The US market sentiment concerning the greenback went from pessimistic to optimistic causing a reverse of the US dollar trend. As Citigroup Inc. reported a $5.11 billion loss, which was worse that estimates, yet revenues were above expectations pulled by abroad businesses which provided hope that the losses from the credit meltdown may have started to peak and companies are still positioned well despite the recession and will pull the economy through. That helped their stocks to go up by 8% This supported the greenback to gain momentum as people gained confidence once again in the markets.

The financial market is mixed after JP Morgan reported better than expected results while Merrill Lynch posted another quarter of losses. That is why there is no clear sign for the bottoming out of the financial markets.

As for the euro it could not break the level of 1.60 against the greenback. The main reason of this was yesterday’s speech by Jean-Claude Junker which took down the single currency’s appreciating. Mr. Junker comments brought back the market sentiment after recent G7 meeting statement which caused the USD buying.

He has also sent a message to the market that they underestimated their G7 concerns about the volatility in the Forex market and it is negative impact on the market stability. The technical indicators have shown that the EUR/USD pair was overbought and if it continues it bearish wave it will meet a major support at the levels of 1.5670. The pair is extended its profit taking wave while it currently trades at 1.5721 while recording a high of 1.5956 and a low of 1.5710.

The royal currency is appreciating against the US dollar as it almost hit the physiological barrier of $2. There was market optimism after the BOE announcement that it will take measures to ease their credit crisis. In addition to restored confidence for the UK economy, the M4 money supply data that was released today helped support the rising British pound. The GBP/USD is currently trading at 1.9926 while recording high of 1.9999 and a low of 1.9881.

Now, so as investors became confident they started selling the yen as it hold a lower yielding rate and especially after the CitiGroup results which pulled carry trades heavily back into the scene. The USD/JPY is currently trading at 104.34 while recording a high of 104.43 and a low of 102.25.

Crown Forex

disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

While 1.60 barrier continues to hold in EURUSD, we observe the lack of liquidity causing unexpectedly large swings in emerging market currencies and majors alike.

MAJOR HEADLINES - PREVIOUS SESSION

Overnight developments:

• SZ Adjusted Retail Sales YoY (Feb) out at 3.3% vs. 1.6% expected.
• SZ ZEW Survey - Expectations (Apr) out at -71.4 vs. -60 expected.
• E-Z Trade Balance (Feb) out at 0.8B vs. -3.5B expected.
• E-Z Construction Output MoM/YoY (Feb) out at 1.2%/4.3% vs. 1.6%/1.6% prior.
• CA CPI MoM/YoY (Mar) out at 0.4%/1.4% vs. 0.5%/1.5% expected.
• CA CPI Core MoM/YoY (Mar) out at 0.2%/1.3% vs. 0.3%/1.4% expected.
• US Initial Jobless Claims out at 372K vs. 375K expected.
• US Continuing Claims out at 2984K vs. 2950K expected.
• US Leading Indicators (Mar) out at 0.1% as expected.
• US Philly Fed (Apr) out at -24.9 vs. -15 expected.
• JN Consumer Confidence (Mar) out at 37 vs. 37.4 expected.
• JN Consumer Confidence Households (Mar) out at 36.7 vs. 37 expected.
• JN Tokyo Dept. Store Sales YoY (Mar) out at -0.7% vs. 2.8% prior.
• JN Nationwide Dept. Sales YoY (Mar) out at -1.2% vs. 0.9% prior.

THEMES TO WATCH - UPCOMING SESSION

Key event risks today (all times GMT):

• US Citigroup Q1 Earnings Report (10:30)
• CA Mar. Leading Indicators (12:30)
• CA Feb. Wholesale Sales (12:30)

Market Comments

While the main economic releases for the week are behind us, thin liquidity continues to plague the FX markets. The only remaining scheduled event left this week that could deliver a big jolt to the markets is the earnings announcement by Citigroup. While the median estimates for Q1 is about 93 cents loss per share, worst estimates forecast a loss of over 2 dollars per share. A significant surprise on the downside can see a renewed bout of risk aversion, eliminating any cautious currency high-yielder build-up following the equity rally of past 2 trading days.

Cable has surprised us with a forceful break of the the trend line resistance, with advances propelling the pair to near 2.00 level despite continued weakness in the U.K. fundamentals. We expect the next Fibo-resistance level 2.0001 to contain any further advances and this sterling rally to be short-lived and the pair to correct lower towards the 1.98 base line. A break of 1.60 in EURUSD and subsequent dollar weakness, however, could trigger the break of 2.00. opening the pair’s way to 2.0150-2.0400 zone and as such warranting a close observation.

The emerging market currencies continue to firmly indicate a looming correction, with two of last year’s strongest performing EM currencies now undergoing potential trend reversals:

Czech koruna has pared all gains from the massive EURCZK sell-off post G-7 meeting on Sunday night, while EURCZK is steadily approaching key turn-around level of 25.200. A break above may be enough to take the pair all the way to March high of 25.650.

Similarly, Polish zloty’s advances against euro have been strongly rejected around the 3.40 support level despite the Polish central bank’s hawkish commitment to thwart the inflation and consecutive interest rate hikes that have seen the key rates gone up 5.75% with more hikes on the horizon.

Note: the support/resistance levels used in the matrix’s of this document are levels derived from yesterday high, low and close. Reference in the text to other support/resistance levels will occur.

Analysis Disclosure & Disclaimer

SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated.

SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained.

Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment.

If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations.

The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time.

In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis.

SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

The news about consumer prices continues to get worse for Americans. Record wholesale and consumer prices were reported again…

… earlier this week. Gasoline surpassed a national retail price average of $3.40 per gallon today (April 17), and more price rises are expected.

Milk, cheese, eggs, and other basic grocery items continue to sell for high prices at the local grocery stores and supermarkets. The weak dollar is still cited as a major culprit, along with inflationary conditions and lower interest rates.

The dollar actually remains steady against most major currencies except the Euro, which seems relentless in its push higher. The dollar is about 5 pips above its recent low against the yen, as the dollar currently fetches 102.46 yen. It is also about 8 pips off its low against the pound, as one pound is worth $1.989 at the moment. The dollar is also holding firm above lows against the Swiss franc, and other major currencies.

Still, the dollar remains at historic low price points despite its month-length strength. Its weakness has contributed to higher commodities imports, most notably oil, higher fuel prices, and higher consumer prices. It has also made it much more expensive for American companies to acquire needed parts and products overseas.

The weak dollar has definitely not been all bad for business and investors, as of late. While the weak dollar and the stock market are both impacted by economic conditions, stocks have been holding above 12,000 for some time. In spite of ongoing negative news about credit and housing, and many bad earnings reports, strong earnings from big names have helped keep traders in the fight.

Google announced earnings after hours Thursday and surprised the market with an incredible 30% spike in first quarter earnings. It easily topped analyst estimates for revenue and earnings per share. Along with crediting business adjustments, the company also cited an increase in global demand for its revenue growth. In fact, it said for the first time in 9 ½ years, global sales outpaced US sales. They said the weak dollar had increased demand for the Internet search engine’s advertising opportunities.

St. Louis-based seed company Monsanto also had a strong earnings report recently. It too cited global sales growth and the impact of stronger global interest in the ‘cheap’ US-based seed companies products. The cheap price according to foreign buyers is due to the relative strength of their currencies to the dollar.

It is not just the foreign demand for cheaper US-based products that has led to some higher earnings and revenue reports for US companies. Levi Strauss and Company credits its four percent revenue growth in its recent fiscal quarter to the weak dollar. The company said the currency adjustment for the weaker dollar contributed to the entire four percent revenue gains, which directly impacted its bottom line of 12% earnings. Obviously, from a practical standpoint, this doesn’t necessarily mean the company has improved its business practices, but four percent revenue looks better to investors.

Businesses that maintain a strong global presence have definitely been more self-sustaining during the tough times in the US economy. As many companies report down earnings, companies that maintain a strong global revenue stream have been surviving, and thriving at times. Even most companies that have been drawing more business from the weak dollar, however, would likely agree that it would be nice to see the US economy head north in the near future. A rising dollar would likely tie to increased US consumer confidence, more domestic sales, and better margins through those global sales.

Market Recap

US equities surged Wednesday, with the Dow gaining more than 250 points on the day. IBM’s strong earnings report from Tuesday evening helped drive Wednesday’s trade. Thursday, it was Google’s turn to excite the market. Equities were virtually flat during regular trade, with the Dow up 1 point and the NASDAQ and S&P down 8 and up 2, respectively. After hours, though, Google surprised with a 30% spike in first quarter profits. The company’s after hours share price soared $76, or 17%. Earlier in the day, Merrill Lynch reported a first quarter loss. Gas prices surpassed $3.40 on average and rises are expected.

Neil Kokemuller
Thursday, April 17, 2008
10:36 PM EST

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University with a specialization in marketing.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significant risk of loss.

FOREX is a serious game. Play it with the pros.
Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Easy-Forex? Others offer promises. WE deliver.
Forex trading involves substantial risk of loss, and may not be suitable for everyone.



Forex online. Without it, you are wasting your time (and money).
Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Control your destiny.
Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Trading the News: Canadian Wholesale Sales

What’s Expected

Time of release:                  04/18/2008 00:30 GMT, 21:30 EST

Primary Pair Impact :          USDCAD

Expected:                              0.4%

Previous:                               2.6%

How To Trade This Event Risk

Canadian fundamental data will have the stage to itself, with no U.S. releases scheduled for Friday, which should provide trade worthy event risk. Wholesale sales and leading indicators will battle for traders attention when they are released simultaneously.   The “Loonie’ has been riding a wave of bullish sentiment on the back of oil prices setting another record over $115 per barrel. The price appreciation in energy has increased the attractiveness of several Canadian companies, driving the S&P TSX to a five month high. The recent strength of the equities market has economists expecting a rebound in the leading indicators from last month’s nine year low of -0.3%. Conversely, wholesale sales are expecting to fall from the 13 month high it set in January.  Nevertheless, fundamentals have remained strong for the com bloc country, which has seen exports, employment and housing remain strong. However, the tightening credit markets and U.S. slowdown has led to a dovish BoC and expectations of a 50 point rate cut. The recent easing of inflation for a fourth month and well below the 2% target, has cleared the way for the MPC to be aggressive at its April 22 meeting. USD/CAD has found support on the news, after “Loonie” bulls drove it below parity for the first time in nearly a month.

A better than expected wholesale sales read, and a supporting rebound in the leading indicators may cast doubt on the need for further rate reductions from the central bank. On paper the economy looks great with strong fundamentals and an attractive stock market. The sole albatross is the softening U.S. economy. A consecutive month of better than expect wholesale sales may ease those concerns, especially if we see a another rebound in timberland sales. The industry, whose 11.2% decline in December pulled down the aggregate measure to a 1 ½ year low,  is a measuring stick for the state of the U.S. housing market. Therefore, we would look for another gain of 1% or greater with support from the broad economic leading indicator gauge. With the right mix of data, we will look for a five minute red bar and rising volatility to short two lots of USDCAD. The nearby swing high (or reasonable distance) will act as our initial stop and this risk will equal our first target. The second target will be set on discretion - with a mind to nearby support. To conserve profit we will move the stop on the second lot to break even when the first takes its target.

A drop in wholesales sales may bring out the Loonie bears, as expectations will rise for further easing from the MPC . We will look for a similar surprise from both readings to the downside for a short and we will follow the same setup as above, just reversed.