PS. it was not my image. It is image from dailyfx article which is not related to s/r but it is good illustration about how to trades/r and what to watch about during the trading.
GM to Pay $35 Million Fine for Slow Response to Car Ignition Glitch
General Motors Co will pay $35 million in US fine for not responding
swiftly to an ignition switch problem with millions of its cars, the US
Transportation Department announced today.
The auto maker is also facing probe by the federal government over the way it dealt with the recall of affected cars.
"What we cannot tolerate, what we will never accept, is a person or a
company who knows danger exists and says nothing. What GM did was break
the law ... They failed to meet their public safety obligations," said
US Transport Secretary Anthony Foxx.
The ignition switch flaw was detected for the first time more than 10
years ago and has been tied to at least 13 deaths. However, the first
recall was implemented in February 2014 despite consumers having
complained for a long time, Reuters report.
The flawed ignition switches on affected GM vehicles can cause engines
to stop, in which case air bags fail to deploy in the event of crashes.
Also, when the ignition switch changes from “on” to “accessory”
position, the power steering and power brakes may stall.
According to USA Today,
the fine is part of a settlement with the DOT to resolve the question
of whether GM notified the government of the car safety glitch within
the required five business days of detecting it.
GM admits in the agreement that if failed to do so.
The company will also be sharing with the DOT’s National Highway
Traffic Safety Administration a report compiled after its own internal
CEO Mary Barra had earlier insisted before congressional committees in
April that she would not provide them with full access to the internal
probe’s results, but would surrender components linked to safety.
Foxx added that the GM fine serves as a warning to other vehicle
manufacturers that there will be consequences for delayed reporting of
vehicle safety defects.
The Week Ahead: Is Now the Time to Change Your Strategy? (adapted from Forbes article)
It was a wide-ranging week for the stock market, while bond prices kept
rising as yields hit new six-month lows. Though volume for the week was
low, the daily volume was a bit higher on the down days. So Is Now the
Time to Change Your Strategy? The sharp selloff was blamed in part on
the comments by a well-known hedge fund manager while others guessed
that the ?sell in May crowd? decided to pick the middle of the month to
dump their stocks. So is now Is Now the Time to Change Your Strategy?
In any case, many investors and traders seem to be risk adverse as we
head into the often-difficult summer months. The decline in yields has
been a global phenomenon as this table from Bloomberg illustrates. It
shows that while the yield on the US 10-year T-note has dropped 11 basis
points in the past month, those in Germany and France have declined 17
Even more surprising is the 22 basis points decline in the 10-year bonds
in Mexico and Brazil. On a yearly basis, the bonds of Portugal and
Greece have declined over 160 basis points in the past year.
The yields on the 10- and 30-year US Treasuries have not yet dropped
below their key support levels but they are much closer now than they
were last week. A break of these levels would indicate a further drop in
yields but I would still not chase the long side of the bond market.
If you have been shortening the maturity of your bond portfolio as I
first recommended a year ago, you shouldn’t change the structure of your
bond portfolio now. If rates drop further, it will lag the performance
of a longer-maturity portfolio. However, the outlook for rates over the
next few months is uncertain, and I think yields are likely to be
significantly higher a year from now.
USDJPY Fundamentals (based on dailyfx article)
The USD/JPY extended the decline from earlier this month, with the pair
slipping to a fresh low of 101.30, and the Bank of Japan (BoJ)
interest rate decision may continue to undermine the bullish sentiment
surrounding the dollar-yen should we see a more material shift in the
In light of the marked pickup in Japan’s 1Q GDP report, the BoJ may
sounds increasingly upbeat on the economy, and the central bank may
continue to scale back its willingness to further expand its
asset-purchase program as Governor Haruhiko Kuroda remains
confident in achieve the 2% target for inflation. With that said, we
may see a growing number of BoJ officials soften their dovish tone for
monetary policy, and the USD/JPY may weaken further in the week ahead
should the board show a greater disposition to halt the easing cycle
sooner rather than later.
At the same time, we are likely to get more of the same with the Federal Open Market Committee (FOMC) Minutes as Chair Janet Yellen
remains reluctant to move away from the zero-interest rate policy
(ZIRP), and a further deviation in the policy outlook may encourage a
more bearish outlook for the USD/JPY as it threatens the bullish trend
carried over from the previous year.
In turn, the fundamental developments coming out next week may
encourage a more bearish outlook for the USD/JPY, and we may see a more
meaningful run at the 101.00 handle as the BoJ turns increasingly
upbeat towards the Japanese economy.
GOLD Fundamentals (based on dailyfx article)
Gold prices are marginally higher this week with the precious metal
inching up 0.18% to trade at $1291 ahead of the New York close on
Friday. Bullion has held a tight range for some time now and while our
immediate bias remains neutral, a clear setup presents itself as we
head into next week with the technical outlook warning of a possible
near-term break in gold prices.
Broader market sentiment remains uneasy heading into the weekend with
all three major stock indices closing markedly lower on the week as the
yield on the US 10Yr dropped to its lowest levels since October 2013
at 2.47%. The key data print came on Thursday with the US consumer
price index showing an uptick in both m/m and y/y core CPI. The data
could begin to undermine the Fed’s dovish tone and with the labor
market recovery seemingly on proper footing, the inflation outlook is
likely to remain central focus for the central bank moving forward.
Looking ahead to next week, the release of the minutes from the April
FOMC policy meeting will be central focus as investors continue to
search for clues as to the central bank’s outlook on interest rates.
Highlighting the economic docket next week will be an update on the
housing market with existing homes sales on Thursday and New home sales
on Friday. Data on Friday showed housing starts jumped 13.2% m/m in
April, far surpassing expectations for a gain of just 3.6% m/m and
strong data next week could further weigh on gold as prospects for
policy normalization from the fed begin to take root. Existing home
sales are expected to rise by 2.1% m/m after a 0.2% contraction in March
with consensus estimates calling for new home sales to jump by 10.6%
m/m, rebounding from a contraction of more than 14% the previous month.
From a technical standpoint, gold has continued to trade into the apex
of a multi-week consolidation pattern off the April highs and a break-out
ahead of the May close is in focus. A break below 1260/70 is needed to
put the broader bearish trend back into play targeting $1216/24 and
the 2013 lows at $1178. Interim resistance and our near-term bearish
invalidation level stands at $1307/10 with a move surpassing $1327/34
shifting our broader focus back to the long-side of gold. Bottom line:
look for a decisive break of this pattern next week with a move
surpassing the May opening range to offer further clarity on our
medium-term directional bias. The broader outlook remains weighted to
the downside sub $1334.
GBPUSD Fundamentals (based on dailyfx article)
The British Pound pulled back further from multi-year highs as a drop in
UK yields and a broader US Dollar reversal produced the
second-consecutive week of GBPUSD declines. Key economic data may need
to impress to spark a larger GBP bounce.
A highly-anticipated Bank of England Inflation Report showed officials
are likely to keep interest rates unchanged for some time to come. The
disappointment sent UK yields considerably lower, and the interest
rate-sensitive GBP followed in kind.
Those same interest rate and FX traders will watch upcoming UK Consumer Price Index inflation figures, Retail Sales results, and Q1 GDP growth numbers for greater clarity on the future of domestic interest rates.
Risks to the British Pound seem weighed to the downside as the BoE
dashed hopes that strong growth figures would be enough to force the
bank into action on interest rates. And indeed short-term government
bond yields matched their largest single-week drop on the year. Given
strong correlations between interest rates and the GBP, any further
deterioration could sink the Sterling for the third-consecutive week.
Consensus forecasts for upcoming inflation, consumption, and growth
figures are relatively tame; the recent tumble in yields suggest we
need to see strongly positive surprises to force a material Sterling
bounce. From a technical perspective it’s important to note that the GBPUSD trades near pivotal support, and its next moves could guide price action for some time to come.
It’s shaping up to be an important week for the previously high-flying
GBP. And though it remains relatively close to multi-year peaks,
continued failure at these levels suggests that the uptrend may be
AUDUSD Fundamentals (based on dailyfx article)
Another quiet week on the Australian economic data front keeps the
spotlight on external factors, with the evolving outlook for Federal
Reserve monetary policy in focus. A central theme driving markets since
the beginning of the year has been the disparity between soft US
news-flow and the Fed’s commitment to continuing to “taper” its QE
effort. That encouraged investors to suspect that the central bank may
pause or abandon the process of reducing the size of its monthly asset
For its part, the Fed has steadfastly reduced the pace of balance sheet
expansion by $10 billion/month since the cutback process was initiated
in December. Fed Chair Janet Yellen and her colleagues on the
rate-setting FOMC committee argued that the slowdown in US economic
performance in the first quarter was transitory and didn’t warrant a
change of course. The markets were duly skeptical of this position
absent hard evidence to support it. This may be changing at last.
A Citigroup index tracking how US economic releases stack up relative
to expectations found a bottom in early April and started to reverse
upward, finishing last week at the highest level in three months. That
suggests analysts are underestimating the resilience of US recovery,
opening the door for upside surprises. In the week ahead, that means
measures of April’s new and existing home sales may yield rosier results
than consensus forecasts envision.
The item of greatest significance is likely to be the release of minutes
from the Fed’s April monetary policy meeting. Traders will be keen to
gauge policymakers’ confidence in QE reduction continuity in the early
weeks of what is increasingly looking like a re-acceleration of US
growth. Recognition of the transition in its infancy would go a long way
toward brandishing the Fed’s ability to read the business cycle,
bolstering the central bank’s credibility and scattering doubts about
the likelihood of an end to QE by autumn.
Unencumbered speculation about the culmination of stimulus expansion and
the commencement of interest rate hikes thereafter sparked liquidation
across the spectrum of risky assets last year, when then-Chairman Ben
Bernanke first introduced the concept of “tapering”. As one of the
higher yielders in the G10 FX space, the Australian Dollar is highly
sensitive to broad-based risk aversion, meaning another mass exodus from
sentiment-geared assets stands to punish currency.
Election of Pro-business Government in India Sparks Market rally
The Indian economy plays a vital role in the emerging markets and in the
global economy as it makes up 5.83% of global gross domestic product
in 2013. A strong performance from the world’s second most populous
nation could contribute to recovery in developed nations similar to the
impact that strong growth in China would have.