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Another rout hit markets on Friday with concerns about Greece and Italy outweighing positive US economic data. CAD was the worst performer, followed by EUR; the yen and Swiss franc were the top performers. Fridays CFTC data showed euro longs cut by 41%.

Moodys sent a shiver through markets Friday by placing 16 Italian banks and two government-related financial institutions on review for possible downgrade. Another 13 banks had their outlook cut to negative from stable. This comes on the heels of Moodys announcement last week of a review of Italys public debt.

Greece continues to be a top story. The ECBs Stark said the latest bailout deal is the nations last chance. The market is also growing increasingly concerned about votes on Greeces austerity package on Tuesday. The governing majority has thinned to 154 votes after a defection; 151 votes are needed.

The S&P 500 closed down 1.2% to 1268. The market closed virtually at the days lows but above Fridays low and critically -- above the 200-day moving average. Gold fell $17 to $1503, oil was flat. The bond market continues to flash warning signals. We must stress that its likely that a major round of risk aversion is likely to show up in bonds first. Ten-year Treasury yields fell to 2.87% -- the lowest since the credit crisis. Two-years are near record territory at 0.33% and T-Bills are down to 0.007%.

Positive US economic data was cast aside by the market. The final report on Q1 GDP was revised to +1.9% from 1.8%. May durable goods orders at +1.9% were above the +1.6% expected. The key line on non-defense capital goods ex-aircraft rose 1.6% compared to the +1.0% expected. More importantly, all the priors were revised much higher with non-def ex-air to -0.8% from -2.3%.

On the week, CHF was the best performer, followed by USD. Sterling lagged followed by AUD. Cable closed out the week below 1.60 for the first time since February due to weak CBI data, dovish BOE minutes and turmoil on the continent.

The weekly CFTC data showed dollar shorts trimmed against everything but JPY. Euro longs were cut to 29.7K from 49.8K. Positions in all the commodity currencies were cut back, especially in CAD which fell to +2.2K from +18.8K. The position in GBP switched from positive to negative, falling by 22.5K to -11.4K. The yen net long position increased to 32.6K from 24.7K. The data is through Tuesdays close.

naijababe:
Call 911, somebody killed Mr Market

Naijababe, u self don kill market?
Abeg make una allow us see dem pips ooo

Am loving my GU buy

Just bought GU
Lets go there

No change in sentiment took place as London traders continue to buy the greenback. No mention of QE3 in Bernankes press conference sent equities and riskier assets lower and helped to underpin the greenback. Fundamental data from Europe disappoint. Onto US housing data.

Data from Europe mostly disappointed today when French, German and Euro zone manufacturing PMI came short of expectations. German manufacturing PMI decreased in June to 54.9 from previous 57.7. Euro zone Manufacturing PMI slowed to 52.0 from 54.6.

As manufacturing PMI slows down in most developed countries around the world, hinting the possibility of another recession, it comes as a weak consolation that German services PMI increased to 58.3 from 56.1. Euro zone services PMI also disappointed when it printed 54.2 from previous 56.0.

CBI reported sales in the UK dropped sharply from 18 to -2 which is the worst reading since June 2010. The sterling lost close to 300 points over the past two days and currently sits at the psychological level 1.60. Clear break and daily close below this level would open way to 1.54.

The common currency has been sliding against most trading partners was further hit after Finnish PM said that risk of serious financial crisis and recession was very high and Slovakian PM announced that during a phone call, Greek PM said he cannot guarantee reforms will find support in Greek parliament. The situation continues to be serious as evidenced by further increase in price of 5 year Greed CDS. This CDS trades at 2025 bps, up 138 bps just today.

New York session starts at 8:30 am ET with Unemployment Claims that are expected unchanged at 414K. At 10:00 am ET New Home Sales May are expected to decrease slightly after three months of gains. Analysts predict 311K from previous reading of 323K. As long as we do not see a serious deterioration, USD should continue to appreciate.

naijababe:
Long ke? Ol' boy, abeg stay on the sidelines biko. If u can check the indices, please do; DAX down 130 pts, DOW down 140 pts and the US session never even start.

I said will soon not right away.

Truth is GU is looking very tempting considering the fact that it is
near the low of march/april.I have set a buy limit there sha,i know it will
definitely bounce there and am gonna do some pips there.

Looking for an opportunity to go long
on GU soon

Greek cabinet passes austerity budget, Euro awaits flash PMI data after disappointing Chinese PMI, US dollar firms up after FOMC and Sterling pressured near key supports as rate rise expectations recede.

For once markets could well be dominated by factors other then Greece over the next couple of days after the Greek cabinet yesterday passed the new austerity budget in preparation for putting before parliament next Tuesday.

Overnight we saw that Chinese HSBC flash PMI slid back coming in at 50.1, still in expansion territory, but down from Mays 51.1, raising fears of slowing growth in one of the biggest drivers of emerging market demand and growth in the global economy. In Europe this morning we should see if flash June PMI data in Germany and the Euro zone is also showing similar signs of stress, with expectations of a slow down in both manufacturing and services in both regions, with reductions across the board from the May figures. German manufacturing PMI, traditionally one of the more robust measures is expected to slip back to 57, from 57.7, while the euro zone equivalent is expected to slide from 54.6 to 53.8.

Fed Chairman Bernanke expressed concerns about the slow down in the US economy with the Fed following in the footsteps of the IMF earlier this month and downgrading its growth forecasts from a range of 3.1-3.3% to 2.75%-2.9%. The Fed also upgraded its core PCE inflation forecast from 1.3%-1.6% to 1.5%-1.8% and making the likelihood of the possibility of further stimulus measures of QE3 less likely in the short term. The Fed did say that it would keep the stimulus at current levels while it kept a watching brief over the economy with Fridays final revision of Q1 GDP a key indicator.

GBP remains on the downfoot over the past 24 hours as it nears a number of key supports against the US dollar. The unexpectedly dovish minutes really shouldnt have come as too much of a surprise, given Andrew Sentences recent departure, however Fishers comments earlier this week might be warranted if downside risks materialised spooked the markets and pushed out estimates of the next rise in interest rates into next year.

US jobless claims are due out later this afternoon and will have particular resonance given the Feds action last night in pushing up its unemployment rate estimate from 8.4% to 8.6% to 8.6% to 8.9%.

honeric01:
Holalalalala


I am glad my patience paid, i stalked GU and EU from 1.6260 and 1.4420 till they started crumbling down, now i can decide to either follow till the end or just take profits and watch for retracements.

GJ too was not left out, nor Uchef.

I also took a snipe at Ausd

Patience always pay off man.I still dey inside my EU

Dollar Strengthens as Fed Refrains From More Stimulus

The Fed is inclined to stay the course, ending Q2 at the end of the month and reinvesting expiring securities, according to the FOMC statement and press conference. The economic assessment was downgraded and there was no hint at QE3, leading to risk aversion and a dollar rally. Look to the HSBC China PMI to help set the tone in Asia-Pacific trading.

In the hours leading up to the FOMC decision, jittery markets built in a concession for the possibility of further Fed stimulus. PIMCOs Bill Gross spurred the trade with a tweet that said QE3 could be unveiled at Jackson Hole in August. The market moves gave us a sneak preview of what QE3 might look like; gold surged, stocks gained and the dollar was weak, especially against risk currencies. When the statement failed to offer any hint at QE3, the moves unwound. Further moves (risk aversion) were a result of the Fed downgraded its economic assessment. Some downgrade was expected but there was also the possibility of the Fed presenting some optimism. The S&P 500 closed at the days low down 0.65% to 1287 in the first decline after four days of gains.

We see a compelling case to be made for longer-term USD/JPY shorts. In the coming months the market will pressure the Fed to embark on QE3 by unloading stocks. If the Fed holds its ground, the dollar will gain broadly on risk aversion but lose ground against JPY and CHF. If/when the Fed bows to the pressure, a dollar rout will commence. AUD and NZD will be the biggest winners but JPY and CHF will also benefit. We prefer using JPY over CHF here because a large portion of CHF inflows have been due to investors seeking a safe haven from the crisis in Greece.

An early look at CHINESE INDUSTRIAL PRODUCTION comes with the June HSBC MANUFACTURING PMI. This indicator has gained increasing clout in the past year. A soft reading here could collide with the negative post-FOMC sentiment to drive an ugly risk off trade on Thursday. The May level of 51.6 was a 10-month low; there is no consensus estimate but we suspect the market is priced for a slight improvement to around 51.9.

honeric01:
O la la la joyful joyful,

Me sef just sold 200,000 lot on EU for 200 pips

Anyways my EU is paying off big time

odiaero:
I was not refering to u but to blackgucci, am telling him to think twice of his buying opinion

Okies.U know say my 1,000,000 lot is at stake here
so i gotta come at any body who no wan my EU to drop

EU dropping baby

Lets wait and see

blackgucci:
If yesterdays high doesnt break at the end of today then u can have your short.

Totally agree with you but i also think general sentiment on EU
favours the downtrend

odiaero:
^^ U may wanna change your mind

No sir,too late man
EU going down baby

blackgucci:
@jazes no harm intended , just defending my long interest in Eu.lol

No prob my brother.Your long go happen after my short

Guys,
I hope u all they watch GU,down side baby

odiaero:
1,000,000 lots? On your own

Chairman me,y u dey deny me now after u thought me
how to kill the market.

blackgucci:
Eu might not fall as expected.

Back to sender by fire

naijababe:
Na wa o. Enjoy the ride, I got out of it because I was frustrated, only for the damn thing to head south 2 mins later. SMH!!! Today get as e be, abeg

E really get as he be
No be small thing ooooo

odiaero:
LWKMD

odiaero:
Bring it on, guy u wan fight EU?

Odiaro na so u teach me na.Infact na 1,000,000 lot
i enter now ooo.I don vex cos the thing needs to pay
for all my time wey hin don waste.

1,000,000 lot baby.Even Odiaro no fit try me

I see EU fall yakata
Bring it on baby

Now you know why our London morning IMT was titled "Sterling Fears Upcoming BoE Minutes". Indeed, the minutes did show one less hawk (see below). USD holding steady. Euro zone industrial orders disappointed. Critically important FOMC statement is later on today.

GBP was under pressure since London traders got to their desks. After the MPC meeting minutes were released, the Sterling dropped sharply. Vote was 7-2 from previous 6-3 (7 members voted for holding rates steady and 2 for rate increase). The minutes revealed a discussion about the possibility of QE extension should downside risk materialize and Adam Posen voted for GBP 50 bln increase in Asset Purchase Facility to GBP 250 bln. Recent QE comments and overall dovish stance would indicate that BoE will not be raising rates in the near future.

Other news from this morning include Swiss ZEW Economic Expectation index for June that dropped to -24.3 from previous -11.5 and Euro zone April Industrial Orders that increased to 0.7% from previous -1.5% but still came short of 1.1% expected.

The New York session will be all about FOMC. The rate decision and statement are both due at 12:30 pm ET and the press conference will start at 2:15 pm ET. The fed funds rate will stay between 0 and 0.25% and the highlight of the day will be the press conference. Traders can expect a significant volatility around these times.

The Fed will acknowledge slowing of the economy and deteriorating fundamentals. The job market has worsened with unemployment ticking back up, yet consumer inflation has been increasing steadily since November 2010. However, at this point additional round of QE is not probable. The Fed is likely to keep the main interest rate unchanged for extended period and to continue to reinvest maturing securities as not to shrink its balance sheet.

If there are no hints of QE3, equity markets will be disappointed and risk aversion will increase as there will not be any expectation of an additional liquidity injections to the financial markets. Falling equities and other types of riskier assets combined with ongoing uncertainty in Euro zone should support the USD over the near term. Should QE3 be hinted, that would be a different case entirely

naijababe:
^ Easy o dude

Naija babe, i don dey inside this trade since
morning with some heavy sell(like Odiaro will say)
but the guy dey do shakara for me.

EU oh EU
Come down baby come down
I have waited patiently for you baby
Come down baby come down baby

EU just no wan come down yet

odiaero:
Yah, also sending my soldiers to that EU, we are still on the sideline, waiting to commence attack

@ sending soldiers. Abeg no send Boko Haram go there oo

odiaero:
Some one please call 911, am about to murder GU, 80pips times 100lots times 2

U are mouthish Carry go jor

GU all the way for me but also waiting on EU for
a good sell opportunity

honeric01:
^^^^

Hehehehe mr newscaster

Trailing stop activated!!!

U don chop all the money,abi?

Send me some pips now

honeric01:
So nothing has really changed since, just few pips here and there, GU and EU, i am waiting and watching, i need my 600pips on EU, i need my 400pips on GU, give it to me, give it to me baibai

Oya take your pips says eu and gu

Greeces Socialist government survived a crucial confidence vote, paving the way for the latest round of aid and confirming market suspicions. The euro and stocks rallied strongly in anticipation of a positive vote but the initial post-vote reaction was to sell EUR. The remainder of the Asia-Pacific session is quiet.

Greek politicians voted along party lines with all 155 members of the government supporting more than the 151 needed. The market appeared to buy the rumour and sell the fact as EUR/USD fell 40 pips after the results were announced. The market sniffed out the positive vote ahead of time, sending EUR/USD up more than 100 pips to a high of 1.4433. The stock market also benefited with the S&P 500 rallying 1.3% to 1295.

Greece appears to be on its way to receiving the next tranche of international aid but risks remain. Next week Greece votes on a five-year austerity package and there will be another confidence vote before July 4. Looking out in the long term, IMF leader Lipsky said the situation is exceedingly difficult but has a reasonable chance of success if fully implemented. Thats not exactly a ringing endorsement. The market will also be watching for any escalation in street protests.

The bulk of trading on Tuesday was related to Greece but US housing also had an impact. Existing home sales fell 3.8% to 4.81 million, fractionally better than the 4.80 million expected. The Fed began its two-day meeting with no change in rates expected on Wednesday.

Wednesdays Asia-Pacific session features second-tier data on New Zealands current account and credit card spending. There are key reports until 0830 GMT and the Bank of Englands MPC minutes.

The dollar was slightly weaker on Monday, as concerns about the U.S. economy overshadowed delays in resolving the mounting Greek debt crisis.

European officials pushed out a decision on Greece until July, warning Athens to get its fiscal house in order if it wants to avoid defaulting next month.

"I cannot imagine for one second that we would commit to finance Greece without knowing that the Greek Parliament has given a vote of confidence to the Greek government," said Jean-Claude Juncker, who leads the euro area group of finance ministers.

It is feared that borrowing costs for other profligate Euro area members will rise to unsustainable levels if Greece defaults.

Moody's Investors Service Friday placed Italy's Aa2 local and foreign currency government bond ratings on review for possible downgrade, citing economic growth challenges.

Still, the dollar slipped to $1.43 against the euro, down from $1.4220 overnight. Since a brief advance to better than $1.40, the dollar has come under renewed pressure amid evidence the U.S. economy is not turning around.

The dollar was steady near Y80.20 versus the yen, staying in the low end of a stubborn trading range.

There was little movement near CHF 0.8450 versus the Swiss franc, not far from early June's record low of 0.8327.

The dollar remained slightly more than two cents below par versus its Canadian counterpart.

The Federal Reserve meets later this week, and while they are unlikely to signal a third round of quantitative easing, will probably say that rates will remain at effectively zero for "an extended period."

German producer price inflation eased in May after spiking up in the previous month, data released by the Federal Statistical Office showed Monday.

The producer price index for German industrial products rose 6.1 percent year-on-year, following a 6.4 percent gain in the previous month. This was the slowest increase in prices in four months.

Japan saw a merchandise trade deficit of 853.7 billion yen in May, the Ministry of Finance said on Monday, staying in the red for the second straight month following the devastating earthquake and tsunami on March 11.

Weighed down by slowdowns in Japan and the United States, the global economy has hit a soft patch and risks are rising amid an unbalanced recovery, the International Monetary Fund (IMF) said Friday.

All eyes remain on Greece in the forex market; overall moves were small Monday as the market prepares for a razor-thin confidence vote on Tuesday. The RBA minutes are a highlight of the Asia-Pacific session.

Sentiment was generally positive Monday after Fin Min Schauble said Germany was prepared to increase the EFSF to 440B and debt guarantees to 780B.

S&P 500 gained 05% to 1278. It was the third consecutive day of gains following the large decline on Wednesday. Stocks breached Fridays high but were unable to close above that 1280 level. The EUR/USD chart is similar but unable to break Fridays intraday high of 1.4339. Look for these two charts to confirm each other in the day ahead.

The market is looking toward a confidence vote in Greeces parliament on Tuesday night. PM Papandreou has 155 of 300 seats. A FAILURE OR DELAY WOULD BE A LARGE EUR NEGATIVE but if not this may be the final hurdle for the Greek situation to return to some stability (EUR positive).

Asia-Pacific Preview

The RBA releases the minutes of the June 7 decision at 0130 GMT. The Aussie dollar fell sharply after the decision, which maintained rates at 4.75% and said the current mildly restrictive stance of monetary policy remained appropriate. AUD later rebounded on June 15 when Stevens said rates will need to rise at some point. Very little tightening is priced in for the year ahead so there is a better scope for an AUD rally here. Unfortunately, the RBA are some of the most opaque among large central banks so there may be little to digest here.

At 0430, Japan releases the all industry activity index for April. It is expected to rise 1.8% m/m after a quake-driven 6.3% decline in March. The Japanese government upgraded its economic assessment on Monday, noting signs of an improvement in production capacity. This data captures a time period that was weak and even if the data falls short of expectations, look for market moves to be quickly reversed as the market is looking ahead.

odiaero:
^^^ Hahahaha, from tomoro, ahahahahhaha

Ok na, ur action is needed in the house man.
See u tomm then.

odiaero:
^^Nice, Got Early Morning 100pips from ECH, been watching since

Odiaro,
Na wetin dey happen today na?I no understand dis ur sit down dey
look today.
Wey all ur action na?Abeg bring back those action ooo cos i don miss
dem oo.

No prob man and help me tell d spam bot that hin self
fit dey follow my fundamental summary now

aguiyi:
jazes ,were the summery when i been see just now  

aguiyi:
@ jazes can we pls have a summery of the european session that just ended,thanks

Bros, i tire for this spam bot ooooo
The thing don bann me twice today ooo