The Forex markets opened the week positive. All the news from last week was positive with global PMI and employment numbers coming out positive. The leader in the race was the US economy which showed an impressive Non-Farm Payrolls data bringing down the unemployment rate to 8.3%.This however did support the US dollar in the closing trades of last week and in this week’s opening moves.  

But moving into this week the risk currencies moved into the bullish zone sending the Dollar Index lower. This was partly due to the past weeks positive data and rumors coming out that the Greeks are on the verge of an elusive deal with its debt holders. The Markets have given particular importance to these talks as the deadline set for Greece, which is 20^th Feb, is fast approaching.

Another factor aiding the markets bullishness was the RBA rate decision. Most of the market participants had priced in a rate cut by the RBA. The RBA however surprised the markets by keeping the rates on hold. After the RBA minutes there was a bullish rally in the AUD, taking the currency to levels before the Greek tragedy began to grapple the markets i.e. the AUD rose to level of August 2011. Riding on the impressive AUD rally the GBP and the Euro also moved higher.

But today it seems that markets have lost its patience on Greece. The Greeks have been continuously testing the market patience with the slogan that a deal is nearing. A favorable outcome might be possible after the German and other European powers warning for Greece last week. But as time elapses speculations rise about the deal, fuelling negative sentiments for the Euro zone.

This is the factor for the selloff seen in the Euro, GBP, AUD, Gold and Silver the early US session today.

Another major fundamental is the dual rate decision in Europe tomorrow. Tomorrow there is the rate decision by the Bank of England and European Central Bank. The ECB outlook on the European economy is particularly important in the wake of the Greek situation. Back in England the BOE is expected to raise its asset purchase target by keeping the rates steady in an effort to fuel the slowing British economy.

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Like a hungry predator, investors are on the prowl for yield. Many quality companies that were yielding 4% or 5% a year ago now have dividend yields below 4%, as prices have been bid up on nearly any stock with a respectable dividend.

As a result, investors are forced to look in some more exotic places. Real estate investment trusts (REITs), business development corporations (BDCs) and especially master limited partnerships (MLPs) have all gained popularity over the past year.

One area that has been a bit overlooked is foreign dividend payers.

There are quite a few American depositary receipts (ADRs) that pay a decent dividend – often more than their American contemporaries. However, you need to keep a few things in mind.

The dividend isn’t always paid quarterly. Most American companies that pay a dividend do so on a quarterly basis. However, foreign companies sometimes pay only twice a year or even just once annually.

Currency fluctuations may alter the amount of the dividend per ADR that you receive. The company usually pays its dividend in the local currency. If you’re invested in a Brazilian company, management will think about and pay its dividend in terms of Brazilian reals, not dollars. Any yield consideration will be based on its share price trading on the Bovespa (the Brazilian stock exchange). Holders of the ADR will also receive a dividend, but it will be dependent on how much was paid in the local currency and the exchange rate.

A Brazilian company could keep its dividend payment constant from one year to the next, but if the real appreciates in price, you’ll get fewer dollars. If the real depreciates, you’ll receive more dollars.

Therefore, for investors who prefer companies with a steady history of dividend growth, foreign ADRs may not match those objectives perfectly.

But that doesn’t mean there aren’t interesting income opportunities in foreign markets. As long as you can handle the currency fluctuations and the irregular payments, the yields are attractive enough to make it worth your while to take a look at some.

For example, CSN (NYSE: SID) is the sixth-largest steelmaker in the world. Based in Brazil, it earned R$2.9 billion in the first three quarters of 2011 and paid R$1.9 billion in dividends. The company pays its dividend in May and is expected to yield about 6% based on the current price.

Another Brazilian company with a healthy dividend is CPFL Energy (NYSE: CPL), the country’s largest privately owned energy company, with 13% of the national market. Roughly 75% of CPFL’s revenue is regulated, which means the company’s cash flow is rather predictable. That should give shareholders confidence that their dividend is secure. As long as the Brazil’s economy continues to grow, so should its dividend.

CPFL generated R$2.3 billion in cash flow from operations over the last 12 months and paid R$1.3 billion in dividends. It’s expected to yield 5.5% on today’s price.

Don’t Forget to Pay Uncle Santos

Often, when you receive dividends from a foreign company, taxes will be automatically taken out of your dividend payment. Since you already paid taxes on those dividends to the foreign government, the IRS will not make you pay it again. In fact, they’ll give you a tax credit against your U.S. tax obligations.

So, if you earned $1,000 in foreign dividends and paid $250 in taxes to Brazil, for example, you would be entitled to a $250 tax credit on your U.S. taxes.

Of course, when it comes to taxes, be sure to consult a professional tax advisor with any questions.

There are plenty of other foreign companies with juicy yields. You have to do a little bit of work in order to understand the story. But to feast on yields that in some cases are double what their American counterparts are paying, it’s worth putting in a little elbow grease. Your portfolio will thank you.

Good Investing,

Marc Lichtenfeld

Article by Investment U

The sterling pound has been sold off during the last hour and after breaking the 1.5900, the pair is now threatening the 1.5800 levels. The low for the day so far was formed at 1.5800. The support may be seen at 1.5800 and below at 1.5750/60. The resistance may be seen at 1.5830 and above at 1.5860. The pair is down half a percentage for the day at 1.5800.

The focus once again was back on the Greek deal. The delay on sealing the Greek deal continues to frustrate the markets. Euro got punished for the lack of development from Greece. It has erased all of the gains of the day and is currently down quarter a percentage at 1.3225. The low for the day till now is 1.3220. Market was expected to reach 1.3400 levels on the hopes of some action on the ground. The more delay will continue to hurt even more. The support now will be seen at 1.3230 and below at 3100. The resistance may be found at 1.3270/80.

US dollar is gaining the levels across the board. Although the USD/JPY pair has failed to hold on the 77 levels, it is still trading in green at 76.87, up about 0.15% for the day. The support may be found at 76.80 and resistance will be seen at 77 and above at 77.10 levels.

USD/CHF continues to trade in a tight range even in the US session. The pair formed a low of 2 months at 0.9105. It is now trading near the high at 0.9130, marginally up from yesterday’s close. The support will be found at 0.9115 and 0.9070. The resistance may be seen at 0.9150 and above at 0.9200.

The Australian dollar also followed the suite of US dollar strengthening. It lost an important 1.0800 levels and is currently trading at 1.0775, down about 0.37%. The pair has retraced back from a six month high of 1.0844. The support may now be found at 1.0750. The resistance now lies at 1.0800 levels.

The US dollar index has come off the lows and is now trading at 78.76. The high for the day so far is 78.82.

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The US dollar spent much of the day today range trading against most of its main currency rivals, including the euro, British pound and Swiss franc. Traders were hesitant to bet against the greenback ahead of possible news on a Greek debt swap deal. The one exception was against the Japanese yen. The USD/JPY took moderate losses throughout much of the day before stabilizing around 76.80 during the evening session.

Turning to tomorrow, market sentiment will likely be determined by a combination of international indicators. First, traders will want to pay attention to interest rate decisions from both the UK and euro-zone. While no changes are forecasted for either rate, the press conferences that follow the indicators are likely to shed some light on the current state of the British and euro-zone economies. Any positive sentiment could result in risk taking, which will likely cause the dollar to drop.

Later in the day, traders will want to pay attention to the weekly US Unemployment Claims, scheduled for 13:30 GMT. The figure will shed some additional light on the current employment situation in the US, following last week’s positive Non-Farm Payrolls report. A lower than expected unemployment figure may help the greenback during the evening session.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Ben Bernanke has restated his pledge to keep the interest rates low for the next three years till 2014 despite the impressive unemployment rate.

Ben Bernanke the Federal Reserve Chairman noted yesterday that the decline in jobless rate for the month of January has masked weaknesses in the US labor market. Bernanke told the Senate Budget Committee in Washington that the 8.3% rate was not expected until the fourth quarter and warned that this should not be taken as a show of full recovery of the US economy.

In his response to a question from one of the committee members, Bernanke said that it is important to look at other factors in the economy and not just concentrate on the unemployment rate which reflects the people who are actively seeking jobs. He added that there are other people who are out of the labor market since they do not consider themselves as qualified to get jobs.

A top US economist said that remarks by Bernanke indicate reluctance in altering the low interest rates announced last month. According to Bernanke, there has to be faster economic growth over a long period for the rates to be changed. He has also suggested that the rates would be changed if there were eminent risk of subdued inflation. According to Dean Maki, an economist at Barclays Capital Inc in US, there is indications that the Fed has not changed its stand on the economy despite the Friday’s unemployment report.

On the FED FOMC report released last month, the officials had estimated that the economy would grow to 2.7 percent this year and the unemployment rate was averaged at 8.2% and 8.5% in the 4^th quarter. Bernanke conceded that some job indicators are improving and the 8.3 percent rate reported on Friday understates the weaknesses in the labor market. However, Bernanke stated that it would take several such reports for the interest rates to change. Further, he noted that the estimates by the central bank indicate that the economic growth will enable the economy to absorb new workforce entrant.

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WHOLESALE MARKET prices for gold bullion held steady just below $1750 per ounce Wednesday morning in London – a 2.2% gain on yesterday’s low – after rallying Tuesday following comments from US Federal Reserve chairman Ben Bernanke.

Silver bullion eased slightly this morning after hitting $34.55 per ounce – its highest level since November 16.

“Gold faces significant resistance at $1766, but above that look for $1778-1798,” says one gold bullion dealer here in London.

The S&P 500 hit its highest level in over six months Tuesday at 1349.24 – 25% up on last October’s low.

Gold bullion meantime is up 9.6% over the same period.

“I’m very bullish on the [stock] market,” says Laurence D. Fink, chief executive at world’s largest money manager BlackRock.

“I don’t have a view that the world is going to fall apart, so you need to take on more risk. You need to overcome all this noise and there are great values in equities.”

Despite official figures showing that the unemployment rate fell to 8.3% last month – down from 8.5% in December – the US still has “a long way to go before the labor market can be said to be operating normally,” Federal Reserve chairman Ben Bernanke told the Senate Budget Committee Tuesday.

“Bernanke did not give any indication that the Friday job market report is changing the fundamental way [Fed policymakers] are viewing the economy,” says Dean Maki, chief US economist at Barclays Capital.

“It is going to take a number of favorable reports before their view on monetary policy shifts.”
The US Dollar Index, which measures the US Dollar against a basket of other major currencies, hit a 2-month low Wednesday morning.

Elsewhere in Washington, talks on extending payroll tax cuts and unemployment benefits stalled in the Senate Tuesday. Around 160 million people will see their taxes rise if the cuts, which expire March 1, are not extended. Three million meantime could lose unemployment benefits from the same date if they too expire.

There was still no agreement Wednesday lunchtime among Greek leaders regarding austerity reforms required as part of Greece’s €130 billion second bailout. A meeting of senior Greek politicians was postponed for the second day running Tuesday, with some reports citing missing paperwork as the cause of the delay.

Leaders have agreed in principle to spending cuts equivalent to 1.5% of GDP, Greek prime minister Lucas Papdemos has said, but a formal reform deal remains elusive.

“[Even] if Greece were to agree on everything right away,” says Societe Generale commodity strategist Jeremy Friesen, “I don’t think it would solve everything because they will still have to implement the measures…there are plenty of land mines left.”

“No to medieval labor conditions!” chanted protesters outside the Greek parliament during Tuesday’s 24 hour strike.

“It is in our interest for Greece to remain [in the single currency],” Dutch prime minister Mark Rutte said Tuesday.

“But if that does no work out, then [the other Euro members] are stronger now than a year-and-a-half ago.”

Rutte’s comments echo those of his compatriot Neelie Kroes, a European Commissioner, who told a Dutch newspaper this week that it is “simply not true” that the “entire edifice” of the single currency would collapse were Greece to leave.

German chancellor Angela Merkel however warned yesterday that a Greek exit would have “unforeseeable consequences”.

“I will have no part in forcing Greece out of the Euro,” she told some young people in a Berlin museum.

The European Central Bank meantime has agreed to exchange its Greek bonds, bought on the secondary market as part of the ongoing Securities Market Program, at below face value, according to a Wall Street Journal report.

The plan would reportedly involve the ECB swapping its Greek debt for bonds issued by the Eurozone’s current bailout fund, the European Financial Stability Facility.

The EFSF, whose debt was downgraded by Standard & Poor’s last month from AAA to AA+, would then redeem the bonds with Greece at less than par value – though the ECB, which itself paid less than par for the bonds, says it does not intend to take a loss.

The ECB Governing Council is due to deliver its latest policy decision tomorrow.

Here in London, the Bank of England, which also announces its latest monetary policy decisions tomorrow, is widely expected to press ahead with further quantitative easing despite recent positive economic data.

“On a risk/reward basis, I still think the Bank will do more QE,” says Alan Clarke, UK economist at Scotiabank.

“The market’s disappointment at the BoE not delivering would be too unwelcome. But if we continue to get reasonable growth numbers, then February’s QE may be the last.”

The Bank of England’s Monetary Policy Committee voted to increase the size of its QE program from £200 billion to £275 billion last October.

“We believe the debate on the MPC will now be between [additional QE of] £25 billion and £50 billion this month, with our official call being for £50 billion,” reckons George Buckley, chief UK economist at Deutsche Bank, who also feels “this may be the last round of asset buying” should economic data continue to be strong.

The world’s second-largest gold bullion consumer China is set to see a 13% rise in the official annual minimum wage as part of a government jobs plan published Wednesday. The plan is part of China’s 12th Five Year Plan, which runs from 2010 to 2015.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Investors with a high hopes of a Greek deal have been dealt with a definite boost as reports that the European central bank is willing to exchange its Greek Bond investments with a possible loss of some significant profit in order to ease the burden on the Greek government and see a swift and fast end to the Greek debt crisis. Combine this with the renewed fears expressed by the Fed and you have got a strengthening euro and weakening dollar.

History tells us when risk appetite increases for the euro and at the same fearful remarks about the future of US economy occur on the same day, there is only one winner: the euro.

The dollar consequently lost against almost all its major rivals both yesterday and at the start of today. Though we are seeing some general range effect now with investors waiting to see if there will be further news from Greece.EUR/USD ended the day with a 122 pip( yes you heard right!) gap away from its opening price of 1.3253. GBP/USD closed the day at a 3 month high of 1.59. Definitely a bad day for Dollar long traders!

Fed chairman.ben Bernanke did not do the Dollar too much good on his part yesterday albeit innocently. He appeared extremely dovish in his much awaited testimony to the senate budget committee.

Recall that the recent NFP report for the month of January was good as it beat expectations. Despite that the FED chairman told the senate that the labor market was still a long way from what it should be and what they want it to be. Combine this with his other statements about a very slow recovery (lower than anticipated) and poor inflation reports; we can see that QE3 is not very far off the radar. A dollar sell off was inevitable.

The FED reserve bank of San Francisco president is expected to give a speech later today at 3.40 pm GMT and if his speech gives any hint of further QE then the dollar is in for a fall once more.

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The euro-zone debt crisis continued to fuel risk aversion in the market place yesterday, as poor news briefly brought the EUR/USD pair below the 1.3100 level. The pair staged a recovery later in the European session, after it was revealed that Greek leaders had begun finalizing a debt swap deal. Today, traders will want to continue monitoring the euro-zone situation, especially as it is becoming clear that Portugal will soon need a bailout to avoid defaulting on its debt.

Economic News

USD – USD/JPY Continues to Make Gains

The US dollar extended its recent bullish run on the Japanese yen yesterday, with the pair reaching as high as 76.85 before staging a slight reversal. In addition to a positive US jobs report from last week, the pair’s ascent was attributed to reports that the Bank of Japan (BOJ) secretly intervened in the marketplace late last year. While the greenback is still fairly close to the lows it hit against the yen last week, it appears that fears of another BOJ intervention have subsided for now.

Turning to today, USD traders will want to continue monitoring the euro-zone to gauge the level of risk taking in the marketplace. While positive news regarding the Greek debt swap talks is likely to boost the EUR/USD, analysts are warning that additional worries in the euro-zone could limit how high the pair moves. The same can be said for the AUD/USD. While the dollar hit a six-month low against the Aussie during yesterday’s trading, any negative euro-zone news could cause the current trend to reverse.

EUR – EUR Moves Up amid Hopes of Greek Deal

The euro staged an upward reversal late in European trading yesterday, after it was revealed that Greek leaders had begun finalizing the details of steps it is willing to take to reach a debt swap deal with its creditors. Both the EUR/USD and EUR/JPY shot up close to 80 pips after the news was released. At the same, analysts were quick to warn that the common currency’s gains may be temporary as other euro-zone news is likely to impact risk taking.

Highlighting Greece’s delicate position in the euro-zone, rumors began circulating yesterday that the country’s chances for exiting the euro-zone have increased. In addition, even if Greece finally succeeds in reaching a debt-swap deal, traders will want to note that Portugal is likely next to need a bailout to avoid defaulting on its debt. Either way, traders should know that the euro crisis is far from over.

AUD – RBA Rates Decision Boosts Aussie

The Australian dollar saw significant gains throughout the trading day yesterday, following news that the Reserve Bank of Australia (RBA) would leave national interest rates at their current level of 4.25% for the time being. Analysts had originally forecasted the RBA to reduce interest rates to 4.00%. The move resulted in the AUD extending its recent gains against most of its main currency rivals, including the USD, EUR and JPY. The AUD/USD hit a six-month high at 1.0823 before staging a reversal, as analysts warned that the pair still had room to move up.

Turning to today, traders will want to continue monitoring news out of the euro-zone, which is likely to determine the level of investor risk-appetite. Positive data is likely to boost currencies like the Aussie. At the same time, fears that Portugal will be the next euro-zone country to require a bailout may limit any gains.

Crude Oil – Crude Oil Drops below $96 amid Risk Aversion

The price of crude oil continued to drop yesterday, as the Greek debt-crisis continued to fuel risk aversion in the markets. The commodity eventually dropped below the $96 a barrel level before staging a slight upward correction late in the European session. Analysts are warning that, if the current trend continues, the price of oil could drop to around the $94 a barrel level before the end of the week. At the same time, there are a number of factors at play that could cause the commodity to unexpectedly spike.

Traders will want to watch out for any escalation in the current situation in the Middle East. Specifically, any increase in tensions between the US and Iran over Iran’s nuclear program will likely cause the price of oil to spike. Additionally, any positive euro-zone developments may lead to an increase in risk taking which could boost the value of oil.

Technical News

EUR/USD

Technical indicators are currently mixed for this pair. While the weekly chart’s Relative Strength Index is right around the 30 level and oversold, a bearish cross has formed on the daily chart’s Stochastic Slow, meaning that downward movement could occur in the near future. Traders may want to take a wait and see approach for this pair until a clearer picture presents itself.

GBP/USD

Most technical indicators show that this pair is currently overbought and may see a downward correction in the near future. The daily chart’s Stochastic Slow has formed a bearish cross, while the Williams Percent Range on the same chart is above the -20 level. Going short may be a wise choice for the near future.

USD/JPY

Technical indicators on the daily chart show this pair in the oversold zone, meaning that upward movement is possible in the near future. A bullish cross is forming on the MACD/OsMA, while the Williams Percent Range is hovering close to the -80 level. Going long may be a wise choice for the pair.

USD/CHF

The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. The Relative Strength Index (RSI) on the same chart is hovering close to the 70 level, which typically means that a downward correction is going to take place. Traders will want to pay attention to the RSI. If it crosses the 70 line, a bearish correction may take place.

The Wild Card

GBP/JPY

The daily chart’s technical indicators are showing that this pair could see a downward correction in the near future. A bearish cross is currently forming on the Stochastic Slow, while the Relative Strength Index is close to crossing the 70 line. Forex traders will want to watch the daily indicators for signals ahead of a possible downward breach.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The speculation of progress in the Greece crisis catapulted the Euro to an eight-week high on a day that saw the yen fall against major currency. Investors were looking forward to positive results from Greece in its efforts to meet the requirements required for Greece to get financial aid. The Greek Premier is expected to three political party leaders in Athens to discuss the way forward.

Jane Foley, a senior strategist at Robobank International said that many investors are viewing the situation in Greece from a half-full perspective which has resulted to higher prices for euro any positive news from Greece. Against the dollar, the 17-nation currency gained o.1% to settle at 1.3276 and rose to 102.4 yen which represented an increase of 0.6%.

Greece Prime Minister convened an unscheduled meeting yesterday with the troika members who include European Central Bank, International Monetary Fund, and European Commission to review the terms required for the second bailout. However, yen’s drop was as a result of the surplus in current account which reduced to 44 percent last year. Analysts believe that the data from the current-account balance is a selling point for the Yen.

The Australian Dollar rose against the US dollar to settle at 1.0836 which had earlier catapulted to $1.0844. this is the strongest the Aussie Dollar has been against the US dollar. Further, the New Zealand’s currency increased against the USD by 0.4 percent to settle at 83.89 US cents. This is also another high since September 5.

The ECB had indicated that it is willing to swap its holdings with the government bonds as a way of reducing the country’s debt burden. However, this claim must be made formal by February 13^th for procedures to be completed by 20^th of March. These developments in the Eurozone are expected to continue causing the currency bounce back as investors are waiting on any type of news from the region. Positive news will see the currency grow stronger against major currencies.

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Euro traded in a tight range quietly during the Asian session. During the early European session, the single currency surged on the hopes of Greek deal agreed soon. The pair printed a high of 1.3288. If 1.3300 is taken out, the focus will be on a level of 1.3450. The support may be seen at 1.3250 and 1.3200. The resistance may be seen at 1.3270 and 1.3370. Trade balance data from Germany came below the expectation at 13.9 billion Euros against the expected value of 14 billion Euros.

Like Euro, the sterling pound also traded in a narrow range of 1.5928 and 1.5885. Pair traded above 1.5900 levels to print a high of 1.5928. Since then it has retracted back and currently trading near its opening price of 1.5895. The support may be found at 1.5890/5900 and resistance will be seen at 1.5930 and 1.6000. Now it will be interesting to see if pound takes out an important level of 1.6000 particularly in light of the Bank of England meeting tomorrow. Interest rate and quantitative easing will be the main focus of the meeting.

The USD/CHF pair has also traded in a small range of 0.9139 and 0.9105 for the day. The unemployment data came out today from Switzerland which showed an increase in unemployment to 3.4%. Expected increase in the unemployment was 3.5%. The pair is trading at 0.9125 up about 0.1%. The support may be seen at 0.9110 and below at 0.9080. The resistance may be seen at 0.9150 and 0.9200.

The Australian dollar continued its rise against the US dollar and is now trading comfortably above 1.0800 to form a six month high of 1.0843. It is currently trading at 1.0820, up around 0.10%. The support now may be seen at a psychological level of 1.0800 and below at 1.0780. The resistance lies at 1.0860 and 1.0900.

The USD/JPY pair managed to break a strong resistance of 77 to form a high of 77.18. It is presently trading at 77.01. The resistance lies at 77.10 and above at 77.30. The support lies at 77 and 76.80.

The dollar index is trading at 78.57. Today is a crucial day for Euro as the fate of Greek deal might be decided.

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Yesterday saw the USD fall sharply against the euro amid more speculation about the Greek debt deal. Reports emerged that the Greek government is in the final phase of putting together a final dossier on the actions they shall take in order to avoid a default.

EUR/USD stood firm although more reports emerged that the meeting in which the final decisions are to be taken was postponed to Wednesday.

The USD index which gives us a measure of USD strength against six other major currencies saw a sharp fall yesterday.

Meanwhile as an additional boost to the Euro reports are emerging of China coming to the aid of Greece. The Chinese premier yesterday indicated this as a real possibility but expressed concerns about how difficult it will be to convince the Chinese people..

The EUR/USD jumped to an unprecedented 1.3256 which represents its highest level since mid December.

The new Greek deal, we hear involves numerous sharp wage and spending slashes, as this are necessary to satisfy the EU and International Monetary fund for a second bailout. Without this help from EU and IMF, it is certain that Greece will default come mid-March.

Greece is also trying to conclude a debt-swap deal with private investors against popular opinion in the country.

Despite the euro growing strong yesterday amid speculation the solid data that came out of the euro zone yesterday was generally bad. This just goes to outline the optimism investors have about the Geek deal and how much help the deal will give to the euro.

The German industrial production report yesterday with a 2.9% fall which is much worse than the expected 0.1% fall we expected at first. Under normal circumstances this was supposed to be bad news for the euro but with the Greek problem overshadowing most investors did not follow up on this.

We expect German trade balance to be released today. Analysts expect a figure of 14.1 billion Euros to be the figure which is slightly less than the expected figure. A falling trade balance is usually bearish for the euro.

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Euro continues to be the main focus of attraction during the US session. Reuters reported that the Greek deal will be put in front of politicians. If this is to be believed then it is a good development for Euro. The single currency reacted positively to the developments and has broken the resistance of 1.3230 successfully which it was unable to breach four times last week.

The upbeat sentiment in the market propelled the Euro to a high of 1.3268, level last seen on 12^th December. The resistance now lies at 1.3300 and above at 1.3370. The support now can be found at 1.3200 and below at 1.3120.It is currently trading at 1.3249, up about 0.90%.

The sterling pound also followed the US dollar weakening move and surged to close to 1.5900 levels. It pierced through 1.5900 mark briefly to print a high of 1.5903, levels last seen on 15 November. The resistance now lies 1.5900 and above at 1.5940/50 levels. The support may now be found at 1.5860 and 1.5820. The pair has surged half a percentage today.

The US dollar plummeted against the Swiss Frank following the general trend and broke the 0.9200 levels. It is now trading around 0.9125, down about 0.70% and threatening the 0.9100 levels. The support may be seen at 0.9110 and 0.9080. The resistance may be seen at 0.9150 and 0.9200.

The USD/JPY is currently trading at 76.85, up about 0.40%. It printed a high 76.96. It failed to break an important resistance of 77. Support now may be found at 76.80 and resistance at 77.

Australian dollar did not rally like Euro and GBP but it regained an important level of 1.0800. The pair failed to break the strong resistance of 1.0810/20. The high of 1.0821, printed during the European session is still in tact. The Australian dollar is currently trading at 1.0802, still up about 0.70%. The support now lies at 1.0780 and 1.0750. The resistance may be seen at 1.0810 and 1.0900.

The dollar index plummeted well below 79. It is currently trading near its low of the day at 78.63. The low so far is 78.56. The risk appetite has returned during the US session after Bernake expressed the concern over slow recovery of US economy.

Article provided by TraderVox.com

Bond investing is the answer to most investors’ needs; not their get-rich-quick dreams, but their real needs. So, you’d think the bond market would be doing everything possible to get these survivors of the stock market into bonds…

But they aren’t!

In fact, the bond market seems to do everything possible to keep the small investor out.

The walls, buying restrictions and ridiculous pricing structure of bonds are set up to keep the little guy out of individual bonds and in bond funds. Bond funds that have all kinds of flaws; hedging and very long average maturities, the implications of which most investors don’t fully understand.

But bond investing can have some real advantages. They’re custom made for investors who:

• Want returns above what savings or CDs are paying
• Are tired of the wild fluctuations of the stock market
• Those who can’t afford any more of the losses they have incurred in the past 10 or 12 years
• Those who need more reliability and predictability in their investments

But plenty of problems stand in the way of the novice investor who’s simply trying to buy a bond:

Lack of Exposure

Unlike most investments, there are no 24-hour television networks that have a constant flow of bond investing ideas. And most bond information that does exist consists of the 10-year Treasury, overnight rates and confusing quotes about rising and falling rates, Treasury auctions and prices.

Frankly, the information available from all sources, The Wall Street Journal and Barron’s included, is useless! I don’t think I’ve ever seen a news story about an upcoming corporate bond offering, and if there was one, the offering was sold exclusively to institutions.

Lack of Information

Second, just getting to a page on an online broker’s site to invest in bonds is ridiculously difficult.

Go to any broker’s website and click on “Trade Bonds,” and you’ll get something that looks like this:

What you’re supposed to do with this chart is beyond me.

To get any sort of usable information and know where to click to get to the next page (it’s never clearly marked), you must fill in as much information as the U.S. government wants from folks joining the military.

Here’s a partial list of the information that’s needed:

• Cusip
• Frequency
• Maturity
• Coupon
• Yield
• Price
• Quantity
• Current Yield
• Bond
• Bill
• Notes
• Zero Coupon
• Indexed

If the average guy knew this much about bond investing, he wouldn’t need a broker at all.

Even if you can come up with all the information necessary to find some bond possibilities, you usually end up with a list of thousands of bonds and no information about any of them other than their cusips and descriptions.

Lack of Access

Can you imagine having this much trouble trying to find a stock to buy? It’s absurd – but absurd by design – designed by the market to make small-time bond investing virtually impossible.

You see, the bond market doesn’t want the small guy. They only want the big money, and they price their bonds accordingly.

If you buy 10, better yet 20 bonds or more, you have your pick of any type of bond and at the best price. But how many people have $20,000 to invest in each trade? The answer is: very few.

Try to buy five, or just one bond, and the most-likely answer you’ll get from a bond desk is: “We can’t sell one bond,” or “It isn’t worth it to you to buy so few.”

Baloney! What they really mean is that they don’t make enough money on a trade that small to make it worthwhile to them.

Plus, the small bond investor is annoying to the gods of the bond desks. The bond gods don’t like the little guy. They do annoying things like ask questions and expect the people on the bond desk to speak English, not the tree-fort, insider-only lingo they have concocted.

Better Returns without Leveraging

The fact is: You can buy one bond.

Yes, it’ll cost a little more and you’ll get a little less if you sell it before maturity. But most stockbrokers know so little about bonds, they don’t know this, either.

And fortunately, the increase in buying price isn’t so great that it makes a significant difference to the average guy. A bond desk will make the increased cost for small bond orders sound like the end of the world, but do the math and it isn’t that bad.

When you buy individual bonds instead of bond funds, you can get better returns without any leveraging. Leveraging is one of the biggest unknowns to bond funds investors, and it will come back to haunt them.

Investing in individual bonds also allows you to buy many small positions in many different industries. This has the same effect as diversifying in your stock portfolio.

As you diversify, you also have the opportunity to spread your maturities over a much shorter range, preferably less than a seven-year average. The best part is you have control of the maturities you hold and you aren’t bound by a bond fund’s prospectus – which can cost you a lot of money when rates run up.

Buying many small, ultra-short bond positions in this market is the only way you won’t get crushed when rates turn back up. Even though we don’t expect any real uptick in rates for about three more years, you can’t risk holding long maturities (in excess of a seven year maturity). Long-term bond investing isn’t prudent!

The Oxford Club is a good place to begin to learn about the benefits of individual bonds. They have a list of brokers called the Pillar One Partners. Many of these brokers will buy as few as one bond and all of them have met our standard of excellence and have been a part of the Club for many years.

Bond investing can be the answer to almost all of the needs of the average person. It may take a little effort to get to the same level of comfort you feel with stocks, but it’ll be worth it.

Good Investing,

Steve McDonald

Article by Investment U

• The unemployment rate has dropped for four straight months on news that U.S. employers added 200,000 jobs in December.
• For the year, 1.6 million non-farm jobs were created (1.9 million total, less 280,000 government jobs lost).
• The unemployment rate dropped to 8.5%, the lowest rate since February 2009.
• The hourly workweek rose from 34.3 to 34.4. Those underemployed (such as part-time workers) dropped from 15.6% last month to 15.2%.
• The long-term unemployed, those jobless for 27 weeks and over, lowered to 5.6 million from 5.7 million. This group represents 42.5% of the total unemployed
• Gains for the month were particularly strong in transportation, retail, manufacturing, healthcare and mining.

I think it’s safe to say that these numbers were received with guarded optimism. But a better question is: What does all this mean?

The Message Inside the Message

In general, increases in employment means that businesses are hiring and that these businesses are healthy and growing.

Thus, the more people newly employed now have money to spend on goods and services. And this ladies and gentleman is called growth – that all-illusive ingredient missing from our economy over the past few years.

While the overall number of jobs added or lost in the economy is big, there’s other information involved in the report that can weigh on financial markets:

• The unemployment rate as a percentage of the overall workforce. This is an important part of the report, as the amount of people out of work is a good indication of the overall health of the economy.
• Sectors that increased or decreased in jobs. You can now see which sectors of the economy may be primed for growth, or are hurting.
• Average hourly earnings. This is an important component because if the same number of people are employed but are earning more or less money for that work, this has the same effect as if people are added to or subtracted from the labor force.
• Revisions of previous nonfarm payrolls (NFP). The NFP number is meant to represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry – releases.

Don’t Draw Too Many Conclusions From One Positive Report

For example, the gains in the transportation sector, which were concentrated in courier and messenger services, may be a seasonal blip, experts say. That could be the same for job growth with retail hiring in December.

Overall, investors shouldn’t invest in a sector based on one month of positive job growth, says Mark Lamkin, the CEO of Lamkin Wealth Management. The more important point is that a fairly wide range of sectors added jobs, which suggests the improvement wasn’t an anomaly, but a sign of real economic growth, Lamkin says. “This type of employment report sets the stage for 3% growth in GDP,” he says.

Is jobs data a one-stop shop to market insight? No, but a few months of compiled jobs data might be.

Good Investing,

Jason Jenkins

Article by Investment U

The US dollar extended its recent bullish run on the Japanese yen today, with the pair reaching as high as 76.85 before staging a slight reversal. In addition to a positive US jobs report from last week, the pair’s ascent was attributed to reports that the Bank of Japan (BOJ) secretly intervened in the marketplace late last year. While the greenback is still fairly close to the lows it hit against the yen last week, it appears that fears of another BOJ intervention have subsided for now.

Turning to tomorrow, USD traders will want to continue monitoring the euro-zone to gauge the level of risk taking in the marketplace. While positive news regarding the Greek debt swap talks is likely to boost the EUR/USD, analysts are warning that additional worries in the euro-zone could limit how high the pair moves. The same can be said for the AUD/USD. While the dollar hit a six-month low against the Aussie during today’s trading, any negative euro-zone news could cause the current trend to reverse.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Analysis from: Forex FX 4X

Gold Analysis: (XAUUSD) is currently making new lows for the week and price is located at the ascending trend line shown on the chart below.   US data has been stronger recently and QE is no longer a given. This has seen a high momentum drop in the price of Gold as the bulls were quick to liquidate positions in the precious metal.

XAUUSD

EURAUD makes new record low.  The Reserve Bank of Australia (RBA) has held the key rate after the two previous consecutive cuts.  This caught the market off guard and went against analyst expectations.   The Greece debt negotiations should be monitored closely as a quick change in sentiment could see high volatility.  AUD has been in bullish mode since the break of key 1.0390 resistance and the Australian economy is well set to gain if the gloabal economy continues to improve.  EURUSD is trading in the middle of the recent range (approx 2 cents) with a break of either side needed to clarify the near term directional bias.

EURAUD

Any information or views found in this post are provided for educational reasons and do not in any way represent investment advice. The article author doesn’t guarantee the accuracy or completeness of this or any other information provided. Forex-FX-4X or the post authors will not accept liability for any losses arising directly, indirectly or because of reliance on any of the trading setups or associated analysis in any way.

U.S. DOLLAR gold prices touched a 2-week low of $1711 an ounce Tuesday lunchtime in London, with stocks, industrial commodities and the Euro also falling amid uncertainty over whether Greece is approaching default.

Silver prices dropped to $33.20 per ounce – down 1.6% on the start of the week.

“The $33.00 level [is proving] to be strong support,” says the latest technical analysis note from bullion bank Scotia Mocatta.

Gold prices Tuesday lunchtime remained more than 3% above where they were on January 25, the day the US Federal Reserve revealed its policymakers expect near-zero interest rates to persist until at least the end of 2014.

The Fed announcement “put an end to the correction in gold,” reckons Mark Arbeter, chief technical strategist at S&P Capital IQ.

France and Germany have suggested that part of the €130 billion second bailout for Greece be set aside to pay Greece’s creditors, with Greek leaders yet to agree to austerity reforms required by the so-called troika of international lenders, the European Central Bank, European Union and International Monetary Fund.

“We want Greece to stay in the Euro,” German chancellor Angela Merkel told a press conference in Paris on Monday.

“But I also say there can be no new Greek program if agreement is not reached with the troika…all those who bear responsibility in Greece must know we will not deviate from this position.”

The lack of agreement among Greek leaders over how to reduce public spending has led to the postponement of a Eurozone finance ministers meeting scheduled for this week, at which the new bailout was to be finalized, the Financial Times reports.

“I honestly can’t understand how additional days will help,” Merkel said yesterday.

“Time is of the essence. A lot is at stake for the entire Eurozone.”

European Commission vice president Neelie Kroes however has played down the implications of Greece leaving the Euro.

“[Politicians] always said if a country is let go or asks to get out, then the whole edifice will collapse,” she told Dutch newspaper Volkskrant.

“But that is simply not true.”

Citi economists Willem Buiter and Ebrahim Rahbari see the likelihood of Greece exiting the Euro – which they term ‘Grexit’ – as “50% over the next 18 months”.

“The implications of Grexit for the rest of the Euro Area and the world would be negative, but moderate, as exit fear contagion would likely be contained by policy action, notably from the ECB.”

“Greece is sitting right on the edge of default,” adds Standard Bank currency analysts Steve Barrow, “with Portugal possibly not too far behind.”

“It is still possible to avoid a disorderly default,” insists one unnamed senior European official quoted by the FT.

“[However] the delays have been damaging [and] have dangerously increased the degree of uncertainty, and they are entirely due to the Greek side.”

“The problem today,” countered Greek socialist Pasok party spokesman Panos Beglitis on Monday, “is the depressing imposition of Germany’s strategy on the Eurozone. Nobody is listening to us. We are lonely.”

Greek trade unions have called a 24 hour strike today. There were disturbances in Athens, where riot police fired tear gas at protesters.

“My timeline says a German flag has been set alight outside the Greek parliament,” reports Greek Dow Jones journalist Matina Stevis on her Twitter account.

“As ever, the ongoing uncertainty would keep gold prices underpinned,” said a note from VTB Capital this morning.

Here in London, FTSE-listed Glencore, the world’s largest stock market-listed commodities trader announced today it has completed its merger with mining giant Xstrata in a $90 billion deal.

China’s gold imports from Hong Kong meantime rose 260% in 2011, according to new data from the Hong Kong Census & Statistics Department on Tuesday.

Rising to a record 428 tonnes, last year’s total was greater than China’s domestic gold mining production – itself a new record, and the world’s largest national output. Today’s news most likely puts total Chinese gold bullion demand for 2011 at well over 800 tonnes.

World number one consumer India imported some 878 tonnes in 2011, according to the Bombay Bullion Association.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

With the first week of February behind us, one trend has been unmistakable in early 2012: cyclical and more speculative sectors are outperforming defensive ones (see Figure 1).  At 13 percent YTD returns apiece, materials and financials have nearly doubled the 6.9 percent return of the S&P 500.  More staid utilities, telecom and consumer staples are actually in negative territory.

Figure 1

Though I consider “sin stocks” to be a stock sector in of themselves, tobacco and alcohol generally fall under the umbrella of defensive consumer staples.  And as such, the sin stock recommendations of the Sizemore Investment Letter have underperformed the market year to date (see Figure 2).

Figure 2

After massively outperforming the market in 2011, Sizemore Investment Letter recommendations Altria (NYSE:$MO), Philip Morris International (NYSE:$PM), and Diageo (NYSE:$DEO) have all underperformed the S&P 500 year to date.

I continue to recommend the three, and I expect all to generate market-beating returns over time.  Sin stocks such as these throw off buckets of cash flow and pay great dividends.  They are exactly the kinds of stocks you want to own during a protracted sideways market; at a time when capital gains are unreliable, getting paid in cold, hard cash may be the only return you get at all. And while there is no such thing as a truly “recession proof” stock, tobacco and alcohol are about as recession resistant as they come.

Bottom line: it makes sense to have sin stocks as a core piece of your long-term portfolio.  (For a longer explanation on the virtues of investing in vice, see “The Price of Sin.”)

Investing for the long-term is great, but many readers are no doubt asking “what about now?”

Whether sin stocks enjoy a good 2012 or not will largely depend on what happens in Europe.  If the crisis conditions continue to ease, more speculative sectors should continue to outperform for at least the first two quarters of the year.  This is the scenario that the Sizemore Investment Letter considers most likely, and we’ve chosen German, Spanish, and Emerging Market stocks as our preferred way to profit from this return of risk appetites.

But as investors, we must always hope for the best but prepare for the worst.  If Europe slips back into crisis, I expect 2012 to follow the same basic path as 2011: on again / off again volatility in a market that hangs on every conflicting word coming out of the mouths of European policymakers.  In this scenario, sin stocks would be an attractive safe haven, as they were in 2011.

In the Sizemore Investment Letter, we’re increasing our risk exposure by allocating to riskier sectors.  But we’re also hedging our bets by maintaining long-term positions in our core sin stocks.  Tobacco and booze served us well during a very turbulent period in the stock market, providing calm and stability when it was needed most.  We would expect much the same were the volatility to return.

And if the stocks themselves aren’t sufficient to help us relax…well…we might just have to rely on the products.  Scotch, anyone?

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