Data Week

by Larry Levin

Although there is only one data point Monday the 24th, existing home sales, the rest of the week is full of news including GDP late in the week. For more than a week the economic data has been light. Will this be enough to take European problems off the front burner?

The European currency had a 3-day reprieve from its nosedive last week while the US equity market continued its fall. Sunday evening, however, the Euro is getting weaker again and only time will tell if it falls apart again.

May 24 (Bloomberg) -- The euro fell against the dollar, ending a three-day gain, on speculation Europe’s fiscal crisis will slow the region’s economic growth.

The single currency weakened versus 12 of its 16 major counterparts after European Union finance ministers pledged to stiffen sanctions imposed on high-deficit countries and ruled out setting up a mechanism to manage state defaults. The dollar rose for a second day against the yen before a U.S. report that economists said will show the housing market is improving.

“The markets’ focus is still on structural issues in the euro zone,” said Manabu Tamaru, a senior investment manager at Baring Asset Management in Tokyo. “An ultimate solution to this crisis won’t happen until policy makers reach political unity. The euro will be in a downtrend.”

The euro fell to $1.2526 as of 8:47 a.m. in Tokyo from $1.2570 in New York last week. The 16-nation currency traded at 113.06 yen from 113.13 yen. The dollar strengthened to 90.28 yen from 90 yen.

The euro has lost 6 percent this year, based on Bloomberg Correlation-Weighted Indexes. The dollar has risen 9.1 percent, and the yen has advanced 12.9 percent.

The euro fell after the Bank of Spain appointed a provisional administrator to run CajaSur, a savings bank crippled by property loan defaults. The lender will be controlled by the government’s bank restructuring fund, the regulator said May 22 in an e-mailed statement.

‘Weigh’ on Euro

“Weekend revelations that the Bank of Spain has acted to support a regional lender is likely to weigh on the euro,” said Gareth Berry, a currency strategist at UBS AG in Singapore. “This will probably revive concerns about the broader stability of the euro-zone banking system.”

Under the German-inspired Stability and Growth Pact, nations with deficits above 3 percent of gross domestic product face fines unless they get the budget back into compliance. No country has been fined during the euro’s 11-year lifespan.

U.S. Treasury Secretary Timothy F. Geithner will tell his Chinese counterparts that Europe’s crisis should have only a small effect on the broader global recovery, a U.S. official told reporters in Beijing yesterday.

Geithner and Secretary of State Hillary Clinton are in China for the two-day Strategic and Economic Dialogue, a set of annual high-level talks. Geithner will then depart for London, Berlin and Frankfurt to meet with European officials and reinforce his call for coordinated efforts to fight off the crisis and rein in government spending.

The full article can be found here:

https://docs.google.com/Doc?docid=0AYC7bjDQBH1EZGZqczM4cm5fNWZwd3pkZ2dw&hl=en



Previous Day's Trading Room Results:

Trade Date: 5/21/10

E-Mini S&P Trades*
(before fees and commissions):

1) VA sell @ 9:10am at 1077.50 = +1.00, +1.00, +1.00 (3 lots)

2) VA buy @ 1:36pm at 1078.00 = +1.25 & -1.00 (2 lots)

3) Algorithm positions (21)

4) “Reading the Tape” positions (31) …combined Secret’s, Algo, & “Reading the Tape” total… +54.00

Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!