FXstreet.com Live Sessions Archives: Fundamental Analysis

Expert: Joseph Trevisani, Chief Market Analyst at FX Solutions
Moderator: Maud Gilson

Summary:
When yields on the 10 Year Treasury note were climbing to 4.0% last spring bond traders fears were focused three items: the Federal Reserve’s liquidity provisions, the Obama administration’s ten year deficit projections and the inflationary potential of both programs. The collapse in Treasury prices prompted the Fed’s entry into the Treasury market. Its $300 billon program to purchase government debt led to suspicions that the US Government had embarked on direct monetization of its debt, printing dollars to make up for the revenues it no longer had.

Chinese officials warned the US government to be mindful of its status as the world's largest holder of US debt and cautioned Washington to act as a careful custodian of its currency. But rhetoric aside, the Chinese had reasons of their own to fear what would have been a dangerous fall in the Treasury markets and the consequent rise in American interest rates.

Continue reading "The Dance of Debt--China and the United States" »

US GDP Live Coverage Release with Nick Nasad

(09/30/2009)

1:10	FXstreet.com: Information and opinions contained in this live coverage session are for educational purposes only and do not constitute trading recommendations.

1:10

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1:11	FXstreet.com: Today’s sponsor is CMS Forex.

1:12

FXstreet.com: Good morning, good afternoon and good evening to everyone all over the world. Today's U.S. GDP Live Coverage will start shortly. I am really pleased to introduce Nick Nasad who is going to take part in this live event today as a co-presenter. He will be giving us a direct picture for the market status.

1:12

FXstreet.com: Nick Nasad is a currency market analyst with CMS Forex for the last 3 years. He closely monitors fundamental releases and reports their results and provides commentary to the company's clients through CMS Forex's interactive economic calendar Forex Capsule and through daily Forex market video recaps. He has also written extensive educational material on using technical analysis in trading Forex.

1:12	Nick Nasad - CMS: Thank you for the kind introduction, and hello to everyone participating in today's live coverage!

1:13	Nick Nasad - CMS: As we await the release of the US GDP release, lets see what has been happening so far in today's session.

1:13	FXstreet.com: Hi Nick! welcome to the US GDP live coverage

1:13

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1:14

What do you anticipate the outcome of U.S. GDP?
Good result and bullish for the USD

( 60% )

Good result but bearish for the USD

( 0% )

Expected result and low volatility

( 20% )

Bad result and bearish for the USD

( 0% )

Bad result but bullish for the USD

( 0% )

Not much impact on the USD

( 20% )

1:15	Nick Nasad - CMS: Overnight we have seen the greenback sliding, as positive data from around the globe helped to increase risk appetite. We saw Australia retail sales jump, a drop in unemployment in Germany, and a sharp improvement in UK consumer confidence.

1:16	Nick Nasad - CMS: The good news helped the EUR/USD to break a recent downward sloping line of resistance, (connecting the highs since September 23'rd high at 1.4840) signalling we may see a correction now..

1:17	Nick Nasad - CMS: A further correction of the downmove from 1.4850 to 1.4525. In European trading we saw the apir move above the 38.2% fibo retracement of that 5 session downmove.

1:18	Nick Nasad - CMS: Right now, we should take a look at the ADP employment change, as that release is a curtain raiser for the more important non-farm payroll release coming Friday.

1:18	[Comment From Guest] What will be the direction of EUR/USD?

1:19

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1:20	Nick Nasad - CMS: RIght now the rally in the Euro stalled out a bit at the 1.4672 high, but like i mentioned we have had a break of our downward sloping line of resistance. Traders will look for the ADP figure, and today's Chicago PMI to gauge risk sentiment

1:20	Nick Nasad - CMS: so the ADP release showed the private-sector shedding 254K jobs in September.

1:21	Nick Nasad - CMS: thats was a higher figure than expected (240K), and may cause economists to lift up slightly their estimates for job losses in Friday's government employment report. The consensus right now (from Dow Jones) is for a loss of 175,000

1:22	Nick Nasad - CMS: Lets see if we have a reaction to the news, so far, the GBP/USD is showing a bit of topping action to its rally, and teh EUR/USD should be pressured downward.

1:22	[Comment From graham] Hi Nick, if the dollar went bullish, what effect on the gbp/usd do you think because i already think that it will get bearish

1:23	Nick Nasad - CMS: Oh, there goes the EUR./USD sliding as a result of the ADP report.

1:24	Nick Nasad - CMS: The Pound was under intense selling pressure to end last week, and has been in a slide since a high near 1.67 on September 11th.

1:25	Nick Nasad - CMS: This week, we have seen a correction to that downmove, and if we look at the swing high to low from 1.65 to 1.5775 and plot fibo levels we see a bounce down off the 50% level, which is today's high.

1:26	Nick Nasad - CMS: If risk aversion rules today's NY session, we may have a chance to see overnight gains pared down in the pair. However, the 1.60 level now becomes an importnat level, and may act as support.

1:26	[Comment From Guest] where it will stop? the EUR/USD

1:27

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1:28

Nick Nasad - CMS: If we look at the most recent swing from 1.46 to 1.4672, (rally during European session) we have already pared about 2/3rds of that rally. If we look at the rally from yesterday's low to today's high, and look at fibonacci levels, we are currecntly testing the 38.2% level, and have a chance to move to the 50% or 1.46.

1:29	[Comment From Guest] And where You see EUR/USD at the end of the week?

1:30	Nick Nasad - CMS: I dont see the pair moving too far away from its current levels before Friday, as traders will want to square their positions heading into the Friday nonfarm paryoll report.

1:31	Nick Nasad - CMS: So, I would think that we will see some sideways trading in a band between 1.4530 and 1.4725, our low and high for this week.

1:32

Nick Nasad - CMS: We still have an important manufacturing report to come out tomorrow, the ISM index, which is expected to be a positive release, so that can help risk appetite prior to the nonfarm payroll. Then of course, what figures we get from the jobs report will be key to where we actually end the week.

1:34	Nick Nasad - CMS: The EUR/USD has found some support from a trendline connecting our low from last week, and today at 1.46, along with a 38.2% retracement level from the rally from yesterday's low to today's high.

1:34	Nick Nasad - CMS: The greenback is showing some signs of reversal in the USD/JPY which was weaker overnight as the greenback was generally weaker and today Japanese firms were repatriating funds back to Japan as part of the end of the fiscal year.

1:35	Nick Nasad - CMS: Increased risk aversion has been helping the greenback in this pair.

1:35	[Comment From stopped out] EURCHF??? what is going on?

1:35	Nick Nasad - CMS: wow, that is a tell tale sign of central bank intervention.

1:37

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1:37	Nick Nasad - CMS: There have been rumblings that the Swiss National Bank may use the latest ECB long-term refinancing operation to intervene in currency markets and halt the Franc's recent rise.

1:38	Nick Nasad - CMS: We last saw intervention on June 24th, but that was at the 1.50 level, and I was expecting the bank to let it slip to that level again before entering.

1:38	Nick Nasad - CMS: So our GDP figures are out, and the results are better than expected

1:39	Nick Nasad - CMS: GDP was revised to -0.7% from -1.0% when the consensus was a downward revision to -1.2%

1:41	Nick Nasad - CMS: Those figures are somewhat dated now, but they may still have an impact as the reason for the upward revision was better business spending in the quarter that initially thought.

1:42	Nick Nasad - CMS: That isnt helping risk sentiment though, and the greenback is gaingin further now against the EUro, approaching that 1.46 level.

1:42	[Comment From Guest] How is GDP result ?

1:43	Nick Nasad - CMS: some figures on today's GDP release: The biggest component of GDP - consumer spending - decreased 0.9%, compared to the previously estimated 1.0% drop and the first quarter's 0.6% decrease.

1:43	Nick Nasad - CMS: The GDP component that includes spending on housing decreased 23.3%, compared to the previously estimated 22.8% tumble and the first quarter's 38.2% drop.

1:44	Nick Nasad - CMS: U.S. exports fell by 4.1% instead of 5.0%

1:44	Nick Nasad - CMS: U.S. business spending fell by 9.6%, revised up from a previously reported 10.9% decline.

1:44	[Comment From Guest] So as you said EUR/USD should continue bullish corrective move?

1:45

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1:46	Nick Nasad - CMS: Before the ADP data, the break of an important resistance trendline and better risk sentiment from overnight releases was supporting the Euro, but we have turned on a dime as a result of the ADP jobs report (mainly in the EUR/USD).

1:47	Nick Nasad - CMS: the pair is now dipping below 1.46 and we could have a move towards the 1.4575 area if greenback strength continues

1:47	FXstreet.com: Here you can take a look at the official data http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

1:47	Nick Nasad - CMS: that would be somewhere between a 61.8% and 76.4% retracements of the recent upswing

1:47	[Comment From Guest] So how much did the gdp component of govt. spending increase?

1:48	Nick Nasad - CMS: Federal government spending rose 11.4%, revised from an earlier estimated 11.0% jump.

1:49	Nick Nasad - CMS: That is an important observation as around the world economies are going to have to grapple with government spending decreasing from their very high levels due to all the fiscal stimulus spending. That could create some headwinds in terms of the strength of the global recovery

1:50	Nick Nasad - CMS: It seems the greenback is doing most of its damage against the Euro currently, as the USD/JPY and USD/CAD pairs, for instance are showing subdued price action.

1:50	Nick Nasad - CMS: The GBP/USD has retraced 61.8% of its move from today's session.

1:51	[Comment From Guest] So if GBP/USD will move through 1,60? where it can go?

1:53

Nick Nasad - CMS: If you take a step back with the GBP/USD you see a very interesting consolkidation pattern throughout most of the summer. It resembles a very long developing head and shoulders pattern. Recently we have been breaking key supports in this pair from a longer term persepective with this week's low one of the last levels left to test in that long sideways range.