Canada's PMI Surprises Lower, Contraction Continues

The Ivey Purchasing Managers Index fell from 45.2 to 43.2; economists surveyed by Bloomberg had expected the measure to rise to 47.0. The move lower follows a sharp rise in the index which bottomed at 36.1 in January. The measure of expansion has now declined for the past five months as the economy suffers through its first recession since the early 1990s. Exposure from abroad remains a top concern as contraction in the US, Canada’s largest trading partner, weighs heavily on the nation. Slowdown in credit markets and demand destruction in commodities have also had a dire effect on the domestic economy as housing starts continue to tumble and unemployment rose to 7.7% in February from 7.2% in the previous month. Canada’s recovery will ultimately be tied to that of its southern neighbor, but it is clear that the downturn will not be nearly as severe if the US economy grows in the latter half of the year and into 2010. Early signs in the survey may also show hint at possible recovery in the months ahead. The Inventory measure of the Ivey report rose from 40.2 to 50.8, the first expansion since October. As demand fell, manufacturers have cut back on production and trimmed payrolls. The first rise in six months signals that months of steep job cuts meant to reduce inventories and capacity utilization may be ending.

The Canadian dollar is weaker this morning, with the USDCAD moving over 100 pips higher in the past few hours to 1.2390. The US Dollar fell significantly in the previous week as risk appetite increased and demand for the safe-haven currency fell.

High Yielders Continue to Win Out on Improved Sentiment (Morning Slices)

MORNING SLICES

Fundys – There were no significant developments overnight, with the market continuing to trade off of the broader global macro fundamentals of improved sentiment and increased risk appetite. The more upbeat psychology has resulted in additional buying of higher yielding currencies, with traders once again focused on favorable interest rate differentials. The New Zealand Dollar has been a star performer of late as a result, and once again leads all currencies on the day, up some 1.50%. The Australian Dollar has however been somewhat of a laggard, with the antipodean weighed down on fears of a potential rate cut at Tuesday’s meeting. Calls from AFR Mitchell for a 50bp cut on Tuesday, have been sourced as a primary driver for the relative weakness in Aussie. The Swissy has also been a relative underperformer on the crosses with Friday’s much lower than expected inflation data escalating fears over the threat of deflation. ECB Bini Smaghi was on the wires overnight touting the Euro as “the best exchange rate decision Europe has ever taken.” Meanwhile ECB’s Quaden and Bonello made it quite clear that the central bank was not yet done with accommodation and would consider all options going forward. In Japan, traders began to focus on the expected unveiling of the new stimulus package. The government is now expected to approve another USD100B on top of the USD119B already in circulation. Usd/Jpy has been very strong on the day with the market bolstered on heavy cross related yen offers. On the data front, Eurozone investor confidence was better than expected while annualized PPI data came in much softer to put in the biggest drop since April, 1999. Eurozone retail sales was also concerning after the data series showed a much weaker than expected annualized print. Looking ahead to the North American session key event risk comes in the form of Canada building permits (-3.0% expected) and Ivey PMI (45.4 expected) due at 12:30GMT and 14:00GMT respectively. On the official circuit, Fed Warsh is slated to speak at 17:00GMT on the financial markets in Washington.

Techs - EUR/USD continues to extend gains into Monday with the market now focusing on the 78.6% fib retrace off of the 1.3740-1.3115 move by 1.3600. A break above the 78.6% fib should open a direct retest of 1.3740 while back below 1.3365 will put the pressure back on the downside. USD/JPY (See below). GBP/USD gains have stalled out just shy of the key 1.4990 early February highs. Look for this level to be tested and broken over the coming session with only a break back below 1.4650 to delay the short-term bullish price action. Ultimately any gains are not seen extending much beyond 1.5070 on Monday. USD/CHF dips have found some support intraday by the 200-Day SMA which continues to prop the major on dips. The market has been unable to establish a close below the 200-Day, and we would expect the moving average to once again support. Ultimately only below 1.1165 will shift outlook. A break back above 1.1395 is now required to accelerate to the upside.

Flows – Semi-officials on the offer in Euro. Asian accounts and tech related sell interest in Aussie above 0.7200; option expiries at 0.7150. Hedge fund buying Cable; US investment house and French bank selling. Japanese investment names on the bid in Usd/Jpy; commercial accounts selling.

Trade of the Day – Usd/Jpy: The pair is looking stretched intraday with the market having already exceeded its daily “average true range” (ATR) of 175 pips, to trade up well over 200 pips thus far. While we see scope for additional upside over the coming days, with shorter-term studies so stretched, we look for an opportunity to establish a playable counter-trend short on Monday if given the chance. The next key level to watch above comes in by 101.70 which represents the 61.8% fib retrace off of the major 110.70-87.15 move (Aug08-Jan09). As such we will sell on a rally to 101.70 today in anticipation of a major corrective pullback from there. Strategy: SELL @101.70 FOR A 99.35 OBJECTIVE, STOP @102.70. Stops to be trailed to cost on a break back below 101.20. If trade triggers and 101.20 not broken, position to be closed out at NY close (5pm ET) on Monday. Recommendation to be removed if not triggered by NY close on Monday.

U.K. Nationwide House Prices Rise for the First Time in 17 Months

U.K. Nationwide house prices rose by 0.9% m/m in March, while we had looked for a 1.4% m/m drop and the Reuters median was for a 1.5% m/m fall and compared to a 1.9% m/m decline in February. This is the first monthly increase to the Nationwide index since October 2007 but the mortgage lender stressed that it was too early to talk about a housing market recovery. The y/y rate improved to -15.7% from -17.6% in February. Indeed, although we have seen some encouraging signs recently of stabilized mortgage lending, the expected sharp unemployment increase this year and next is likely to continue to place downward pressure on house prices.

Euro-Zone Retail Sales Drop More than Forecast

Euro-Zone February retail sales declined 0.6% m/m and fell 4.0% y/y, after 0.1% m/m and -1.7% y/y in January. Expectations had been for a decline of 0.5% m/m, so data were broadly as expected and the renewed sharp decline backs estimates of another sharp contraction in overall economic activity in Q1 this year. Falling prices are boosting real disposable income, but rising unemployment and the uncertain economic outlook are keeping a lid on consumption trends.

Meanwhile, Euro-Zone February PPI dropped 0.5% m/m and 1.8% y/y, after falling 1.1% m/m and 0.7% y/y in the previous month. The breakdown showed that the sharp decline is only partially due to lower oil prices, which prices excluding energy down 0.4% m/m and 1.0% y/y in February. Previous energy price declines are feeding through the product chain, which together with falling decline is bringing down prices for intermediate goods, which dropped 0.9% m/m and 3.1% y/y.

Forex Market Update: USD-JPY nears 101.00 as Stock Markets Broadly Higher

Once again, JPY cross buying was the focus in Asia, sending the dollar lower against most currencies except the JPY. U.S. and foreign entities were said to be behind the buying in the wake of the DJIA close above 8,000 on Friday and as Asian stock markets rallied in response. USD-JPY rose to highs of 100.92 but option defense of 101.00 stalled a move higher. EUR-USD gapped from Friday's NY closing levels around 1.3485 to 1.3514 and proceeded to rally to highs of 1.3582 on the back of EUR-JPY gains. Asian stocks were all broadly higher today, with some such as S. Korea and Taiwan testing 6 month highs. Crude futures rose above $53 on increased optimism but gold dropped further, slide $18 as stops were triggered, as risk appetite increased.

Forex Market Update

RBA steers a "middle course" with a 25bp rate cut

BOJ stands pat but broadens collateral accepted for liquidity operations

MAJOR HEADLINES – PREVIOUS SESSION

• CA Feb. Building Permits out at -15.9% m/m vs. -4.0% expected and revised -6.0% prior
• CA Ivey Mar. PMI out at 43.2 vs. 47.0 expected and 45.2 prior
• NZ NZIER Q1 Business Opinion Survey out at -65 vs. -64 prior
• AU AiG Mar. Construction Performance Index out at 30.4 vs. 29.5 prior
• JP Mar Official Reserves out at $1.018 tln vs. $1.009 tkn prior
• JP BOJ leaves o/n call rate target unchanged at 0.1%, as expected
• AU RBA cuts official cash rates by 25bp to 3.0%
• 
  

THEMES TO WATCH – UPCOMING SESSION

• Sweden Budget balance (0730)
• Norway Ind Production Manufacturing (0800)
• UK Industrial/manufacturing Production (0830)
• EU Euro-zone final Q4 GDP (0900)
• IS IBD/TIPP Economic Optimism (1400)
• US Consumer Credit (1900)

Market Comment:

In his speech at an investor conference overnight, Fed Gov Kevin Warsh blamed the “panic” that hit financial markets in late-2007 for contributing to, and then magnifying, the depth of the recession. Warsh clearly laid the blame on “faulty private practices and flawed public policies” and concluded with an admonition to fellow policymakers that their policy preferences must be communicated clearly, credibly and consistently and

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WORLD FOREX: Dollar Demand Rises On Financial-Sector Fears - Wall Street Journal

Novinite.com WORLD FOREX : Dollar Demand Rises On Financial-Sector Fears Wall Street Journal By Riva Froymovich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)–Dollar demand is back on a return of financial-sector woes Tuesday. The Dow Jones Industrial Average is down more than 150 points on the day, dragging currencies associated with risk … Dollar rises ahead of first-quarter earnings Forbes all 257 news articles

Forex is a 24 hour global market

Trading occurs 24 hours a day in the FOREX market. Trading world currencies is unlike stocks, bonds and commodities which are confined to a specific trading time and market. Investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

FOREX offers huge buying power with 200:1 leverage. For example, with $10,000 cash in a standard account that allows 1:100 leverage, you can control up to $1,000,000 in notional value. The margin you put down on a trade can control a position up to 200 times greater in size.

The currency markets can act as a safe haven during uncertain times. It doesn’t matter whether the stock market is sinking or soaring, whether real estate is booming or busting, whether interest rates are flying or falling, and regardless of the direction of bonds or commodities, basically: No matter what's happening, opportunities abound in the currency market.

Majors steady, eye G20 and ECB rate decision

* Majors quiet ahead of expected ECB rate cut, G20 meeting

* Market watching ECB for signs of unconventional easing

* G20 draft communique: to regulate big hedge funds

TOKYO, April 2 (Reuters) - The euro, dollar and yen barely budged on Thursday as markets awaited an expected rate cut from the European Central Bank and what it might say on unconventional easing, while also keeping a close eye on possible steps for the global economy from a G20 meeting.

A draft communique from the Group of 20 leaders of developed and developing nations meeting in London made no specific commitment to extra fiscal stimulus but said regulation would extend to systemically important hedge funds. [ID:nL2438948]

Leaders were also set to pledge to cooperate on economic policy, boost funds for the International Monetary Fund and refrain from competitive devaluations of their currencies as they seek to ward off a deepening global slump.

The ECB is expected to cut its benchmark interest rate by half a percentage point to a record low of 1.0 percent. [ECB/INT]

Markets are keen to see whether it will follow the U.S., British, and Japanese central banks in buying corporate or government debt to boost money supply. [ID:nL115284]

"The markets are pretty much in limbo ahead of the G20 and the ECB. So I wouldn't expect much in the way of volatile moves ahead of them," said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney.

The euro was steady from late New York trade at $1.3253 , although within sight of Monday's two-week low at $1.3113 and technical support at its 100-day moving average at $1.3137.

The dollar was also steady at 98.50 yen , eyeing a March peak of 99.69.

The euro edged up 0.1 percent to 130.63 yen , after losing ground against the Japanese currency in the past two sessions following its failure to break through 132.00.

The ECB's rate decision is due at 1145 GMT.

ECB President Jean-Claude Trichet holds a question and answer session at 1230 GMT, with some analysts doubtful he will say much about whether the central bank will buy corporate or government debt in steps known as quantitative easing.

"If Trichet unleashes anything along the lines of QE that would be poorly received by market," Trinh said, adding the euro would likely trade lower in that event.

The Australian dollar edged higher to $0.7005 and gained 0.4 percent on the yen to 69.06 yen , within sight of March's four-month high at 69.60.

Yen Falls Below 100 as Risk Aversion Fades

This week marked a couple milestones for the Japanese Yen. First, the Yen fell below 100 JPY/USD for the first time in five months. Second, the Central Bank of Japan “celebrated” five years of not having intervened in forex markets. Of course, the relationship between these two events is not difficult to ascertain; as the Yen retreats from the stratospheric highs of 2008, intervention is becoming progressively less necessary (and hence less likely).

Risk aversion, or in this case a decline thereof, has been identified as the likely cause of Yen weakness, although as I alluded in an earlier post, there is still a question of causation, as opposed to correlation. Is it higher equity and commodity prices that are driving risk tolerance, or the other way around?

Regardless of whether the chicken or the egg comes first, higher asset prices have recently been accompanied by modest declines in so-called “safe haven currencies,” namely the Dollar and the Yen. In the case of the Yen, there were previously two different narratives, one that underlies the Yen’s performance solely against the Dollar, and another thread seems to govern its fluctuations against virtually all other currencies.

In recent weeks, however, a combination of forces have come together to drive the Yen down against all currencies. First, of course, is the theme of declining risk aversion: ” ‘The euro was bought for the yen on the back of recent firm stock markets and this supported the dollar relative to the yen,’ ” summarized one analyst. The $1 Trillion economic stimulus plan unveiled today by the G20 will also have the effect of “sapping demand for Japan’s currency as a refuge.”

There are also end-of-quarter factors that have played a role in the Yen’s decline. ” ‘The dollar is being buoyed as Japanese investors try to secure currency on the last day of the fiscal year. Investors’ demand for the yen stemming from repatriation flows, on the other hand, appears to have peaked,’ said a trader at a Japanese bank.”

Last but not least, there is the Japanese macroeconomic picture, which shows a country that is headed towards a deep recession. The latest monthly figures show a 49% year-over-year decline in exports, which is contributing to rising pessimism among Japanese businesses. According to a recent survey by the Bank of Japan, “Confidence among Japan’s large manufacturers dropped to minus 55 in March from minus 24 in December, [which]…would be the lowest since 1975 and the biggest drop since the bank started the survey.” Given that Japanese household spending is also falling, “Japanese companies are caught in a double bind, facing markets at home that are shrinking with the population as well as the global downturn.”

Euro Gains after ECB Rate Cuts

Yesterday, the European Central Bank delivered a surprise to the forex markets; instead of cutting rates by the consensus expectation of 50 basis points, the ECB knocked down its benchmark lending rate by only .25%. The Bank also opted against certain non-standard measures that would accompany a change in monetary policy. At this point, all investors can do is wait until the next meeting to see if the ECB will finally intervene in credit markets as well as on behalf of beleaguered Eastern European currencies.

While Jean-Claude Trichet, President of the ECB, coyly refused to rule out the possibility of further rate cuts, analysts are puzzling over the relatively minuscule cut. After all, the consensus was that the ECB had already fallen well behind the curve, and was not struggling as quickly as possible to play catch up with its counterparts in the UK, US, and Switzerland. “ ‘By again buying time, the ECB risks falling further behind the curve…You cannot buy time forever.’ ”

There are a few explanations. First of all, it’s possible that the ECB is selectively interpreting data as a basis for deriving a more optimistic economic forecast. Given the spate of recent bad news emanating from Europe, however, this seems unlikely. Besides, no less than Trichet himself has suggested that an economic recovery is unlikely to occur before 2010. There is also the possibility that the ECB is simply prioritizing its mandate to guard against inflation, rather than to stimulate economic growth. This theory is also unconvincing, given that price inflation has already fallen well below the ECB’s target of 2%.

Perhaps, the best explanation is technical: “A 50 basis point cut would have required the ECB to cut the interest that it pays on deposits by banks to zero, from 0.5%, in order to maintain the current spread between the two of 1 percentage point.” Along the same lines, “European interest rates are lower than those in the U.S. when making a comparison of real inter-bank lending.” Ultimately, it’s probably the Bank’s conservatism that is behind both its comparatively tight monetary policy and its failure to unveil a quantitative easing plan that would mirror those put forth by the Fed and Bank of England. In other words, the door for more drastic monetary prescriptions has been strategically left open in the EU, while all but closed in the US and UK.

Curiously, the “the smaller-than-expected rate cut ‘remains an all-round booster for the single currency.’ ” Prevailing trading patterns and market sentiment seemed to herald a decline in the Euro, as investors have recently prioritized capital preservation and vigilance against deflation. Based on the positive market response, however, we can conclude that there are still some traders for whom interest rate differentials are important. After all, the only remaining alternatives to the EU (from the standpoint of yield) are Australia and New Zealand, but both of these economies/currencies are perceived as risky.

Alas, the ECB’s role is not to make currency traders happy. Unless the ECB follows up with a big move next month, the result could be a “very prolonged slump in euro-zone activity.”

Canadian Dollar Edges Down on Quantitative Easing Fears

Despite an ebb in risk aversion, the Canadian Dollar is once again falling. Since touching a high of $1.18 in January, the Loonie has zigzagged its way downwards and hovered around $1.25. March 31 marked the end of its third straight quarterly decline.

With the exception of the Japanese Yen (which is declining due to economic factors), virtually every currency has risen against the US Dollar in recent weeks. Stock market rallies have been accompanied by a general pickup in risk tolerance, and investors are piling back into assets and currencies that had been abandoned during the worst of the credit crisis. Why, then, has the Canadian Dollar been excluded from this rally?

Investors cannot be faulted for focusing on the abysmal Canadian economic situation. Employment, public and private spending, and construction - to cite a few indicators - are all falling at alarming speed. As a result, “the nation’s economy, the world’s eighth largest, will shrink at an 8.5 percent annualized pace in the first quarter, the largest decline since at least 1961.” Given that the picture is equally grim throughout the world, however, there must be another explanation.

Cue Mark Carney, head of Canada’s Central Bank, who has announced that Canada will “adopt a much milder version of the U.S. and U.K. strategy of printing more money to fight the recession.” Euphemistically referred to as “quantitative easing,” such a policy involves the injection of cash directly into credit markets and government bond markets, with the dual purpose of creating liquidity and stimulating the economy.

The concern, especially among forex traders, is that printing money will lead to inflation further down the road. When similar policies were announced by the Central Banks of the US, UK, and Switzerland, for example, their currencies plummeted instantly. In the words of one trader, “The precedent is a haircut right off the currency.” The Central Bank of Canada does have a reputation for being conservative, which suggests that it is likely to pursue quantitative easing only as a last step, and in a measured dose.

Accordingly, there is still some bullish sentiment surrounding the Canadian Dollar. One analyst even urges readers to “Consider the Canadian Dollar as a Possible Inflation Hedge,” partly on the basis that “The Loonie is a commodity based currency, so stronger commodity prices mean a stronger Loonie.” Given that crude oil and base metals prices are extremely correlated with the Loonie, this is a fair point.

“Canada’s currency will fall 3.3 percent to C$1.27 to the U.S. dollar by July, from C$1.2298 on April 3, according to the median forecast in a Bloomberg News survey of 40 economists and analysts.” Whether this prediction actually obtains depends primarily on what, if anything, Mark Carney and his colleagues at the Central Bank of Canada decide at their next meeting, scheduled for April 23.

Forex Make Easy

Update − Euro up slightly, awaiting ECB views on quantitative easing

Economic Calendar

Market Update

• Nikkei average gained 4.1 percent on Thursday as automakers surged on growing optimism about the U.S. economy after a string of better data than expected.
• Hong Kong's Hang Seng index jumped 4 percent, with HSBC leading the gauge up nearly 7 percent.
• Stocks rallied, driving the MSCI World Index higher for a third day
• Treasuries and the yen declined as the Group of 20 met amid growing speculation that the worst of the global recession is over.

News Summary

• The European Central Bank may cut its key interest rate to a record low of 1 percent today, increasing pressure on policy makers to use new tools to fight the worst recession in more than 60 years.
• World leaders will strive to reach an agreement on how to confront the worst global financial crisis since the 1930s at the G20 summit in London, amid signs that the world economy is stabilizing after months of freefall.
• Stocks climbed on Wednesday as factory activity in March fell at a slower rate than the month before, while pending home sales rose more than expected in February, sparking a broad advance.
• Timothy Geithner said global economies are showing “traction” amid widening stimulus efforts. Geithner’s remarks reflect the view of some analysts that the worst of the economic downturn may be past, even as some banks are likely to fail and unemployment is set to worsen.
• U.S. auto sales fell 37 percent in March, a smaller-than-expected drop that encouraged hope that the world's largest car market is nearing a bottom after a freefall that has pulled the industry into a deepening crisis. Toyota's U.S. sales fell less than analysts predicted last month as the world’s largest carmaker offered near-record incentives to spur demand.
• Commercial property loans in default or foreclosure grew in the first quarter as the U.S. recession cut occupancies and the credit crisis stymied refinancing.
• Companies in the U.S. cut an estimated 742,000 workers in March, pointing to no relief in sight for the labor market amid the longest recession in seven decades, a private report based on payroll data showed yesterday.
• Although the U.S. economy is expected return to growth later this year, there is a danger of a second recession if monetary easing and a weak dollar leads to increased inflation expectations, a report said on Wednesday.
• Changes to General Motors Corp's contract with the United Auto Workers union could save the automaker $1.1 billion or more in hourly labor costs, GM said in a report to the U.S. Treasury released on Wednesday.
• The UK manufacturing sector declined at a slower pace in March, adding to signs that the recession may be near its deepest point, data published on Wednesday suggested.
• China’s leaders, increasingly concerned about the nation’s $740 billion of U.S. Treasuries, are making it easier for trading partners and consumers to do business in yuan.

U.S Market Update

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- With another extremely light economic calendar stock investors continue to turn their attention to the upcoming earnings seasons and are lightening up in equity holdings in the early going. The US indices are down about 1.5% a piece, although they are off their worst levels mid morning. PIMCO CEO Mohamed El-Erian had plenty to say to CNBC ahead of the open, noting that he would not be surprised if equities retested lows and that government bonds are "not worth owning." Front-month crude is below $50, around $1.50 off overnight highs, while natural gas is making six-year lows around trading below $3.60. The Colorado States latest forecast for the upcoming hurricane season only confirmed the early weakness in the energy complex when they lowered the number of named storms expected to 6, with only 2 major.

- Pessimism over upcoming earnings at leading financials is sending the banks down 2-4% in early trading. Overnight "Heard on the Street" wrote that after a strong start in 2009, banking shares may be due for a pullback due to uncertainty over book values, which may fall amid uncertainty of banks being able to earn ROE above the current 13% cost of equity. Meanwhile, the IMF has said that the toxic assets held by financial companies could rise to $4T, with the deterioration in US-originated assets to reach $2.2T by the end of next year. Citi is an exception this morning, spiking up 2.5% in early trading.

- There has been a smattering of guidance reports and profit warnings ahead of earnings season, but nothing like the deluge of highly negative guidance seen ahead of last quarter's earnings season. Two consumer-facing names offered strong guidance this morning, restaurateur Brinker International and electronics retailer HH Gregg, with EPS forecasts for the coming quarter that blew out consensus estimates. Shares of EAT+6% and HGG+10% have lost a little altitude in early trading. March same-store sales come on Wednesday and Thursday, and the analysts are out talking up retailers. Yesterday Needham was positive on the sector, while Merrill raised price targets on multiple names. But today most retail names are down with overall indices and headed lower in early trading.

- Managed healthcare names traded off somewhat in the premarket after being granted a substantially lower baseline rate increase for Medicare Advantage (0.8% rather than the approx 4% increase in recent years), although the cuts are slightly less severe than those initially proposed in February. Humana, Aetna, UNH, Cigna, Wellpoint and Health Net slipped 2-3% before quickly heading back toward positive territory, with HUM, AET and UNH up 2-3%.

- Currency markets are still seeing the effects of some risk aversion trades, but the Pound Sterling is showing some relative strength late in the NY morning. Cable has paired nearly all if its losses for the day to trade back towards 1.4750 after trading below 1.46. EUR/GBP has droped below 0.90 for the first time in roughly a month. JPY has also exhibited some relative strength trading pretty much higher across the board. The EUR.USD pair has been down more than 1% for most of the session trading below 1.33.

Forex Trading − Greenback Gains as Market's Optimism Fades

The European single currency came crashing on Tuesday after data showed the Euro-Zone economy recorded its deepest ever quarterly fall in the 4-quarter of 2008. As a result, the currency market moved back to the U.S currency after optimism regarding the European economy faded. The USD which is seen as a safer bet than others currencies in times of market stress will likely keep drawing demand as investors stay away from riskier assets.

Economic News

USD - USD Regains Lost Momentum from Under-Performing Stock Market

The USD has begun a moderate rally these past two days, starting from as high as 1.3575 against the EUR, the greenback is now trading near the 1.3175 price level. An even sharper price rally began this morning during the early trading hours when the release of poor stock data emerged from Wall Street. The negative economic outlook for first quarter stock performance has many traders returning to their safe-haven investments - namely, the U.S. Dollar.

After witnessing a sharp 70 point drop, the EUR/USD began to stabilize while maintaining its downward posture. Against the GBP, the greenback made similar gains, rising from 1.4950 yesterday to as high as 1.4682 in today's early hours. Surprisingly, the USD saw no significant change in value versus the Japanese Yen, which may lend strength to the notion that the JPY is also being picked up as a potential safe-haven. So long as stocks and other equities continue to under-perform, due to the weakening global economy and rising metal prices, the USD may regain its recently diminished safe-haven status and return to levels not seen in over two weeks, perhaps to the 1.3000 price by the day's end.

Looking over the economic calendar may lend some insight into how the USD will perform through the second half of this week. The ever-increasingly important report on Crude Oil Inventories is due to be released later today. If inventories continue growing it could signal a further lack of real growth in the economy and continue to push the USD higher throughout its pairs and crosses. On Thursday, of course, we will also see two highly important data releases: the US Trade Balance report and unemployment figures. Both are due to be released tomorrow at 12:30 GMT and will likely carry a heavy impact on the value of the Dollar.

EUR

EUR - EUR's Recent Depreciation May Not End This Week

The EUR has apparently taken a hit from the recent rally in the U.S. Dollar, and not just against the USD. Dropping against all of its major currency rivals, the EUR is poised to suffer a significant loss through the rest of the trading week. Trading as high as 1.3575 against the USD this week, the EUR is currently losing momentum and may continue to drop from its current location to as low as 1.3000. The 16-nation currency is witnessing similar losses to the GBP and JPY as well.

Many analysts claim that the Euro-Zone's primary currency is losing strength not because of an inherent weakness, but because the recent price rally was dependent on a resurgent stock market. As stocks and various other equities have experienced a sharp depreciation this week, the EUR's rally has begun to implode in on itself. Unless stocks begin to rebound once more, the EUR will likely continue its depreciation as other currencies, such as the USD and JPY, regain their safe-haven trading status.

As negative data continues to emanate from the Euro-Zone's regional economy, this consequential weakness for the EUR is apparently going to continue growing as well. The rest of this week's economic news doesn't appear to be offering any significant level of support either. With very few economic indicators being released during the second half of this week, there doesn't appear to be much in the way of stopping this downward momentum in the various EUR trading pairs.

JPY - JPY Pares Losses and Stabilizes as it Regains Trader Confidence

Somewhat surprising for the market this week is a sudden resurgence of support for the JPY. While continuously losing ground to all of its currency rivals in recent days, the Yen now appears to be regaining a portion of its previous safe-haven strength. As world stock markets released poor 1st quarter data, the USD witnessed a sharp appreciation against all of its currency rivals, except for the JPY. Two of the possible explanations are either that the JPY was unaffected by a rallying USD, which seems unlikely, or the Yen also received a small boost from the search for safe-haven investments.

The island currency experienced a roughly 50 point increase against all of its major pairs and crosses, save the USD, which is currently trading at 99.70. With very little information being released regarding the Japanese economy this week, the news events surrounding world stock markets as well as the U.S. Dollar are likely going to lead the market through Friday and into next week. Because of the deterioration of world stock markets, there is a distinct possibility that low-yielding, safe-haven currencies, such as the USD and JPY, are going to begin regaining some of their recent losses through next week.

OIL - Demand for Crude Oil Continues to Fall; As Does its Price

It appears that the recent steps taken by the Organization of Petroleum Exporting Countries (OPEC) to increase the price of Crude Oil have begun to lose their momentum. After 4 consecutive days of losing value, the price of Crude Oil currently sits just below $48 a barrel and could retain this downward momentum. As economic growth continues to provide data which indicates a further slump in demand, and as the USD rallies from poor stock market data, Crude Oil may devalue even further through to next week.

As U.S. Crude Oil inventories have illustrated these past weeks, demand for this commodity has witnessed a solid deterioration. This inventories report, which is due to be released at 14:30 GMT today, may indeed indicate that demand has continued to fall and traders could be seeing a decreasing price of Crude Oil through Friday and into next week. A price of $46 may be seen by the week's end.

Technical News

EUR/USD

There is a very distinct bearish channel forming on the hourly chart, as the pair is now floating in its lower section. In addition, all oscillators on the 4-hour chart are pointing down, suggesting that the downtrend might extend. Going short might be the right strategy today

GBP/USD

It seems that the Cable has limited its bullish correction after peaking at the 1.4941 level. And now, a bearish cross on the daily chart's Slow Stochastic indicates that the general downtrend might extend. Going short seems to be the preferable choice today

USD/JPY

The daily chart shows that the pair is currently range-trading within a restricted price range. However, as the RSI on the daily chart has dropped beneath the 70 line, it appears that bearish momentum might be arising. Going short with tight stops could be the right choice today.

USD/CHF

Ever since bottoming at the 1.1253 level, the pair has entered a very strong bullish trend and is currently traded around the 1.1490 level. And now, a flag formation on the 4-hour chart suggests that the bullish move has more room to go.

The Wild Card

GOLD

Gold prices are in the midst of a very strong downtrend, and an ounce of gold is currently traded for about $887. The daily chart shows that the current price has dropped beneath the Bollinger Bands' lower border, indicating that the bearish move is still quite strong. This might be a good opportunity for forex traders to join a very popular trend

US Cash Hogs Midday: Bids Flat-Lower; Most Plants Are Full

KANSAS CITY (Dow Jones)--Slaughter hog prices in the Midwest Wednesday are flat to lower, and most plants are reportedly done buying for this week.

Demand is expected to remain slow through the weekend and could be light on Monday as well since several plants will be taking a day off between now and then, said livestock dealers and market managers.

Two plants will be down Friday, and nine others will be dark Monday in observance of the Easter holiday Sunday. With the plant closures seen for Friday and Monday, the estimates for those daily figures are around 410,000 and 300,000 head, respectively. Projections for Saturday's slaughter are from 45,000 to 50,000 head.

Sales of pork domestically and in the export markets have not been active enough to encourage packers to chase after hog supplies and process more animals, analysts and livestock dealers said. Processing margins have been thin to negative throughout most of this year, so packers are trying to hold the line on costs.

A few plants may need another load or two for later in the week but the buyers expect to be able to purchase the hogs at flat to weaker prices. Selling interest, however, has turned extremely slow as well, and most producers are willing to wait until next week before offering additional loads for sale in hopes that prices will move higher by then.

Prices at the terminal markets were reported mostly steady with one location down $1 per hundredweight. Top prices are reported from $34 to $39 on a live basis.

-By Curt Thacker, Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=nTu4LxwcXyZ5kQj31xplfg%3D%3D. You can use this link on the day this article is published and the following day.

ICE FCOJ Review:Rallies On Charts, Underpinned By Fundamentals

ICE FCOJ Review:Rallies On Charts, Underpinned By Fundamentals

NEW YORK (Dow Jones)--ICE Futures U.S. frozen concentrated orange juice rallied on technical buying Wednesday as demand ideas and supply concerns underpinned prices.

May juice settled up 380 points at 81.05 cents a pound, off of the 81.50 high, and the July contract settled up 335 points at 83 cents.

OJ dipped in early dealings to the 77.10 session low basis May, but quickly regained balance. The contract surged through resistance at the 78- and 79-cent levels to hit 81.50, the contract's highest price point since Jan. 22. May juice trimmed gains to below the 80-cent level but reclaimed ground and settled stronger on the day.

Analysts said juice could advance to the 82-cent level, a high hit Jan. 22, and the 83-cent level on continued technical buying.

Aside from technical buying, supply and demand conditions are adding to FCOJ's appeal, analyst said. Ongoing drought conditions in the northern part of Florida have been adding to gains during the week, though the trees are blooming satisfactorily and recent rains have taken the edge off of dry conditions, said an Orlando-based FCOJ broker.

Florida's 2008-09 orange crop projection is expected to be left unchanged at 158 million boxes when the U.S. Agriculture Department issues its April crop production report at 8:30 a.m. EDT Thursday, analysts said.

Increased consumption of reconstituted orange juice in place of chilled juice beverages is adding support amid the tight economic situation, the broker said.

Added support is springing from ideas of a weaker orange crop from Brazil, the leading producer of FCOJ, ahead of the U.S., said Jimmy Tintle, analyst at Transworld Futures in Tampa. Weather premium may be trickling into the market ahead of the June-July onset of the Florida tropical storm and hurricane season, he added. These bullish factors could push orange juice futures to the $1.20-a-pound level by mid-September, Tintle said.

ICE FCOJ open interest deceased by 30 positions Tuesday to total 28,296, the exchange reported.

Volume was estimated at 7,061 contracts, according to exchange data. In options, approximately 1,057 calls and 389 puts traded.

ICE         Settle      Change    Range (At time of settlement)
May         $0.8105     up  380   $0.7710-$0.8150
Jly         $0.8300     up  335   $0.7920-$0.8325

-By Holly Henschen, Dow Jones Newswires; 201-938-2338; holly.henschen@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=nTu4LxwcXyZ5kQj31xplfg%3D%3D. You can use this link on the day this article is published and the following day.

Forex: GBP/USD: Pound rejected by the 1.4745 level

FXstreet.com (Barcelona) – Sellers seem to have flocked to the GBP/USD as the pair reached 1.4745 level, sending the pair below minor support 1.4675 towards 1.4635 intra-day low.

On the downside, in case downside reaction is strong enough to break below 1.4635 level, next support levels would come at 1.4580 (Apr 7 low) and 1.4560 (100 day moving average). On the upside, above 1.4745 intra-day high, next resistance level lies now at 1.4776 (Apr 7 high) and, above here, 1.4875.

According to Valeria Bednarik, collaborator at FXstreet.com, traders are squaring positions ahead of Easter holidays: "Gbp remains also slightly bullish, but contained in a tight range around the 1.4700 zone, as traders square positions ahead of the Easter Holiday. Indicators are mostly flat in the hourly chart, not giving clear signs of further bias, while bigger time frames suggest some upside pressure, limited by the 1.4780 zone."

ited by the 1.4780 zone."

• GBP/USD

GBP/USD (Apr 08 at 18:29 GMT)

1.4683/88 (-0.36%)

H 1.4747 L 1.4632

S3	S2	S1	R1	R2	R3
1.4645	1.4656	1.4666	1.4688	1.4698	1.4709

[?]Trend Index	[?]OB/OS Index
Strongly Bearish	Neutral
Data updated on Apr 08 at 18:25 (15-minute timeframe)

U.S. Update: market after ECB and G20

The two huge fundamental events scheduled for today have not disappointed market participants. High volatility all across the board, send Gbp and Euro to test or even break key mayor resistances levels.

Through G20, world leaders summit a plan to increase international aid by $1.1 trillion to cushion the deepest global recession world is suffering since World War II and agreed to tighten oversight of the financial industry. They will channel $750 billion to the International Monetary Fund, $100 billion to the World Bank and provide another $250 billion in trade finance, the draft said. All hedge funds will have to register with national regulators.

ECB surprise market with a cut of just 0.25% points instead of the 0.50% economist were expecting, and it’s President, Jean Claude Trichet, said policy makers are ready to lower their benchmark interest rate further, while the deposit rate has probably reached its floor. “I don’t exclude that we could in a very measured way go down from the present level” of 1.25 percent, he add. The deposit rate is at “an extremely low level at 0.25 percent, and I don’t expect that we’ll move in the period to come.” Important notice, Trichet did not made any comments about unconventional monetary policy, giving Euro further support.

Positive sentiments together with bolder trader are growing at a very fast pace after this, and also Wall Street is cheering: Dow Jones Industrial Average has just reached the key 8000 level, mayor resistance zone. Clear continuation above, will bring more optimism around the world.

Gbp/Usd overview

Upside momentum in the pair continues after just reaching the 1.4740 zone that temporally halt the continuation. Strong resistance lays around 1.4770/80 a tough congestion zone. If this last is cleared, after due corrections longer term perspective in the pair turns clearly bullish, and targeting next mayor resistance zone around 1.5000. 1.4637 could well be a target for corrections. As long as the price remains above that level, upside bias remains intact. 4 hours charts are getting into over bought territory right now. Next candle opening will probably clear if we will see more continuations or corrections for the next hours.