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Reports that JP Morgan losses have increased by $1 billion

Slight dip in the risk trades a few minutes ago was caused by some newswire reports that the initial JP Morgan trading losses could be $1 billion greater than earlier reported.

Around the markets

Shares are mixed in Asia with most Bourses within 0.25% of their closing levels from yesterday.

Gold was up by 0.75% to $1548 but is now starting to ease back off those levels. Oil is trading back above $93/bbl.

Any chance of momentum building in the FX market looks to be lost for this session at least, with AUD/USD and EUR/USD now backing off their session highs and trading at mid-range levels.

BHP warns that commodity boom starting to slow

The Sydney Morning Herald reports on the double broadside from BHP’s CEO and Chairman. They say that the Chinese boom is maturing and that demand for steel will contract, meaning that the big Australian must decide if/where it’s next investments are made. They are not happy with the Australian government and are making a not-so-veiled threat.

Gold bouncing off strong support levels, aiding AUD

AUD/USD is at session highs near .9950 and dealers say that the market is closely watching the gold price for indicators. There is very important technical support near $1520/25 in Gold and ACBs are also reported to be buying near there so little wonder to see the Gold price moving higher in early Asian trade.

Japanese officials hogging the newswires

• PM Noda: Important for government and BOJ to work closely on beating deflation
• BOJ Shirakawa: Effect of monetary policy takes some time to appear; wants to achgieve 1% inflation goal asap; relying on monetary policy alone to defeat deflation can lead to unintended effects
• EconMin Furukawa: Will take bold steps against excessive FX market fluctuations; Japan still in moderate deflation but pace is easing

Singapore exports increase more than expected

• Non-oil domestic exports +8.3% YoY (7% expected)

USD/SGD is trading near 1.2650 and those option-related sellers which we’ve been mentioning between 1.2650/1.2700 are making further bullish progress a tough fight.

EUR/USD orders: Trailing stop-loss orders now likely above 1.2765, but real money sellers await

• EUR/USD made fresh intraday lows at 1.2680 yesterday and then rallied to 1.2760. It dipped from there but was unable to post fresh lows, which means that plenty of short-term trend followers will have their stop-loss orders just above that 1.2760 level.
• Solid sell orders are noted at 1.2795/00 from real money accounts.

NZD short-covering leads the way in early Tokyo

The Nikkei has opened -0.1% and the Kospi is +0.1%, so the market isn’t getting any leads from there.

Dealers say that short-covering in the NZD/USD has been the main factor over the last hour of trade, and this is encouraging AUD/USD and EUR/USD to ease higher as well.

Japan Q1 real GDP +1.0% QoQ

• Capex -3.9% QoQ
• Japan EconMin says the economy is continuing on moderate uptrend

(Reuters newswires)

EUR/USD technical trade idea

This comes from a professional trader based in Singapore, who we will call Mam. He is 100% technical and has a proprietary system which works off overbought and oversold indicators.

His model has the EUR/USD heavily oversold on a 4-hourly basis. This fact allied with strong chart support at 1.2625, might be enough to encourage a strong short-covering rally but he will not jump into the market, preferring to trust the bear trend and wait for a final dip.

He has buy orders at 1.2660 with s/l at 1.2590 and a t/p target at 1.2950, a risk/reward ratio of 70/290. This is the first time I’ve seen one of his trades, so let’s see how useful his model is?