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NEW YORK (AP) - Treasury prices were mixed in uncertain trade Thursday as the stock market tried to extend a lively rebound into a second session.

Treasury prices were volatile, alternating between fairly heavy gains and slight losses as the market adjusted to a sudden resumption of demand for stocks. Wall Street registered a considerable advance late in Wednesday's session.

The gains in the stock market were smaller Thursday but largely eclipsed buying interest in Treasurys. The stock and government bond market often trade in opposite directions, as investors alternate between favoring safe assets like Treasurys and opting for the higher potential returns of riskier stocks.

The 10-year benchmark note fell 9/32 to 104 31/32 with a yield of 3.64 percent, up from 3.60 percent late Wednesday.

The 30-year long bond dropped 20 to 110 27/32 with a yield of 4.34 percent, up from 4.32 percent late Wednesday.

The 2-year note fell 4/32 to 101 31/32 with a yield of 2.19 percent, up from 2.14 percent.

New calls by New York Insurance Superintendent Eric Dinallo and others for an orchestrated rescue of cash-strapped bond insurers also has diminished demand for Treasurys. Earlier in the year, the prospect of the insurers' problems wreaking havoc in the municipal bond market spurred demand for Treasurys and federal agency debt.

However, some analysts questioned the viability of such a rescue.

The plan "begs one important question: Given the size of the write-downs witnessed in the financial sector, who is going to provide the capital to banks?" said Kevin Giddis, managing director of fixed income trading at Morgan Keegan.

Earlier in the week there was robust demand for Treasurys that drove the 2-year yield down to its lowest level in almost four years and caused the 30-year yield for the first time to break below 4.15 percent, the yield's level when it debuted in 1977.

The rallies were the result of investor bets on the likelihood of a signficant economic slowdown and further rate cuts by the Federal Reserve. Investors often seek government-backed assets and stay away from risky investments when the economy softens, so Treasurys could register further price gains later in the week or early next week.

The Fed on Tuesday ordered an unusually large 0.75 percentage point rate cut and sent strong indications that it is willing to reduce rates again if necessary. The Fed is widely expected to put in another rate cut at its monetary policy meeting Tuesday and Wednesday. Many investors expect a 0.50 percentage point reduction.

The focus on the Fed has diminished interest in economic data for the time being. The Labor Department reported a slight decline in the number of people applying for jobless claims in the latest week, while the National Association of Realtors reported a 2.2 percent drop in existing home sales in December to 4.89 million. It was the smallest number of homes sold in nine years.

As the global equity markets are in a free fall, the risk of Emerging Markets turmoil has clearly increased. It is notable that it looks as if global investors – rightly or wrongly – are loosing faith in the rest of the world’s ability decouple from the US slowdown. For example, this is visible in commodity prices, which have fallen somewhat overnight. Crude oil is now at a five-week low.

The continued rise in risk aversion is likely to hit high beta currencies such as TRY, ZAR, ISK, RON and HUF mostly. Furthermore, with commodity prices beginning to fall also, it is likely that the Latin American currencies – particularly BRL and CLP – are likely to come under further selling pressure. In general we see most risk in the EMEA currencies where external imbalances are large.

It should be noted that a lot of investors have been betting on the notion that Emerging Markets were “special ” and could act as a “safe haven”. That view might now no longer be the dominant one, and hence the Emerging Markets’ FX markets could now cave in to the selling pressure.

he dollar’s recent rebound against the euro and sterling was undermined by weak economic data. The reports released earlier today added to burgeoning fears that the US economy is headed toward a recession. A combination of poor housing data and a disappointing Philadelphia Fed survey set the tone for the trading session, with the greenback initially weaker across the board. The reports also fueled expectations for aggressive policy easing from the Fed beyond the largely priced-in 50-bp rate cut anticipated at the end of the month.

Housing starts for December plunged by over 14% to 1.006 million units, its lowest level in 16-years. Consensus estimates were calling for a drop to 1.14 million units versus 1.187 million units from the previous month. December housing permits declined by 8.1% to 1.068 million units, versus a 0.7% drop in November at 1.162 million units. On a positive note, weekly jobless claims declined to 301k from 322k.

The January Philadelphia Fed survey revealed dismal economic conditions, falling to its lowest level in six-years to -20.9, far greater than expectations for a decline to -1.0 from -1.6 from December. The employment index dipped into negative territory in January to -1.5 from 3.8 in December, its lowest level since September 2003. The new orders component fell to -15.2 in January, a sharp reversal from the 12 reading in December.

Fed Chairman Bernanke delivered his Congressional testimony today, offering a somber assessment on the outlook for the US economy. He said the economic outlook has worsened and that downside risks to growth are more pronounced. Bernanke reiterated last week’s comments that “more policy easing may be necessary and was ready to take substantive action”. He said that inflation expectations remained well anchored so far and funding markets were still impaired. Further, he said inflation expectations were well anchored so far adding that pressures on resource use have eased.

Atlanta Fed President Lockhart echoed a similar sentiment, saying additional rate cuts may be needed in the face of economic weakness. He said recent economic news has been more negative than expected and as a result, the Fed must act pragmatically. Lockhart sees inflation moderating, permitting the Fed to focus on immediate risks to growth. He expects adjustment under way in the US housing market and anticipates correction for most of 2008.

Summary of contents

• The outlook for the national economy continues to depend upon how well the consumer navigates through four major headwinds: the housing slump, rising energy costs, a tightening credit environment, and a weakening job market.
  
• 
  

The American Consumer

• Consumer spending will slow, but not collapse in 2008, as job and income growth underpin continued gains. Despite slower average employment gains in the coming year, job growth should be sufficient to produce wage and salary gains of around five percent.
• The slowdown in consumer spending coupled with steady income growth means that income growth will outpace spending growth for the first time in five years. As a result, the saving rate will rise.
  
• Growth will not be uniform, many areas will face sharper declines in home prices, and these adjustments will weigh heavily on local economies.

Housing & Residential Construction

• Housing will continue to decline into the new year and we do not expect any meaningful recovery on a national basis before the end of the decade. Many areas are facing longer workout periods.
  
• Prices need to decline as much as 20 to 30 percent in markets such as California and Florida, where the run-up in home prices has created severe affordability issues for potential residents. Nationally, prices will need to decline only 10 to 15 percent from peak-to-trough.
  

Interest Rates

• The Fed will need to cut the federal funds rate twice more in the first quarter. Recent actions suggest the Fed is committed to ensuring liquidity and the stability of global money markets. However, with renewed growth in the U.S. economy and lingering concerns of inflation, the FOMC will be in a position to begin tightening by year-end.
  
• Treasury yields will remain range-bound in the coming year, and newfound steepness should remain in the curve in the coming year.
• The Fed’s coordinated action with other major central banks may not be a cureall for the credit market problems, but it was certainly a step in the right direction. We look for LIBOR-to-Treasury spreads to narrow after the year-end pressures subside.
  

The Dollar

• The Dollar may have reached a bottom in its five year slide recently. It should begin a slow move higher against European currencies by the second half of 2008, when foreign central banks will be easing into the face of renewed Fed tightening. However, we look for the greenback to depreciate further versus most Asian currencies.

Often, people take a new year as an opportunity for a fresh start. For the trader, perhaps that means deciding that you will always focus on risk first and take every stop loss according to plan. Others may conclude that they are going to increase share size because they have been doing well. From some recent emails, I have noticed that some traders are going to add futures trading to their plate in 2008. Whatever you decide to do in 2008 as a market speculator, there is one governing dynamic to markets that you had better make sure you understand: Supply (resistance) and Demand (support). Average market volume is not likely to be back to normal until Monday so there should be no big hurry to jump back into the markets. This means there are three full days to ask yourself some simple questions. If you are not sure of any of these questions, why would you be willing to put a dime of your hard earned money at risk? Believe me, the market speculators on the other side of your trades know the answers to these questions without even thinking.

1) Do you have a trading plan?
a. The best traders always have a plan and more importantly, stick to the plan.

2) Is there discretion in your plan?
a. If there is discretion in your trading plan, this means there are unanswered questions. It is best to turn those questions into RULES.

3) Is all your analysis based on objective information or is some of it subjective?

4) Do you understand how to quantify supply (resistance) and demand (support)?
a. Or are you focused on a lagging indicator which can lead to high risk and low reward trading?

5) Have you reviewed your trading results such as average win to average loss and your winning percentage?

While I have many more important questions for you, it is best to address these one at a time as this will allow you to really deal with the main issues and get on the path toward your goals. As a concerned educator, I would suggest you NOT even think about trading until all these issues are taken care of. As a market speculator, go ahead and ignore the questions and keep on trading. Never forget, in trading, it's almost always the novice trader providing income for the consistently profitable trader.

Let's review some markets:

Above is a chart of the SPY, the ETF for the S&P. As I have tried to point out over the past few weeks, this market has plenty of room on the downside for a decline. While there appears to be support at the lows marked support 1, be careful buying at that level if and when price reaches it again and here is why. Price has revisited this level a number of times already as seen on the chart. Each time price revisits this level, more willing buyers that make up the demand (support) get to buy. This means support is getting weaker, not stronger. A lower risk and higher reward area to buy would be the lower support level marked support 2. This is really the origin of the demand, the 200 MA is in this area, and price has not revisited this level yet.

This is a chart of the QQQQ, the ETF for the NASDAQ. Above current price, we find a resistance level that has not been revisited yet. Swing and day traders may find a low risk/high reward shorting opportunity in this range. Also, notice the dramatic decline in price from this level suggesting that supply and demand are very much out of balance at the resistance level. The down sloping 200 MA shows the downtrend which means it's okay to sell short at the resistance level seen above. If you don't know how we enter these trades and where we put our stops, join us in our Pro Trader course where we spend plenty of time on this issue. You can always email me as well.

This market, the XLF (ETF for the financial service sector) has been declining at a very rapid rate due to all the credit related problems with lenders. While the selling is likely to continue, there is a demand (support) level below that has not seen price revisit it even once. This suggests a move higher when price reaches it. If you're trading financial stocks, it may be a good idea to time your longer term buys in those stocks with the demand level seen on this chart.

Tactical signals

Signals only: 2007 +151%. January points below.

EUR/USD 1.4750 -1 pts
Long at 1.4649, Profit stop loss 1.4671
Long at 1.4689, Took Profit 1.4701
Long at 1.4729, stopped 1.4701
Long at 1.4779, stop loss 1.4721
Buy on stop 1.4799, if done stop loss 1.4731
Buy on stop 1.4849, if done stop loss 1.4771
Sell on stop 1.4571, if done stop loss 1.4639

GBP/USD 1.9725 -116 pts
Long at 1.9789, stopped 1.9731
Long at 1.9819, stopped 1.9751
Buy on stop 1.9789, if done stop loss 1.9721
Buy on stop 1.9859, if done stop loss 1.9801
Sell on stop 1.9671, if done stop loss 1.9729

USD/YEN 108.65 +346 pts
Buy on stop 110.39, if done stop loss 109.61
Short at 112.51, Profit stop loss 109.29
Short at 112.01, Profit stop loss 109.09
Short at 108.71, stop loss 108.99
Sell on stop 107.71, if done stop loss 108.29

EUR/YEN 160.30 +0 pts
Buy on stop 162.19, if done stop loss 161.41

EUR/GBP .7475 +76 pts
Long at .7219, Profit stop loss .7431

GBP/YEN 214.40 +0 pts
Buy on stop 217.49, if done stop loss 216.01
Sell on stop 212.71, if done stop loss 213.69

AUD/USD .8725 +11 pts
Long at .8619, Took Profit .8761
Long at .8639, Took Profit .8771
Buy on stop .8779, if done stop loss .8741
Buy on stop .8819, if done stop loss .8771
Buy on stop .8849, if done stop loss .8801
Short at .8731, stop loss .8749
Sell on stop .8671, if done stop loss .8719

NZD/USD .7665 -61 pts
Buy on stop .7719, if done stop loss .7661
Short at .7661, stopped .7699
Sell on stop .7631, if done stop loss .7689

AUD/YEN 94.80 +0 pts
Buy on stop 95.29, if done stop loss 94.61
Sell on stop 94.21, if done stop loss 94.79

USD/CAD 1.0010 -18.5 pts
Long at .9979, stop loss .9961
Long at 1.0029, stop loss .9971
Short at .9871, stopped .9939
Sell on stop .9931, if done stop loss .9969

1,4730. EUR USD is in an uptrend supported by 1H exponential moving averages. EUR USD is in a consolidation after the last bullish movement. The volatility is high. Bollinger bands are flat. ForexTrend 4H, daily (Mataf Trend Indicator) is in a bullish configuration. The consolidation should continue. The price should continue to move in Bollinger bands. We won't take a position.

Resistances

1,4760 - 1,4820

Supports

1,4700 - 1,4650

more information on EUR/USD - Euro Dollar Click Here

GBP/JPY - British Pound Yen

214,65. GBP JPY is in an downtrend directed by 1H exponential moving averages. GBP JPY is in a consolidation after the last bearish movement. The volatility is high. ForexTrend 1H, 4H, daily (Mataf Trend Indicator) is in a bearish configuration. 4H ForexSto (Modified Stochastic) indicate a bearish pressure on GBP JPY. The downtrend should continue to gather momentum.
=> We could take a short position at 214,70. We will put the stop loss above 215,70 (-100 pips). The targets are 213,00 (+170 pips) 212,50 (+220 pips) 211,50 (+320 pips). Each trade is dangerous, take care and put your stop loss. Trade configuration (1 Speculative -> 4 Trend following): 4.

Resistances

215,10 - 216,15

Supports

213,70 - 213,00

more information on GBP/JPY - British Pound Yen Click Here

GBP/USD - British Pound Dollar

1,9706. GBP USD is in an downtrend directed by 1H exponential moving averages. The volatility is high. Bollinger bands are flat. ForexTrend 1H, 4H, daily (Mataf Trend Indicator) is in a bearish configuration. The downtrend should continue on 1,9500 support.
=> We could take a short position at 1,9710. We will put the stop loss above 1,9755 (-45 pips). The targets are 1,9600 (+110 pips) 1,9500 (+210 pips). Trade configuration (1 Speculative -> 4 Trend following): 3.

Resistances

1,9755 - 1,9800

Supports

1,9685 - 1,9650

more information on GBP/USD - British Pound Dollar Click Here

USD/CAD - US Dollar Canadian Dollar

1,0015. USD CAD broke 0,9965 resistance. USD CAD is in a consolidation after the last bullish movement. The volatility is high. ForexTrend 1H (Mataf Trend Indicator) is in a bullish configuration. 4H ForexSto (Modified Stochastic) indicate a bullish pressure on USD CAD. The price should find a resistance below 1,0050. The consolidation should continue. We won't take a position. The risk/reward ratio is too high to take a position..

Resistances

1,0050 - 1,0060

Supports

0,9965 - 0,9900

more information on USD/CAD - US Dollar Canadian Dollar Click Here

USD/CHF - Dollar Swiss Franc

1,1097. USD CHF is in an downtrend directed by 1H exponential moving averages. The volatility is high. ForexTrend 4H, daily (Mataf Trend Indicator) is in a bearish configuration. The downtrend should continue to gather momentum.
=> We could take a short position at 1,1110. We will put the stop loss above 1,1160 (-50 pips). The targets are 1,1000 (+110 pips) 1,0950 (+160 pips). Each trade is dangerous, take care and put your stop loss. Trade configuration (1 Speculative -> 4 Trend following): 3.

Resistances

1,1120 - 1,1150

Supports

1,1090 - 1,1050

more information on USD/CHF - Dollar Swiss Franc Click Here

euro

The European currency continued in the upside direction yesterday due to the signals it had previously formed to take the euro up until 1.4780s resistance area. The technical oscillators indicated the upside potential; hence, the euro might cause a significant move if it passes the major resistance area around 1.4800.

The trading range for today might be between the key resistance level at 1.4880 and the key support level at 1.4670.


The general trend is up as far as 1. 3860 remains intact targets now at 1.5000 and 1.5230




Support 1.4743 1.4718 1.4694 1.4670 1.4647
Resistance 1.4765 1.4780 1.4803 1.4825 1.4850

Recommendation
We expect buying Euro above 1.4720 with a target at 1.4820 stop loss below 1.4670.

gbp

The British pound yesterday dropped in a strong bearish move as it couldn't breach the major resistance level located around 1.9840s area. The pound fell sharply to hit the strong support at 1.9700s, and is seen to remain weak therefore the pound is expected to progress in the downside direction.

The trading range for today might be between the key resistance level at 1.9870 and the key support level at 1.9500.


The general trend is up as far as 1.9460 remains intact targets now at 2.1170 and 2.1450




Support 1.9685 1.9665 1.9638 1.9620 1.9590
Resistance 1.9726 1.9745 1.9767 1.9789 1.9826

Recommendation
...

jpy

The dollar against the Japanese yen yesterday declined in a major move to hit the important support level at 108.20s and failed to progress due to the support's strength so the pair reversed back to the upside direction in the last trading sessions to close with tendency to the upside. Today the pair is expected to move in a bullish pattern.

The trading range for today will be between the key resistance at 111.00 and the key support at 107.80.


The general trend is down as far as 121.30 remains intact, targets at 112.40 and 111.20.




Support 109.37 109.10 108.82 108.56 108.34
Resistance 109.56 109.85 110.05 110.27 110.48

Recommendation
...

chf

The dollar against the SWISS Frank yesterday lacked momentum resulting in a key drop to show the confirmation on the bearish pattern. In the meantime, the technical studies still show the downside potential for today's trading.

The trading range for today will be between the key resistances at 1.1250 the key support at 1.1000.

The general trend is down as far as 1.2020 remains intact, targets at 1.0900 and 1.0740.




Support 1.1106 1.1087 1.1069 1.1045 1.1027
Resistance 1.1135 1.1150 1.1185 1.1216 1.1236

Recommendation
We expect selling USD/CHF below 1.1140 with a target at 1.1080, stop loss above 1.1185.

cad

The dollar against the Canadian yesterday moved to the downside direction with high level of volume to show the progressive bearish pattern to set the target at 0.9760s support area as the technical parameters indicated.

The trading range for today will be between the key resistance at 1.0018 and the key support at 0.9700.


The general trend is down as far as 1.0450 remains intact, targets will be at 0.9000 and 0.8880.




Support 0.9884 0.9867 0.9840 0.9818 0.9797
Resistance 0.9900 0.9913 0.9932 0.9957 0.9983

Recommendation
We expect selling USD/CAD below 0.9900 with a target at 0.9800, stop loss above 0.9950.

source http://www.crownforex.com/en/newscenter-major_analysis_tech.aspx

http://www.djnewswires.com/eu

Currency Rates Of Coffee Producing, Consuming Countries


LONDON (Dow Jones)--U.S. dollar exchange rates as of 09:11 GMT January 4, compared with 08:55 GMT January 3.

Producers:

Angolan Kwanza AON 74.971 (74.971)
Bolivian Boliviano BOB 7.64 (7.64)
Brazil Real BRL 1.752 (1.763)
Burundi Franc BIF 440.8 (445.35)
*CFA Franc XOF 2012.5 (2018.5)
Colombian Peso COP 517.935 (517.935)
Costa Rican Colon CRC 1 (1)
Cuban Peso CUP 33.6 (33.6)
Dominican Republic DOP 25052 (25052)
Ecuadorean Sucre ECS 8.75 (8.75)
El Salvador Colon SVC 7.6315 (7.6315)
Ethiopian Birr ETB 9.1925 (9.1925)
Guatemala Quetzal GTQ 7.6315 (7.6315)
Guinea Franc GNS 4271.15 (4271.15)
Haiti Gourde HTG 36.15 (36.15)
Honduras Lempira HNL 18.89 (18.89)
Indian Rupee INR 39.335 (39.435)
Indonesian Rupiah IDR 9432.5 (9409.5)
Kenyan Shilling KES 68 (63.55)
Malawi Kwacha MWK 137.55 (137.55)
Mexican Peso MXN 10.8785 (10.9145)
Nicaragua Cordoba NIC 18.871 (18.871)
Papua New Guinea Kina PGK 3.0189 (3.0189)
Peruvian New Sol PES 2.9725 (2.9725)
Philippines Peso PHP 40.93 (41.085)
Venezuelan Bolivar VEB 2147.5 (2147.5)
Vietnam Dong VND 15990 (15990)
Zambian Kwacha ZMK 3735.5 (3735.5)
Zimbabwe Dollar ZWD 29999 (29999)

CONSUMERS:


Danish Krone DKK 5.0622 (5.0704)
#Euro EUR 1.4718 (1.4703)
Japanese Yen JPY 109.25 (109.545)
Norwegian Krone NOK 5.3533 (5.3993)
Swedish Krona SEK 6.3539 (6.4028)
Swiss Franc CHF 1.1118 (1.1171)

* = The CFA Franc is the common currency of 14 African countries which are
members of the Franc zone:
XOF = Benin, Burkina, Ivory Coast, Guinnea Bissau, Mali, Niger, Senegal
and Togo under the Central Bank of the West African States.
XAF = Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea
and Gabon, under the Bank of the Central African States.

# = Currencies that are quoted in U.S. dollars per unit of currency.
All other currencies are quoted in units of currency per U.S. dollar.

Source: OANDA Corp and yahoo.com.

-By Anthony Anderson