemented are doing nothing to help the average consumer. The US consumer that has been encouraged to support the world by spending for the past 40 years. That's right - the IRS check is in the mail - or directly deposited - So now drive to Disney World and spend some money! We will have your job back in a few decades. ( I love trading!)

No - Banks are raising not lowering interest rates on the average person that needs relief - Credit card users are being charged over 20% to 30%! That's criminal!

Buy The Amero - Now at IPO prices!

But $105 Dollar Oil looks great doesn't it! - after hitting $120!!! and $4.00 gasoline will soon look like a bargain after it spikes over $5.00 - and NAFTA is great for America - I agree - South America.....

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Tune in to my Live Webinars every Monday at 12 Noon Eastern US Time - 16:00 GMT for the "1st on Forex - The Week Ahead" - Also - today I will be broadcasting live coverage of the ADP - GDP and FOMC announcements here on FX Street - Click Here to Register for your Free Password and Admission to the Show!

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 or 30 Minute Consultation.

Dollar Rallies from Oversold - Finally!

Relief Rally - or Short Squeeze?

As many traders were anticipating the Euro to test the 1.60 mark, the US Dollar had other plans. Reasons for the Dollar rally run rampant as analysts needing a story speculated that Citigroup's $5.1 Billion Loss ($16 Billion in Trading Write Downs), and cutting another 9,000 jobs was a relief rally... Go Figure!

Break Out - Fake Out

 

The charts (Click to Enlarge) show how large and violent Friday's European session was. The above Ascending Triangle break proved to be a fake out.

The Euro's Upward Trend Channel (shown below) that begins back on March 12 was marked from top to bottom in one 4 Hour bar. The Euro bounced off support around 1.5700 before the New York session began and closed the day and the week in the middle of the channel near the 38.2 retracement level of 1.5817.

Euro Dives Over 240 Pips

An "orderly decay" of the US Dollar on the long term charts sounds reasonable to assume.

According to the CFTC's COT report - Speculators are moving away from the Euro and into the Yen. Speculators or not. It should be noted that the Dollars rally was not contained to the Euro as all the charts were showing extreme volatility. It should also be noted that the British Pound Sterling bounced up against the Dollar closing at 1.9973 and tapping the 2.00 mark.

 

Gold and Silver Index: Up Channel - Wedge - 50% Retracement 

 

You are Invited to attend "1st on Forex-Week Ahead Webinar" Free

I expect the volatility on the currencies will continue as a battle over some very strong chart patterns need to be played out to the north or south. Tune in to my Weekly Webinar - "1st on Forex - The Week Ahead" every Monday morning at 7am EDT - 11:00 GMT - on FX Street - Click Here to Register - and Attend Free.

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation.

Sterling Strugling as Euro Poised For New Highs

G7 - Gee Whiz - Now What?

Last Weekends G7 Meeting left observers with nice words of cooperation - but as the respective leaders headed their separate ways to the four corners of the globe - the currencies seem to be on their own paths now as well.

The G7 is calling for China to increase the flexibility of it's currency - But it seems to me that all that will do is cause the price of their exports to go up - causing more inflation for consumers worldwide!  Click Here for a Link to the G-7 Statement

 

Euro Poised for 1.60 Range?

On Wednesday the Euro zone reported higher than expected inflation - dragging down hopes that Trichet might lower interest rates to help prop up the US Dollar.  

 

Inverse Head and Shoulders on 30 Min Chart

Click to Enlarge

Ascending Triangle on Daily Chart

Click to Enlarge

 

Tracking Errors?

Although the UK came out with better than expected CPI numbers the Pound Sterling seems to almost track the US Dollar down more than it's traditional tracking of the Euro - currently on it's way up.

 

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN),He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation. Tune into his broadcasts weekly on FX Street with "1stonForex the Week Ahead". 

G7 Meets - Interest Rates - UN-Interesting

G7

This Weekend the Group of 7 – Finance ministers meet in Washington and the US Dollar and FX rates appears to be high on the list of topics.

European Central Bank President Trichet has indicated that rates will stay stable as the ECB walks a tightrope of being concerned about inflation, while extremely concerned about market turmoil. He was quoted Thursday as saying, “I deplore the excessive volatility in exchange rates.”

GBP-USD

The currency markets were little changed as there were no surprises to the markets as the Bank of England cut interest rates .25% to 5.00%

 

Euro – USD

The European Central Bank left rates steady at 4.00% as expected. The currency markets had little reaction as continued intervention seems to be at work.

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN), Tune into his broadcasts weekly on FX Street with "1stonForex the Week Ahead".  He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation

Pound Under Pressure - Euro on the Rise

As the Dollar Bides Its Time

It has been a rather boring week of headlines and news announcements compared to the volatility of the past few weeks.

Focusing on the US Dollar - It could be argued that intervention is at work propping up the Greenback for the past two weeks. Active traders have witnessed an amazing pause in the laws of gravity as the Dollar has actually strengthened in the face of negative forces, most notably after the Fed cut interest rates on March 18. Others may call it consolidation... But the Dollar can only hold on for so long - paused against expectations of further rates cuts by Bernanke. The EMU has expressed several times this past week that their main concern is with inflation and feel that growth will continue as demand continues from areas other than the US.

Pound Losing It's Sterling?

The Above Chart Shows a Classic Head and Shoulders patter on a 30 minute chart that would have netted savvy Technical Traders with over 130 pips!

Euro on the Rise!

The Chart Above Shows the Euro Strengthening against the Pound

Jerry Furst is an active trader, educator, and Founder of Investors Education Network (IEN), Tune into his broadcasts weekly on FX Street with "1stonForex the Week Ahead". He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation

Thee Calm Before........ The Fed (and After?)

More Volatility Ahead?

Markets are in a state of shock Tuesday mourning awaiting the 2:15pm Eastern time US interest rate announcement. Sunday's slaughter of Bear Stearns has evaporated  as it appears to me that Intervention is at work around the globe to avoid systemic panic. This is is a good thing - I think.... Ben Bernanke and his advisors (who ever they are) have done a magnificent job of keeping the markets orderly. As of this writing the DOW is up over 250 at 12,222 points and the S&P 500 is up over 30 points at 1308. Bravo Ben!

Euro Trending Nicely against the Dollar - Click Chart to Enlarge

2:15 - The Moment of Truth - Save or Kill the Dollar

At 2:15 the currency markets will show just how much (if any) intervention is at work - as the guessing game for Interest rate announcement ranges from a 1.25% cut to people like myself that say rates should hold steady at current rates. If they surprise by holding rates (please!)  then the dollar may rebound quickly and help to establish a sense of security in the financial markets  liquid. The Flip side - The Fed already cut .25% in a surprise move on Sunday - a smart move - so if they lower a full point - It might be look out below...! It might even signal a new Gold Rush.

You can tune in to my live Webinars every Monday at 7 am EST and Today I will be covering the FOMC interest rate announcement - live on FX Street - Free - Click here to register.

Jerry Furst  is an active trader, educator, and Founder of Investors Education Network (IEN), Tune into his broadcasts weekly on FX Street with "1stonForex the Week Ahead".  He is available as a Mentor and Trading Coach to Select Clients Click Here for a Free Survey and 15 Minute Consultation