Apparently, most market analysts find themselves in irrational cycles as they try to understand the possibility of the ECB cutting its borrowing rates, introducing a fresh round of LTRO, revive the securities program market, do some or all of the preceding , or remain dormant.  On a different level, the analysts crowned their predictions by suggesting the way EUR will react to these actions.

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Germany’s development engine is gradually collapsing following weakness in the currency union and Asia. This weakness is taking a heavy toll on the well-oiled export engine. In the meantime across the pool it is apparent that both the BoC and ISM Non-manufacturing indicator are waiting for us.

•    Apr. German Factory Orders (10:00 GMT) to spot a rush in the drop in orders: The Eurozone’s main economy has set a solid struggle against adversity caused by weakness in the currency union’s associates and China, although it gradually exceeded. The PMI Manufacturing Index got to the lowest point of 46.2 in April only to fall further last month to just 45.2. The current weakness in PMI series will most likely be confirmed in a report on Factory Orders that is due today.

•    Bank of Canada (13:00) is expected to retain its current interest rates? There is a sluggish growth in Canadian economy together with its Southern neighbor.  The CPI is also decelerating continuously to about 2% that was recorded in April. With all factors constant, the Bank of Canada takes a rather dovish stance unlike in the last meeting on April 17th when it noted that doing away with the stimulus may become proper and that world vagueness will have little impact on the country’s economy.  But things may not have gone so wrong to warrant total reversal on the last meeting’s hawkishness. Consensus – predictably – expects unaffected rates

•    May US ISM Non-manufacturing (14:00) to corroborate slow economic development: of both the ISM reviews were lost last Friday while the Nonfarm Payrolls figure was publicized, however regarding the ISM Manufacturing understanding the employment section would possibly not have assisted predictors much as it remained at an elevated point of 56.9 signifying robust development (57.3 prior). Considering the utter slowdown in additional payrolls in current month April’s ISM Non-manufacturing recruitment part of 54.2 seems hard to beat. In spite of the feeble US recruitment report agreement remains comparatively positive with a prediction for an unaffected point of 53.5 last month – perhaps buoyed by the burly interiors of the ISM Manufacturing.

A declining market is different from range bound and bull markets.  The latest drop of 200 day accelerating average and because of the fact that it was retaken by the close makes it an alarm for a bearish market. The most unique thing about bear markets is that they do not come with defined supports. This means that they can continue trending downwards without finding purchasers for several consecutive days.  However, it is not possible for you to take an enormous short position simply because most of down trends begin unevenly with underneath fishers and knife catchers coming in to purchase on bearish days plus rumors triggering face ripping price increase from nowhere.  Currently, the rumors of third Quantity Easing might trigger a record breaking plunge.  Even if the market is calm, we expect to see several price increments heading back to 200 day and it may act as resistance and even experience one or two days break to draw people back ahead of a fresh plunge. In such a situation, you need to tread very carefully.

This is how am trading it.

I am playing on the smaller side until there is a turnaround in trend and multi-day corroboration over the 200 accelerating average.
I am chiefly utilizing stock options to avoid losing too much capital to whip saws that are normally triggered by surprise news flashes.
I am also trading a bit lesser position sizes than normal making sure that there is no influence over the size of my account.
I am also shorting current leaders with busted tables that will experience a lot of problems while improving in the rally.
My aim is also to short junk stocks whose charts are in the death spirals in order to make new 52 week drops severally.
I also intend to short current IPOs that might not afford their hype and therefore lose their huge valuation rewards.
I am not permanently set around the macro environment but I am willing to overturn and take long positions incase there is an up tread.
I plan to long with Apple incase the world doesn’t come to a halt. I will trend it with a close over the 10 day SMA incase the market goes back to uptrend.
Currently, I am not ready to take long position in the ongoing downtrend. My aim is to wait a little bit for strong leaders.
My first aim is to retain my profits from the last up trend winnings but I don’t intend to make much profit for now.

Be careful when you are trending here my friends.

The president of FED in Cleveland, Sandra Pianalto, was today cited as saying that the bleak US jobs report for last month does not merit additional easing of financial plan.

Speaking with the Wall Street, Pianalto also noted that although the latest jobs report is disappointing, she is still optimistic that the economy will improve.

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Forex and borrowing rate exchanges staffing increases due to the ongoing economic crisis in Greece and Spain.

Current figures indicate that the rush by investors to protect their businesses against risks that may be triggered by the crumple of the monetary union caused an increase in recruitment in the Square Mile the previous month.

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According to a report from Morgan Stanley, the Fed is expected to provide additional stimulus after its present attempt unwinds following a report that indicated job increase in May.

Additional Central Bank strategy action also increased to 80% from the last 50%. This came after the labor department announced a job increase in May. The report showed that US employers added 69,000 new jobs in May following an increase of about 77, 000 new jobs in April. More than 85 economists that were interviewed by Bloomberg had predicted an increase of about 150,000 jobs.

David Greenlaw, an economist at Morgan Stanley, sent a letter to customers saying that any hopefulness associated with job market over the winter season is slowly fading away with fiscal conditions tightening considerably since April’s FOMC meeting.  The Fed is expected to do everything possible to offer assistance.

U.S central bank is almost done with its project of replacing $400 billion of near term liability in its investments with longer maturities before the end of June to boost the economy by reducing interest rates. The plan, labeled Operation Twist, will be closed this month. The next FOMC meeting will be on 20th June.

According to Bloomberg, the standard 10-year acquiesce dropped 9bps to 1.47% New York time. Thirty-year bonds yield dropped by 9bps to 2.55%, hitting 2.5089% beneath the record 2.5090% that was experienced in Dec, 2008. Fed figures starting from 1953 were also put into consideration.

Morgan Stanley is a primary dealer that trades directly with Central Bank. It is among the 21 main dealers trading with Central Bank.

Today’s Bloomberg terminal clearly indicates an XGD currency function, which is a mark cost for a post-euro drachma currency.

We contacted Bloomberg’s for clarification, but they answered that the function was internal.

In normal business situations, Bloomberg conducts contingency planning. In this regard, Bloomberg is ready to face different business situations including personal sovereign non-payment scenarios and overhaul of currency for personal sovereigns.

In the entire testing process, few customers were able to briefly identify an assessment identifier.

Strangely, it revisits what IMF representatives noted yesterday about setting up emergency plans for Spanish rescue.

The following is the expect scenario in case Greece exits the Euro.

Looking at the temporary results of the FSO (Destatis), Germany’s retail earnings in April this year slumped by 2.0 percent in ostensible terms and 3.8 percent in actual terms compared with the same month of the earlier year. In April 2012, only 23 days were open for sale, while in April of the previous year only 24 days were open.

 
When the April earnings were adjusted for seasonal variations, it appeared to be in nominal terms 0.7 percent and actual terms 0.6 percent larger than what was realized in March this year.

 
Compared with the earlier year, retail trade earnings appeared to be in nominal terms 2.7 percent and in actual terms 0.8 percent.

Swiss Economic Growth Unexpectedly Strengthens on Consumers
The economic expansion in Swiss has suddenly accelerated in the initial quarter to a speedy pace in one and a half years. This unexpected strength is attributed to consumer demand.

 
The SSEA in Bern has noted that the country’s GDP increased by 0.7% from the last quarter, moving up by a revised 0.5%. Apparently, this is the strongest increase since the 3rd quarter of 2010. Reports from Bloomberg News indicate that economists had predicted that the economy would stop.

 
It is also clear that the country’s economy might struggle to expand in the present quarter following a push of the countries into recession by the financial turmoil in the Euro zone. This push has also eroded demand across the entire region. Thomas Jordan, the president of Swiss Central Bank, has also warned that the country might face some serious challenges in 2012, adding that strategists will have to uphold their Franc maximum of 1.20 against the Euro for the short term in an attempt to safeguard the economy and exporters.

 
UBS AG’s economist, Reto Huenerwadel, has said that such a development is a great surprise that shows there is higher private consumption. He also added that there is no foreseeable slump this year noting that the SNB’s top limit has a stabilizing effect.

 
The franc was selling at 1.2010 against the euro starting at 8:08 am in Zurich. Very little change occurred since yesterday.

 
Consumer Spending
Reports indicate that Consumer spending increased by 0.6% in the initial quarter. Commodity export dropped by 0.4% while exports of services rose by 2.6%. Government spending rose by 2% from the last quarter while gross fixed capital spending dropped by 1.5%, following a decline in construction.

 
Reports from the OECD indicate that Switzerland’s economic development will strengthen in the 2nd half of 2012. GDP may also go up by 1.9% by 2013. This is especially true considering that consumers have already created exports and spending rebound.

 
Speaking to press Jordan said that franc is a changed currency and is expected to depreciate due to economic fundamentals. He also noted that it would be counterproductive and deadly to manipulate the franc indiscriminately.
SNB, which introduced the franc top limit in September following a surge in franc versus the euro, is expected to conduct its next financial assessment in June.

CAD/CHF Daily Chart

The CAD/CHF pair has been relatively operating in a range the whole of 2012 following a cap next to 0.94. Previous to this, range, the souk has maintained a bullish run since a drop of about 0.7119 recognized in August 2011. But you should also put into account the fact that the souk is currently trading on top of 200-day simple moving average. Even though the last 0.94 resistance  is yet to be broken, there are so many signs pointing to it.

- The on going averages seem to have an optimistic orientation with 200- period at the base with 100, 55, 21, and 8 showing an uptrend.
- Considering that lows have been showing an uptrend since Feb. 27 low around the 0.8935 level, it is clear that bears have more control this year.

CAD/CHF Weekly Chart

The CAD/CHF weekly table indicates a continuous decline in the market since 2008 when it experienced a high of about 1.25. The current rise in price since 2011 seems to be a price reversal against the bearish sway from 1.1142 to 0.7119. Here are some of the possible resistance levels in case the 0.94 level is broken.
- 200-wk SMA at 0.9550.
- 61.8 percent retracement appears at 0.96.
- There is a possibility of price drop at the 0.9880-0.99 region.
- Equality and the dropping channel price decline should serve as the main resistance area sooner than the situation becomes more promising on top of the dropping trend line.

Risk Events:

Three major factors that determine whether the pair can break and rise above 0.94.3;
1) CAN GDP (this Friday)
2) US NFP (this Friday) – deprived US information can harm the CAD and optimistic US data can assist to boost the CAD
3) CAN employment report (next Friday).