Archive For "September, 2010"

NEW YORK (MarketWatch) — It’s time to bet that the direction of Canada and Mexico’s currencies will reverse, strategists at Brown Brothers Harriman said Wednesday. The Canadian dollar has been one of the weakest among major currencies but seems better positioned if the U.S. embarks on more quantitative easing. The Mexican peso , on the other hand, has jumped about 5% this month, as Mexican bonds are expected to soon be included in an industry benchmark index, said Marc Chandler, global head of currency strategy. Flows related to that are nearly complete. The Canadian dollar dipped below 12.09 peso earlier and recently traded at 12.13 pesos. “Like minded traders may want to consider long Canada – short Mexico positions near current levels,’ Chandler said. The objective would be for the loonie to rise to buy about 12.35 pesos, he said.

WASHINGTON (MarketWatch) — The Treasury Department said Wednesday that it intends to sell Citigroup preferred securities that it acquired as part of the government rescue of the bank in early 2009. The department said it will sell trust preferred securities received from Citigroup under an Asset Guarantee Program. These preferred shares were received in exchange for Treasury’s agreement to share potential losses on a pool of $301 billion of assets held by Citigroup. The loss-sharing deal was terminated last January. Treasury kept $2.2 billion of the preferred shares. Because Treasury never was required to make any payment under the arrangement, all proceeds from the sale will consititue a net gain to the taxpayer, the department said.

LONDON (MarketWatch) — The European Commission’s economic sentiment indicator for the 16-nation euro zone rose to 103.2 in September, up from 102.3 in August, the commission said Wednesday. The indicator’s industry sub-index rose to -2 in September from -3 in August, while the services index rose a point to 8. The consumer index was unchanged at -11, while the retail index rose to -1 from -3 in August. The construction index rose three points to -26.

LONDON (MarketWatch) — British lenders approved 47,372 mortgages for house purchases in August, down from 48,346 in July and below the previous six-month average of 48,619, the Bank of England reported Wednesday. Total net lending to individuals rose by 1.5 billion pounds ($2.4 billion) in August, up from a 200 million pound rise in July. The central bank said its closely-watched measure of broad money supply, M4 excluding intermediate other financial corporations, rose by 12.8 billion pounds in August after a 200 million pound fall in July. The annualized three-month growth rate for the measure slowed to 4.5% in August from 5.1% in July.

Daily Outlook: First off, I’m very glad that so many of you were able to take down pips by the boatloads yesterday. I got plenty of messages, emails etc with reports of 100+ pip trades on the E$ alone for the day. Nice work.

It is a bit bittersweet for me though – I wasn’t able to get in. As all of you know as much as we would like to sometime we can’t trade 24 hours a day. We pick our sessions and trade them. I personally trade the end of the Asian session, beginning of London and then most of the New York session. If I’m feeling particularly motivated I’ll set price alarms while I sleep and if I’m even more motivated I will actually get up when they go off :). But that was just how the cookie crumbled yesterday. And I’m OK with that. There are always trades we all miss out on or get in on and, like I say, it is always better to miss out then miss your money. Besides, I get in on plenty of trades in the New York session that many of you have to miss out on for sleep, jobs, etc. When I checked CandlePro this morning though the last 5 out of 6 E$ candles were all pointing North with good signals :(.

That ramble aside, the EUR/USD made a very nice technical move yesterday and if you took a long on a dip (if you were smart about your stop and your entry) then you made out like a bandit. If you took a long on a sustained break above 1.35 then you still made out pretty well but you missed out on the first 100 pips of the move.

Bullish Pennant

Overbought or not the technical picture is still bullish and we currently have a bullish pennant forming on the 4h and 1h charts, with an almost 170 pip flagpole. This pennant pattern is decidedly bullish and I will stick with a two-part strategy: looking for dips to buy into and looking for a break above 1.3600 to long on.

As always CandlePro users can check multiple pairs/timeframes for intraday candlestick signals and you should watch out for news events on the forex calendar. There is not a lot of news for the Eurozone or US tomorrow, which heightens the chances that we will see a ranging day, most likely between 1.36-1.3520 (if we see a range).

Trading Idea: My primary strategy will be to look to buy into dips with confirmation, preferably around 1.3500 support (resistance from yesterday). Long targets from 1.3500 are 1.3525, 1.3555, 1.3585, 1.3615 for 115 pips profit.

My secondary strategy will be a long on a break above 1.3600 with targets up to 1.3700.

If we do see a ranging day on the weak news then 1.3600 should provide top shorting opps and 1.35-1.3520 will provide support buying opps.

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WASHINGTON (MarketWatch) — Federal Reserve officials have not reached any agreement on whether the central bank should purchase more Treasurys or other assets to pump up the economy, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank on Tuesday. Officials don’t agree on pivotal questions like whether growing the Fed’s balance sheet will work and how much would be needed to make a difference, Lockhart said in a speech at the University of the South. After the Fed’s last policy meeting, the Fed said it is prepared to provide additional accommodation if needed to combat slow growth and too-low inflation. Lockhart said he believes the recent economic slowdown will be temporary but improvement will be “gradual.” The risk of deflation also cannot be dismissed, he said.

NEW YORK (MarketWatch) — The U.S. Treasury Department sold $35 billion in 5-year notes on Tuesday at a yield of 1.26%, the lowest level on record. Bidders offered to buy 2.96 times the amount of debt being sold, compared to an average of 2.8 times at the last four monthly sales of the securities. Indirect bidders, a group that includes foreign central banks, bought 50%, compared to an average of 43.3%. Direct bidders, which includes domestic money managers, purchased another 8.7%, versus 11.5% on average. After the auction, the broader bond market extended gains, pushing yield lower. Yields on 10-year notes fell 9 basis points, or 0.09%, to 2.44%.

NEW YORK (MarketWatch) — BP Plc said Tuesday it plans to sell bonds maturing in 2015 and 2020. The company has orders for more than $5 billion in debt, according to Andrew Brenner, head of emerging markets at Guggenheim Securities. BP didn’t put an amount to be sold in a regulatory filing, which is fairly common, but said that proceeds from the sale would be used for general corporate purposes.

NEW YORK (MarketWatch) — The Federal Reserve Bank of New York purchased $550 million in Treasury Inflation Protected Securities on Tuesday, part of officials’ pledge to reinvest cash from maturing mortgage-backed securities and housing agency debt back into the bond market to support the economic recovery. Dealers offered to sell the Fed $6.821 billion in TIPS maturing from 2011 to 2040. Analysts have said they don’t expect much of the Fed’s purchases to be in TIPS because those have little impact on borrowing rates for companies and individuals. After the results, the broader bond market remained up, pushing yields down. Yields on 10-year notes fell 5 basis points to 2.48%.

NEW YORK (MarketWatch) — Companies have sold $116.5 billion in bonds this month, the highest amount of the year, according to Informa Global Markets. The massive amount of sales in September can partially be attributed to mammoth deals in the U.S., but overseas companies selling U.S. bonds also made a big contribution, Informa’s Ken Jaques said on Tuesday. NBC Universal sold $5.1 billion in bonds on Monday as part of its financing to buy Comcast . NBC Universal is owned by General Electric Co. and Vivendi . Last week, Microsoft Corp. sold $4.75 billion in bonds. The all-time highest monthly issuance record is held by March 2009, when about $155.9 billion of bonds were sold, according to Informa.