CFD Markets News and Forecasts — 07-12-2010

Techs, from SMRA's Michael Sacchitello: " EURUSD needs to hold $1.3249 in order to hold on to the possibility that the post-11/30 correction has room to mature through $1.3538/$1.3716. Conversely, failure to hold $1.3249 reverses short-term euro strength; initially exposing EURUSD to the $1.3204 through $1.3149 area, with settlement below the latter raising the odds of an eventual move to new lows.

The euro erased gains against the dollar as Ireland’s parliament neared a vote on austerity measures that are required to qualify for an 85 billion-euro ($113 billion) aid package.
The Irish vote comes as European leaders continue to discuss how to contain the region’s debt crisis from spreading to other nations.

Ireland’s parliament will vote on its budget around 7 p.m. in Dublin. The budget must be passed for an 85 billion-euro aid package to go into effect. The government was forecast to win approval for austerity measures after independent lawmaker Michael Lowry said late yesterday he will support the budget.
Irish Finance Minister Brian Lenihan said in a speech to the Irish parliament in Dublin that there are “clear signs of hope” as the economy gathers strength.
“We’re getting near the Irish budget vote so we’re seeing a bit of profit-taking ahead of that,” said Kathy Lien, director of currency research at GFT Forex.
Luxembourg Prime Minister Jean-Claude Juncker said late yesterday after chairing the ministers’ meeting that his group would “do everything to secure the financial stability in the euro zone.”
The yen fell from a three-week high against the dollar after President Barack Obama broke a stalemate about extending middle-class tax cuts introduced by the administration of George W. Bush.
Obama said he would accept lower tax rates on high earners’ income, dividends, capital gains and multimillion dollar estates for the next two years in exchange for extending federal unemployment insurance. The current tax rates, enacted in 2001 and 2003, are set to increase Dec. 31.
"The increase in taxes may further widen the budget deficit", said Alan Ruskin at Deutsche Bank AG. “These kinds of agreements ultimately don’t support the idea of fiscal consolidation,” Ruskin said. “That’s a point of particular caution.”
Canada’s dollar dropped, erasing earlier gains, after the Bank of Canada held the benchmark interest rate steady at 1%. It said it will remain careful about future interest- rate increases as falling exports and Europe’s sovereign debt crisis hinder the economic recovery.
The pound rose against the dollar after U.K. manufacturing expanded twice as much as economists forecast in October and retail sales climbed, boosting demand for British assets.

Both the Dow and the S&P 500 have slipped to fresh session lows. The Nasdaq has also been pushed down a bit, but it still isn't yet back to its worst level of the day.

Industrial stocks have been resilient in the face of the broader market's backslide. Collectively they are still up 0.8%, which is double the S&P 500's gain.

Deere & Co. (DE 81.15, +2.11) has been a steady leader in the group today. It even set a new two-year high less than an hour ago.

In contrast, 3M (MMM 83.95, -2.93) has been one of the sector's worst laggards after the company reaffirmed its fiscal 2010 outlook, but issued a disappointing forecast for 2011.

Daily studies plateauing, cautioning bulls as oil fails to maintain a break above $90 and also the daily Bollinger band top. Initial support seen as the 5-DMA at $88.46 and further support as the 7 Oct 2008 low at $87.87.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up nearly 1% ahead of the opening bell. Futures measure current index values against perceived future performance.

Stocks had climbed more than 2% last week as investors hoped for a deal that would extend current tax rates.

Late Monday, President Obama announced a deal with Republican leaders that would extend Bush-era tax cuts for 2 years and unemployment benefits for 13 months. It would also lower the payroll tax by 2 percentage points for a year.

"What that does is it removes uncertainty from businesses, from individuals, other entities as far as the taxes for 2011 and 2012 and also all the taxes would stay as they were," said Zahid Siddique, Associate Portfolio Manager of the Gabelli Equity Trust. "Assuming that we have a resolution, it is something that markets would like."

On Monday, major indexes ended mixed after drifting around breakeven for most of the day. Investors spent most of the day mulling over Federal Reserve chairman Ben Bernanke's pessimistic comments about the nation's economy.

While stock investors sat on the sidelines, commodities surged Monday. That rally continued Tuesday morning with gold hitting a fresh intraday high, oil topping $90 a barrel for the first time in more than 2 years, and silver prices hitting another 30-year high.

Commodities have been on a tear as investors see increased demand from countries like China. They're also being used a hedge against inflation and moving higher on the back of the weakening dollar, said Siddique. "As the dollar weakens, that means the commodities will move higher because they are linked to the dollar."

Currencies and commodities: The dollar fell against the euro and the British pound, but rallied against the Japanese yen.

Oil for January delivery gained $1.19 to $90.58 a barrel, crossing the $90 a barrel threshold for the first time since October 2008. Oil for January delivery settled at a new 2-year high Monday, at $89.38 a barrel.

Gold futures for February delivery rose $14.40 to $1,430.50 an ounce, after reaching a new intraday high of $1,432.50 earlier in the session. Gold settled at a record $1,416.10 an ounce Monday.

Silver for March delivery rose 95 cents, or 3.2%, to $30.68 an ounce. Earlier in the session, silver topped $30.75 an ounce -- a new 30-year high.

European session:
03:30    Australia     RBA meeting announcement    4,75%    4.75%     4.75%     
05:00    Japan     Coincident Index     100,7    100.8    102.1    
05:00    Japan     Leading Economic Index     97,2    97.3    98.6    
06:45    Switzerland    Unemployment Rate     3.6%    3.6%     3.6%     
09:30    UK     Industrial Production (MoM)     -0.2%    +0.3%    +0.4%    
09:30    UK     Industrial Production (YoY)     +3.3%    +3.9%    +3.8%    
09:30    UK     Manufacturing Production (MoM)     0.6%    +0.3%    +0.1%    
09:30    UK     Manufacturing Production (YoY)     +5.8%        +4.8%    
11:00    Germany     Factory Orders s.a. (MoM)     1.6%    1.6%    -4.0%    
11:00    Germany     Factory Orders n.s.a. (YoY)     17.9%    18.6%    14.0%


The dollar weakened against most major counterparts after President Barack Obama said he would agree to sustain tax cuts, boosting investor demand for higher- yielding assets.
The dollar reached a three-week low against the yen after Obama broke a stalemate over extending middle-class tax cuts, introduced by the administration of George W. Bush, before Congress adjourns.
The current tax rates, enacted in 2001 and 2003, are set to increase Dec. 31.
"Risk has taken a bit of a bid tone today and part of that was due to some of the concessions last night by Obama,” said Lauren Rosborough, a senior strategist at Westpac Banking Corp. in London. “The suggestion is that the extension of the Bush tax credits will add stimulus for the U.S. economy.”

EUR/USD: gained to $1.3390, before traded within $1.3390/50 range.

GBP/USD: Demand building strongly post UK production data now as cable break $1.5800 and supported by middle eastern demand in the euro dollar. Cable has posted a high on the day at $1.5820 before eased back under the figure.

USD/JPY:  traded within Y82.30-Y82.80 range.

See contraction between EU economy, markets

Expect Portugal to specify 2011 measures

EU is beefing up systemic response to the crisis

EU will start new round of bank stress tests in Feb

New bank tests will include liquidity test

Nicor will merge with a subsidiary of AGL Resources in a transaction with an enterprise value of $3.1 bln, including a total equity value of $2.4 bln. The combined entity will have an enterprise value of $8.6 bln.

The dollar weakened against most major counterparts after President Barack Obama said he would agree to sustain tax cuts, boosting investor demand for higher- yielding assets. The dollar reached a three-week low against the yen after Obama broke a stalemate over extending middle-class tax cuts, introduced by the administration of George W. Bush, before Congress adjourns.

The current tax rates, enacted in 2001 and 2003, are set to increase Dec. 31. "Risk has taken a bit of a bid tone today and part of that was due to some of the concessions last night by Obama,” said Lauren Rosborough, a senior strategist at Westpac Banking Corp. in London. “The suggestion is that the extension of the Bush tax credits will add stimulus for the U.S. economy.”