Monday Afternoon To Answer

Stocks slipped on Friday as a session with sparse economic data gave investors little reason to push indexes higher, but the S&P 500 and Nasdaq remained on track for their eighth positive week in the last nine. The S&P 500 has traded in a tight range in the past two weeks, mostly holding on to a gain of nearly 9 percent since the beginning of the year. Even though both the Nasdaq and S&P were on track for their third straight weekly advance, gains were limited as economic data throughout the week cast some doubt on the strength of the economic recovery. "The news continues to be conflicted. That is why you see this market. We are not racing away any more. We are stuck right at" these numbers, said Ken Polcari, managing director of ICAP Equities in New York. "You just have the markets ...

Forex News and Events: High yielding currencies continued to outperform as the developed nations central banks have all committed to a sustained period of ultra-loose monetary policy (unlimited free liquidity) and the contraction of volatility has put the carry trade back on the map. As with the crowded dividend trading in the equity markets, we suspect that growth projections in many of these nations have already been priced in. So the kicker at this point will only be the interest rate differentials and trading momentum. Australian retail sales came in slightly weaker than expected at -0.1% m/m vs. 0.2% exp although there was little spillover into the AUD. AUD OIS are pricing in a 70% probability of a 25bp cut at tomorrow RBA meeting so we are also looking for a quarter worth of ...

Fundamental News: Today's Highlights • ECB Chairman Speaks from Europe. (UN, 8:30 GMT) • Monthly Manufacturing Production from UK. (UK, 9:30 GMT) • Housing Starts from Canada. (CAD, 13:15 GMT) EURUSD EUR/USD: EUR/USD reaching 1.3698 before easing slightly mid-American afternoon. Also, as stocks and commodities rose amid EU authorities pledged to deliver a plan to recapitalize banks by the end of the month. The hourly chart shows indicators heading slightly lower after reaching extreme overbought conditions. Support levels: 1.3600 1.3550 1.3520 Resistance levels1.3660 1.3710 1.3770 USD/JPY USD/JPY: USD/JPY traded in an even narrower range this Monday, barely 20 pips from low to high. Flat indicators in 1 hour chart prevail as lately with the dominant range being 76.50/77.00. ...

Yesterday was busy here on the desk, with the normal flurry of Monday trading combined with a number of calls to the desk regarding our MarketSafe CD which will be closing out shortly. But the currency markets were fairly quiet ahead of the elections today. But as I pointed out yesterday, trading yesterday was nothing more than the quiet before the storm, as the currency markets were rocked overnight with surprise rate announcements by both Australia and India. I warned you that this week was going to get interesting. The big news overnight was the Reserve Bank of Australia’s announcement that they would add another quarter point to their benchmark interest rate in order to steer their economy clear of inflationary pressures. The move pushed the Aussie dollar (AUD) to above parity for the ...

The Week Ahead Highlights * Stress test results are in--Yawn * Sterling bolstered as some of the economic gloom lifts * German recovery becoming difficult to ignore * JPY-strength becoming an issue in Tokyo * Key data and events to watch next week Stress test results are in--Yawn The long-awaited results of the Eurozone banking sector stress tests were delivered on Friday and markets greeted them with a collective yawn. Earlier leaks led markets to conclude the adverse scenarios would not be especially stringent, causing most to discount the results. To re-cap, only 7 of the 91 banks tested failed, requiring a total of only EUR 3.5 bio to be raised in new capital. To put that number in perspective, some analysts reckon Spanish banks alone need to raise EUR 40 bio to ...

Previous session overview The euro rose against the dollar in Asia Thursday as some Asian hedge funds bought the unit on the view it won't likely fall sharply for now because Europe's fiscal problems won't worsen much in the near term. These hedge funds speculated that the EUR750 billion bailout plan created Monday may contain investors' concerns that Greece could default, at least for now. As of 0450 GMT, the euro rose to USD1.2667 from USD1.2629 in New York Wednesday, and increased to JPY118.00 from JPY117.69. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 84.641, down from 84.848. Euro weakened to an intra-day low of USD1.2605 in Asian afternoon but then rebounded strongly to USD1.2740 on active short-covering after news that ...

Today Greece will attempt to issue €1.2bn of short term 6 and 12 month t-bills and will be a critical test of the markets’ faith in the EU / IMF rescue plan. This will be the first test of the markets appetite since the EU formally layout the terms of aid, should Greece request emergency funding. Initially, the markets were very optimistic on the agreement, with the EURUSD climbing to 1.3692, while Greek CDS are sharply lower, now trading below Iceland’s. However, further examination of the Greek bailout plan has produced more questions than answers, causing erosion in confidence. One point is the proposal that Greece will be charged “around 5%” which is clearly below market’s rates. Given that any bailout will need a unanimous EU vote, it’s unknown whether Germany will provide the ...