Forex Blog by Greg Secker

The FTSE yesterday closed up 18 points with insurers leading the way after Standard Life published a promising set of preliminary results and US retail sales figures beat the estimated figures. Wall Street, which managed to avoid losing ground immediately after a big rally for the first time all year, held its breath. Were the banks actually showing the beginnings of a turnaround? No one was saying the financial crisis was over. But stock in Citigroup, JPMorgan Chase and Wells Fargo & Co. all advanced again yesterday – one day after Citigroup’s CEO surprised investors by saying the bank ran at a profit in January and February. It was enough to carry the Dow Jones industrial average to a paltry but nonetheless significant gain of nearly 4 points – the first time since early February the average has strung together two days of gains. The Dow closing at 7170.06. In forex data releases today at 1100 we await the CAD Unemployment Rate and then the CAD Trade Balance at 1230. At 1230 the USD Trade Balance is due which is expected to confirm a slight contraction in economic activity. Later at 1355 the USD Preliminary UoM Consumer Sentiment figure is due, a leading indicator of consumer spending, and is expected to confirm the economic slowdown.

Yesterday – notes Greg Secker – the FTSE fell just 21 points to close at 3,694 as investors wrestle with the current lows after heavy falls over the last fortnight. The Dow closed at 6,930 under the significant figure of 7,000. The S&P 500 closed at 721, a little up from the lows of last Friday. The DAX in Frankfurt closed at 3,931 after testing the significant 4,000 level. So overall rather bearish in the global indices with several rejections of big numbers forming resistance. News out of the US is that we are in the worst financial crisis since the 1930’s with the world’s banks still hot out of trouble. In overnight Forex news the RBNZ the dropped official cash rates to 3.0% as expected and the AUD unemployment rate has risen to 5.2% slightly above expectations.  At 1230, USD retail sales are due for release which is expected to see a contraction together with unemployment claims. At 1300 the Swiss Libor rate is expected to see a reduction to 0.25%, this is the London interest rate for 3-month Swiss franc deposits.  Then later on in the evening at 2145 NZD retail sales results are due which are expected to see a small increase.

The FTSE 100 index of leading shares inched up 0.33 percent Monday to close at 3,542.40 points. Vodafone being the most traded stock, seeing 173 million units change hands, followed by Lloyds Banking Group, which saw 131 million shares switch owners. Insurer Aviva was the best performer on the index, bouncing back from last week’s heavy losses to rise by 8.38 percent — or 13.7 pence — to finish at 177, followed by Tullow Oil, which rose 7.89 percent — or 58 pence — to stand at 793.Property investment group Land Securities was the biggest fall, losing 10 percent — or 42.25 pence — at 380, while British Land Co fell a further 9.8 percent — or 32.75 pence — to finish at 301.25. The Dow Jones industrial average fell 79.89, or 1.2 percent, to 6,547.05. Uneasiness about the economy eclipsed a bounce in troubled financial stocks as well as news of a merger between drugmakers Merck & Co. and Schering-Plough Corp. On another note, the U.S. economy is urgently looking for growth engines, and one such engine the nation should seriously consider is nuclear power.From a economic perspective, it makes a great deal of the sense for the United States to imitate the French model and build nuclear power plants — 100 percent publicly funded if necessary — on a grand scale. The US dollar ended last week mixed across the majors as the currency gained against the British pound, euro, Japanese yen, Canadian dollar but fell versus the Swiss franc, New Zealand dollar, and Australian dollar. However, when looking at the big picture – aka the DXY Index – the greenback remains in the uptrend that started in mid-December, which presents potential for further gains. At 9:30am , GBP high news for the Manufacturing production expected to be better than previous and at 12:30pm, Fed Chairman Bernanke Speaks.

The FTSE 100 index is predicted to open 20 to 22 points higher today, according to financial bookmakers, having closed up at 3,530 in the previous session.  Lloyds Banking Group will be the centre of attention after it said Britain would take a stake of up to 77 percent in the bank.  Britain’s economic downturn will be deeper than previously thought this year as commented by the British Chamber of Commerce.  The central bank may have scope to pump more money into the economy if an asset-buying spree unveiled last week failed to kick-start growth as quoted by Bank of England Deputy Governor Charles Bean.  The Dow reached 6,500 on Friday, bounced off the bottom of the weekly channel and finally closed the day with a surprising gain of 33 points. If the Dow can remain above the lower boundary of the sloping trading range, we could actually see near-term buying pressure toward the range at around 7,500. However, continued overall weakness should rule the market beneath 7,500, as the Dow continues to make its way toward the next target of 5,600.  Forex news today sees a quiet day for data releases with only the CAD housing starts due at 1215 GMT with a slight reduction expected.  Friday saw a terrible USD Non Farm Payroll number with 651K jobs shed resulting in the US unemployment rate rising to the highest in 25 years.   The BOE plans to initiate Quantitative Easing has left sentiment fragile at best and is having a largely negative impact on Sterling.

Britain’s FTSE 100 index closed 116.01 points down from the previous session to close at 3529. The index is seen opening 9 to 14 points lower on Friday ahead of the key US jobs data according to financial bookmakers. Bank of England Governor Mervyn King has also commented that the central bank’s 75 billion pounds ($106 billion) asset buying spree to boost the money supply and the economy will not create a huge inflationary surge. A top International Monetary Fund official has also commented that the world’s rich economies
are shrinking at such a rapid timescale not seen since the World War Two and the downturn may last into 2010.
The Dow closed with another drop yesterday. It opened the day with heavy selling pressure and reached new lows within the current overall downtrend. The Dow pushed below 6,700 and eventually closed the day below 6,600 with a loss of 281 points. The 60 Minute Chart shows the Dow is making lower lows within the five-week downtrending channel and is now approaching the bottom of the pattern at around 6,500.
Forex News: Today is Non-Farm Payroll at 1:30pm.  This is vital economic data released shortly after the month ends. The combination of importance and earliness makes for hefty market impacts; Therefore we will not place any Income Generator trades today.
Also Unemployment rate is due to be released at 1:30pm, adding more volatility during that time.

The FTSE 100 looks set to finish the day up after yesterday’s heavy losses, adding 3.14% by 16:09. The Index closed at 3645. Miners led the way this afternoon on the back of China’s better-than-expected industrial figures and on the expectation the Chinese Government will unveil a range of new economic stimulus measures tomorrow. The Dow Jones industrial average rose 149 points, or 2.23 per cent, to 6,875. General Electric was among the few big names to end the day lower. The economic bellwether fell 4.6 per cent to $6.69 for its fourth day of losses as investors worried its ailing financial arm could threaten the whole company. GE has fallen 21 per cent this week. In Forex related data yesterday Australian q/q GDP fell to -0.5% whilst the PMI Services figure in the UK, considered a leading indicator of economic health, was better that expected at 43.2 but still well under the 50+ that would indicate expansion. In the US, the ADP Non-farm payroll figures worsened at -697K but the US ISM Non-Manufacturing PMI had a slight improvement at 41.6.   We have lots of important data coming out today and tomorrow so check your data release calendar. Of special notes is the setting of the GBP official bank rate. The rate is expected to be cut by 0.5% but more importantly the BoE is expected to introduce “quantative easing” measures to support it’s interest rate efforts. This means that the government will be injecting straight into the UK economy by buying government paper such as bonds and treasuries.

The FTSE closed down 113 points yesterday at 3,512 breaking the lows set October. The S&P, Dow and Nasdaq have also broken through major support levels in the last couple of days as the global selling rout continues driven by fear and concern for the state of the global economy. Reassurance from Gordon Brown and Barak Obama in Washington appears to be having little effect on the markets. The US automotive industry continues to suffer with poor sales released from a collection of major manufacturers. This will put jobs in doubt and not help the US unemployment figure – ADP is released at 13:15 GMT this afternoon and Non-Farm Payroll is out on Friday. Today the Services PMI is due to be released at 9.30, and this will be closely watched because it’s a leading indicator of economic health. Good trading.

Buyers took a mauling yesterday while those going short ended the session smiling as the FTSE closed down 204 points at 3625. Financials were among the main losers as confirmation of HSBC’s rights issues were confirmed causing the index to fall to it’s lowest level in 6 years.  The Dow fell below 7,000 points for the first time since 1997 in the early trading hours, closing at 6763.  American International Group Inc (AIG) reported a 62-billion-dollar quarterly loss as the United States’ deepening recession and financial crisis mean’s the blue-chip Dow has now lost more than half its value since reaching a record high of 14,000 points in October 2007.  In Forex news, the CAD BOC rate statement is due out at 2pm with an expected cut to 0.50%.  Then at 3pm, USD Pending Home Sales are expected to see a significant reduction to – 3.0%. Also watch out for Fed Chairman Bernanke as he testifies before the Senate Budget Committee at 3pm.  In overnight news, AUD Retails Sales came in better than expected at 0.2% and the RBA left cash rates steady at 3.25% despite expectations of a drop of 0.25%.

The FTSE 100 closed down 2.18 per cent. At closing time, the index stood at 3,830.09 a fall of 85.55 points. In a week that saw the index rooted below the 4,000 mark, it fell a total of 1.5 per cent – after seeing a fall last week of 7.17 per cent. Over February as a whole the index lost 7.7 per cent. Another bad week for the banks with Lloyds  reporting £10 billion losses on its HBOS subsidiary – was down 22.27 per cent to 58.30p & Royal Bank of Scotland was down 20.00 per cent to 23.20p. Barclays slipped 17.35 per cent to 93.40p. The Dow gained 236.16, ending at 7,350.94. The Nasdaq added 54.11, to 1,441.83, while the S&P 500 rose 29.81 to settle at 773.14. Citigroup and Bank of America led the surge after Ben Bernanke said the government would not have to resort to nationalization to save the beleaguered banks.  In Forex news and data on Friday the US Preliminary GDP q/q figure came in very low at -6.2% It is worth noting that although this is q/q data, it is announced in an annualized format (quarterly change x4). Neverleless, a fall of -6.2% in such an imortant indicator of economic activity, and therefore, health can not be ignored. The unemployment rate in the Eurozone also increased very slightly to 8.2% but remains high and could worsen over coming months. GfK Consumer Confidence in the UK improved slightly to -35 but is well below the zero watermark that tips consumer sentiment from pessimistic to optimistic. Important figures being released today for the UK so watch out around 9am -10am this morning We have the Halifax HPI m/m, Manufacturing PMI and Mortgage Approvals all being relaesed for the UK market. Also the ISM Manufacturing PMI figured due out in the US.