Bobbys Corner-Open Market-Feb.25.2010

Good Morning:

The Euro dropped as Moody’s Investor Service and S&P said they may cut Greece’s rating.  Sovereign debt issues are a rising concern for investors, and may put upward pressure on interest rates in other developed countries. 

Fed Chairman Bernanke continues his speaking engagement in front of  Congress, and yesterday reiterated his stance on keeping interest rates low to keep the economy on the road to recovery.

World equity markets are lower-and US Futures are also pointing to a lower opening this morning.

Oil:$79.29                    Gold:$1091.50

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Feb.10.2010

Good Morning:

I have been away at the World Money Show in Orlando, FL- I am now back in NY with the snow falling.

The USD continues to benefit from the crisis in the EuroZone.   Greece is trying to work out a deal with either the EU or to get direct assistance from Germany.  Greece is a major political concern for the EZ. The EZ cannot afford to allow Greece’s debt to be placed below investment grade levels, for fears that this could also effect  other Southern European economies.

Fed Chairman Bernanke is expected to testify before Congress today-but due to the inclement  weather, his testimony may be in written form.

World equity markets rose-as speculation that a “rescue package” for Greece is taking root.
Commodities are mixed.

Oil:$73.96                                          Gold:$1080.70

HAVE A GREAT DAY & GOOD LUCK

Bobbys Corner-Open Market-Jan.25.2010

Goodtures,stocks, Morning:

The JPY dropped as speculation rises that the Japanese Government may increase the purchase of government debt.  They are looking to limit the growth of the JPY and safeguard the economic recovery.
The USD also fell as speculation that Fed Chairman Bernanke will be re appointed to his post for a second term, which will increase demand for higher-yielding assets.
The USD also fell as investors speculate that this morning’s data on existing home sales will show a drop last month.

World equity markets were lower overnight-but US Futures are higher this morning as investors realize last weeks decline may of been overdone. 
Stocks took a beating last week when investors were concerned that Bernanke may not  be re appointed, and President Obama proposed to limit bank  investment activities.

Oil:$74.33                                       oil:$1097.60

  HAVE A GREAT DAY & GOOD LUCK

Canada Building Permits due at 8:30 AM. Bernanke to speak at 12:00 NYT.

The Canadian Building Permits for the month of October will be released at 8:30 AM. The expectation is for a gain of 1.0% vs a gain of 1.6% last month.   This would be be the 3rd consecutive monthly increase for the release.

Later at noon NYT, Fed Chairman Ben Bernanke will speak at the Economic Club of Washington. His comments, post the stronger than expected US Employment Report, will be of extreme interest to the market.   The market will be looking for any shift in Fed’s stance that the Fed will remain on hold for “an extended period of time” .

Bernake comments appear on the newswires before Testimony on Capitol Hill

• WARNS CONGRESS AGAINST REVIEW OF FED POLICYMAKING
• WARNS FED INDEPENDENCE LOSS COULD SPUR INFLATION FEAR
•  HOUSEHOLD-SPENDING OUTLOOK `IMPORTANT DOWNSIDE RISK’
• `CONFIDENT’ FED HAS TOOLS NEEDED TO ACHIEVE MANDATE
• SAYS JOB LOSSES, HOME-VALUE DECLINES TO HURT SPENDING
•  FED CAN WITHDRAW STIMULUS IN `SMOOTH,’ TIMELY WAY
• URGES `PROMPT ATTENTION’ TO REINING IN BUDGET DEFICIT
• SAYS `FINANCIAL CONDITIONS REMAIN STRESSED’
• SAYS DRAG ON ECONOMY FROM EXPORTS `WANING’
• POLICY TO BE `TIGHTENED’ WHEN RECOVERY IS IN PLACE
•  OFFICIALS MUST PLAN NOW FOR RESTORING FISCAL BALANCE
• MANY BANKS FACE RISK OF `SIGNIFICANT’ FURTHER LOSSES
• SAYS HOUSING DECLINE `APPEARS TO HAVE MODERATED’
• SAYS PACE OF ECONOMY DECLINE `SLOWED SIGNIFICANTLY’
• SAYS POLICY TO BE `TIGHTENED’ WHEN JOB MARKET IMPROVES
• SEES KEEPING RATES `EXCEPTIONALLY LOW’ FOR EXTENDED TIME
• SAYS DEMAND SHOWS `TENTATIVE SIGNS OF STABILIZATION’

The rise in rates line in the sand has been drawn with Bernankes comment on how the Fed will raise rates when the unemployment improves.  He is passing on responsibiilty of budgetary discipline back on Congress.  This is his warning.   He notes that export woes have improved.  A lower dollar will do that as it makes exports more competitive abroad.

GBPUSD bouncing in early NY trade. Earnings help. Bernanke at 10AM eyed.

Overnight, the GBPUSD moved lower steadily, in a reversal type day to yesterdays move higher (see chart above) .  Like yesterday, the GBPUSD followed the 100 bar moving average on the 5 minute chart  - in this case down.  There was one test early on when market tested the moving average, and used it to push lower.  The UK Public Sector Borrowing figures, which came in better than expected, could not reverse the trend/sentiment.

The move lower retraced 61.8% of the move up from the low reached on Friday.  That Fibonacci Retracement came in at the 1.6375 level.  The low reached 1.6382 where buyers came in the market.  The push back higher in early NY trade (on the back of some better earnings announcements from Merck/Caterpillar) has moved the pair back above the 100 hour moving average which is currently at the 1.6420 level.  Additional support should come in at the 1.6410 level (50% of the move higher - see chart below)  

A move back below these levels, would likely indicate the correction higher off the low was just that.  If the prices can hold, the upside may continue, with 1.6448 followed by the 100 bar MA which is currently at the 1.6460 level and moving lower.  Watch these levels.

Bernanke speaks at 10:00 AM on the economy on Capitol Hill.  His comments are likely to cause some volatility in the market.  He should speak to the bottoming of the economy with less need for liquidity stimulus. However, he is also likely to warn the bounce will be shallow.  The Unemployment is continuing to weigh on the economy as full time and underemployed is upwards of 16%, and housing although more stable, still has a lot of inventory hangover.

USDCHF breaks through intraday support as Bernanke testimony pressures the dollar

The USDCHF moves below the support area for the pair.  Support at 1.0975 and 1.0970 gave way and the market scooted lower.  The threat of intervention remains, but the market is more intent on dollar selling at the moment as the Senate hearing weighs on the potential stability of the Fed/Bernanke.  The opening remarks suggest a heated discussion is likely. Expect choppy trade to continue.  The low for the day reached down to 1.0920.  Risks are increased in the market while rewards are uncertain.

Bernanke comments at Capitol Hill Testimony

•  REPEATS HOUSING HAS SHOWN SOME SIGNS OF BOTTOMING
•  REPEATS PACE OF ECONOMY CONTRACTION MAY BE SLOWING
• SAYS UNEMPLOYMENT TO RISE FURTHER IN NEXT FEW MONTHS
• TAXES SHOULD MATCH APPROPRIATE LONG-TERM SPENDING
•  CAN’T BORROW INDEFINITELY TO FUND ENTITLEMENTS
• FINANCIAL MARKETS REMAIN UNDER STRESS
• MUST START PLANNING NOW TO RESTORE FISCAL BALANCE
• MORE BANK ANNOUNCEMENTS ON RAISING EQUITY
• RISE IN YIELDS PARTLY REFLECTS DEFICIT CONCERNS
• WARNS LONG-TERM DEFICITS THREATEN FINANCIAL STABILITY

Next Page »