Forextrading | Forex Blog

April 15, 2011

Happy Tax Day!

Filed under: Forex News — Tags: a-higher-rate, account, currenc, currency, forex, forextrading, ireland, irish, money, taxes, time, trade — admin @ 1:13 pm

OK, not really. Do you know where your money goes? Well I certainly don’t, and while I am not happy about having to write a big check, at least this means that my trading has been successful. Many Americans are in the same boat, and are disappointed by the lack of stewardship coming from our politicians.

Today the House will vote on the Republican budget plan, but it is DOA in the Senate so let the negotiations begin. Major reform is necessary but very unlikely to take place. I would advocate some sort of polling system, where taxpayers could “allocate” their tax dollars to areas that they feel are important. Take the corrupt politicians out of the equation.

One place where they don’t have to worry budget deficits is China, who reported overnight 9.7% GDP growth. This is an amazing figure considering the state of the global economy, however the reported 5.4% CPI data shows that inflation is still a problem there, which could mean further rate hikes which could potentially slow economic growth for the periphery that depends on Chinese growth. Perhaps it has something to do with the $3 Trillion dollars in currency reserves that China holds, all thanks to their currency peg.

In the Euro zone, Irish debt was downgraded, Greek debt may need to be restructured, and CPI came in a little hotter than expected.

Meanwhile the US Fed continues to deny that inflation exists here in the US, and today’s CPI data will likely prove their point. I guess if the price of things that nobody cares about continues to go down, then it is acceptable to have $4 gasoline. The intellectually dishonesty is sickening frankly.

So stock are set to open lower, and commodities have pulled back some as there is risk aversion to start the day.

In the forex market:

Aussie (AUD): The Aussie is lower as China is the largest importer of Australian raw materials and if the Chinese raise rates to slow inflation than that could affect Aussie exports negatively. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is actually trading mostly higher as the expectation of rate hikes and a higher rate differential after the emergency cuts the RBNZ made to provide relief from the earthquake, may have stoked inflation.

Loonie (CAD): The Loonie is mostly lower as commodities are pulling back on the threat of a potential Chinese slowdown. It has long been rumored that China is the driver behind the recent oil price spike. More US Fed subterfuge if you ask me.

Euro (EUR): The Euro is lower across the board as the Irish debt downgrade and the possible Greek debt restructuring is being the debt crisis back into to focus. Ignoring this won’t make it go away, so some concrete plans could allay market fears, especially if the ECB is going to continue to raise rates.

Pound (GBP): The Pound is also lower as the UK’s close ties to Ireland are helping to weigh on Sterling. With no news out of the UK today, British prospects are looking up when compared to the others.

Dollar (USD): The Dollar is mostly higher on risk aversion and CPI data came in slightly higher than expected, showing inflation at 2.7%. I don’t want to get into the headline vs. core debate, but it is clear that the Fed is intentionally trying to avoid the reality. Stagflation, here we come!

Yen (JPY): The Yen is strengthening as carry-trades are being unwound due to the threat of a potential Chinese slowdown. (Click chart to enlarge)

When both monetary and fiscal policy in a country is deplorable, it makes no sense to invest there. Yes, I am talking about the USA. Politicians can debate the ideology back and forth, but at the end of the day the lack of leadership is truly striking.

Enter the Fed, who will some claim to just be stupid and not malevolent with regard to the way that they do things. In the meantime, hardworking Americans will continue to do their patriotic duty and send in their taxes, so politician/celebrities can fly around on private jets and make policies that nobody wants or needs.

So Happy Tax Day! I hope you are having as much fun as I am!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currency, currency trading, dollar, dow, economy, EUR, Euro, forex, forextrading, free, gbp, Il, jpy, market, nzd, practice, ssi, time, trade, USD, Yen

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April 11, 2011

Slow Start To The Week!

Filed under: Forex News — Tags: chinese, conversation, currenc, dollar, eur, euro, forextrading, highly-doubtful, japan, market, morning, ssi, trade — admin @ 12:36 pm

This week is starting out slowly as there is little news today to warrant any excessive volatility or trend disruptions. This may be a good thing as after Friday’s major moves higher in commodities and the resulting Dollar weakness, a quick pause to re-evaluate may be exactly what this market needs.

Here’s what we do know this morning: Chinese exports came in better than expected overnight giving them a trade surplus vs. an expected trade deficit. I guess that peg to the Dollar really helped out!Over the weekend, the US government was able to come to a compromise to keep the government operating—for now. Quickly the conversation is going to switch to the debt ceiling which needs to be raised if we want to keep doubling down, or perhaps this is just another political game to be played.

Japanese machine orders fell and the aftershocks keep coming as earthquake after earthquake continues to pound the island nation. A mixed reading of industrial production figures in the Euro zone has led to some minor weakness.

Later today, two noted Fed Doves (inflation deniers) Yellen and Dudley will be speaking. The only risk here is that a deviation from their noted dovish stances could belie a shift on the FOMC. This is highly doubtful.

Meanwhile, oil has “pulled back” to $112, and gold to $1470. US stocks are set to open higher, and Europe is mixed ahead data due out later this week.

But make no mistake about it; Dollar weakness is driving global markets higher, as the Dollar index has put in a 17-month low. How much lower the Dollar can go without disrupting economies abroad remains to be seen.

In the forex market:

Aussie (AUD): The Aussie is marginally lower this morning with no news to guide it higher. Commodities have pulled back a bit so the US dollar is strengthening some, but this could just be a cat-cat bounce. Consumer confidence figures due out on Wednesday highlight the extent of the news form down under.

Kiwi (NZD): The Kiwi has been moving higher very quietly as the re-building efforts from the earthquake are starting to add to the pick-up in economic activity. The Kiwi just broke its 2011 high vs. USD. (Click chart to enlarge)

Loonie (CAD): The Loonie is pulling back a little as oil is now trading at $111.50. This comes ahead of tomorrow’s BOC rate decision where the expectation is that rates will be left unchanged at 1%.

Euro (EUR): The Euro is starting the day lower as mixed industrial production figures do little to affect the Euro one way or the other. What is affecting the Euro this morning is a wee bit of US dollar strength, as oil prices retreat. The Euro fell just short of reaching 1.45 vs. USD. (Click chart to enlarge)

Pound (GBP): The Pound is mixed this morning ahead of tomorrow’s CPI report which is expected to show inflation still a problem at 4.4%. Should inflation subside in any meaningful way, then the BOE may be afforded more time to allow fiscal policy reductions to work, rather than having to do it through monetary policy. UK jobless claims are due out on Wednesday.

Dollar (USD): The Dollar appears to be doing a little “dead-cat bounce” here, as oil prices have pulled back after the risk of being short over the weekend was navigated. Fed doves will speak today but don’t expect a change of heart with regard to policy stance.

Yen (JPY): Aftershock after aftershock keeps happening in Japan which has heightened the risk that this nuclear situation could get worse. While economic fundamentals are bound to be moribund in the short-term, the long-term prospects for growth appear grounded due to the re-building that will take place.

There are many factors contributing to the global economy that have had various push-pull effects on different markets. But the one underlying theme that continues to persist is Dollar weakness.

While economic data this week won’t be as telling here in the US, both the UK and Canada have news that could be market moving. But overall, the weak US dollar trend is still intact.

However, if you are not already short the US dollar, it may be difficult to get in here, so wait for pullbacks to get a better low-risk entry. And of course keep an eye on the news to see if any other region’s fundamentals begin to look as bad as the US.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currency, currency trading, dollar, dow, economy, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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April 8, 2011

Shut It Down!

Filed under: Forex News — Tags: a-big-mistake, account, course, economy, forextrading, games, government, person — admin @ 12:32 pm

Yes that’s right, I’m talking about the government. We are less than 24-hours away from a federal government shutdown and it is an embarrassment that it has come to this as grown men and women cannot come to an agreement. There is much blame to go around and I say just throw ‘me all out and start afresh.

Nevertheless, the markets couldn’t care less as stocks and commodities are still pushing higher as nobody wants to get in the way of Bernanke’s money pump. With oil at $111 and gold making new, nominal all-time highs, the only place in the world where there isn’t inflation is at the US Fed.

Meanwhile, Japan has shaken off another earthquake that occurred overnight and it is business as usual as the Nikkei has pushed higher.

In the Euro zone, Portuguese politician may have made a big mistake when they rejected their own austerity measures in favor of the ones that are going to be imposed by Germany in order to receive the bailout funds. I guess it is politically more expedient to be able to blame someone else for the austerity coming down than to accept responsibility.

PPI data in the UK came in higher than expected though this is not necessarily “unexpected”, s everyone knows that the BOE has turned a blind eye to inflation. At least they have the guts to say yes there is inflation but we are choosing to ignore it; rather than Brake and the Fed’s complete denial that it exists at all.

In Canada, the number of jobs gained by the economy came in worse than expected, though the unemployment rate remained steady at 7.7%.

In the forex market:

Aussie (AUD): The Aussie is rocking higher now firmly trading above 1.05 vs. USD which, as you may have guessed, put in another all-time high.

Kiwi (NZD): The Kiwi is also trading higher as the only risk in the marketplace appears to be missing the boat on the inflation trade.

Loonie (CAD): The Loonie is also higher despite a weaker than expected jobs report as its high correlation to oil is the rising tide lifting this ship. (Click chart to enlarge)

Euro (EUR): The anti-Dollar properties of the Euro make it the most sought after currency this morning despite Portugal requesting a bailout and a new round of bank stress tests that are forthcoming. As long as German economic metrics keep coming better than expected (like exports this morning), then the Euro remains more attractive than the Dollar. (Click chart to enlarge)

Pound (GBP): As mentioned above, UK PPI input and output figures came in higher than expected showing that yes indeed inflation is very real and present in the UK. The choice to ignore it is another issue entirely.

Dollar (USD): Another “no confidence” vote taking place today in the US economy, with everyone selling Dollars and plowing money into just about anywhere else regardless of risk. Right now the riskiest asset appears to be the US dollar, and not being invested everywhere else appears to be opportunity cost risk as well.

Yen (JPY): The Yen has resumed its downtrend and is weakening despite another earthquake that happened last night. While the market was disappointed with the lack of BOJ stimulus in response to the natural disaster, the fundamentals of the Japanese economy may be weak enough to encourage Yen selling.

Where have all of the leaders gone in the world? The world has become one giant popularity contest and the person with the most twitter followers wins! Meanwhile, the tough decisions that need to be made fall by the wayside, and everyone continues on like it isn’t their fault.

Blame game politics, not just here in the US but abroad, have weakened the global economy and provided a false sense of security to those who need it the most. Meanwhile honest, hardworking people receive the brunt of the onus of trying to hold the generous global quagmire together, as they are forced to pay more for everything through the insidious tax known as inflation.

So I say just shut it down and purge the whole thing. It is sad that this is what it has come to and the games that politicians play affect real people’s lives. Only when we wake up and demand better, will things get better.

So keep selling that Dollar, to try to offset some of the inflation you are forced to bear today!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

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March 29, 2011

They’re Buying What?

Filed under: Forex News — Tags: account, board, correlations, course, currenc, dollar, economy, forextrading, free, jpg, jpy, time, trade, yen — admin @ 1:44 pm

Just when you think you know what is going on in the marketplace, you get thrown for a loop. Apparently now the market believes that the safest place to be is in US stocks. No matter what the situation or risk in the market, stocks seem to keep climbing higher.

Last night President Obama gave his speech on why the US is involved in Libya and at the end of the day he should be afforded the same leeway as every other president who takes military action.

Oil prices are pulling back some, stocks in Europe and Asia are lower, yet US stock futures are higher to start the morning.

IN the UK, GDP figures came in slightly better than expected, posing a decline of .5% vs. an expectation of a .6% decline, with the YoY number coming in as expected at 1.5%. This isn’t too bad considering that the austerity measures are starting to kick in. Right now, the market is expecting the ECB to raise rates before the BOE does, despite the high inflation in the UK.

US home price figures are due out later this morning, s are US consumer confidence figures. It will be interesting to see whether US stocks can hang on, or if the Dollar turns around and weakens.

In the forex market:

Aussie (AUD): The Aussie is lower this morning after putting in a multi-decade high vs. USD. The Aussie had put in 6 days of gains prior to today’s pullback.

Kiwi (NZD): The Kiwi is lower against all but the Yen as overnight trade balance figures came in lower than expected. However, both imports and exports were higher, showing the potential for economic growth.

Loonie (CAD): The Loonie is higher across the board despite lower oil prices to start the day. With relatively little news out of Canada, this appears to be more of a fundamental play on the perceived strength of the Canadian economy. (Click chart to enlarge)

Euro (EUR): The Euro is mostly lower as Dollar strength is driving the forex market this morning. While there is an expectation that the ECB will raise rates at the April 9th meeting, they first have to navigate the Irish bank stress-tests.

Pound (GBP): The Pound is also some strength, higher against all but the Dollar as the GDP figure came in slightly better than expected. A call for measured rate hikes from a hawkish BOE policy-maker were countered by a statement from the BOE dove who said he would resign if inflation didn’t come back to normal levels this year.

Dollar (USD): The Dollar is stronger across the board despite higher stocks to start the day. Home price figures and consumer confidence numbers are due out later this morning.

Yen (JPY): The Yen is weaker across the board this morning as no additional news about the nuclear crisis has induced Yen buying. The Yen should be weakening after the G-7 intervention, and last night employment figures came out that showed that the economy was actually improving prior to the earthquake. (Click chart to enlarge)

Sometimes the market doesn’t behave as we would expect it to and that is something that all traders have to deal with. Correlations that we rely on sometimes break down and as the saying goes, “the correlations work great until they don’t.”

So it is important to remember to look at the technicals of each pair individually, as anything can happen. Be married to a certain view can sometimes prove dangerous.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

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March 22, 2011

Inflation Situation!

Filed under: Forex News — Tags: aussie, cad, currency market, events, forextrading, globe, practice, world — admin @ 12:54 pm

Earlier this morning, the UK CPI data came in hotter than expected showing inflation rising at 4.4% vs. an expectation of 4.2%. This is already more than twice the BOE target, and outside of the government band of 3%, which will require the BOE to explain to the government why this is happening.

While the BOE is already accustomed to writing this letter, they are beginning to paint themselves into a corner as a higher Pound could get even stronger if the BOE begins to raise rates. Tomorrow is the release of the rate policy meeting minutes so it will show what they are thinking about the inflation situation brewing.

Meanwhile, there is not a lot of new on tap today, with Canadian retail sales figures and the leading indicators due out later this morning. In the US, the home price index is on tap.

More important though is not the micro news coming out of individual countries, but the macro view of what is going on the world today. There are three basic themes driving world markets today: the Japanese nuclear crisis, unrest in the Arabian countries, and the continuation of QE2 in the US which is essentially weak US dollar policy.

As more and more clarity emerges, sentiment may shift. Oil prices are lower despite Libyan oil supply essentially going off-line, but the markets have already priced this in. Risk is still heightened around the globe, but that hasn’t stopped stocks from moving higher. As the saying goes, “the show must go on”.

In the forex market:

Aussie (AUD): The Aussie is mostly higher as the markets rebound from the sell-off due to the Japanese earthquake last week. While there isn’t much news this week for the Aussie, it has received the correlated benefits of a higher MSCI Pac Rim index.

Kiwi (NZD): The Kiwi is the big winner this morning ahead of tomorrow’s GDP report. While GDP is expected to decline in the short-run due to their earthquake, the IMF came out this morning and said that 2012 growth could be north of 4% due to the rebuilding efforts.

Loonie (CAD): The Loonie has now flipped to lower this morning as retail sales figures have come in worse than expected. The market was looking for a gain of 1%, and it came in at -.3%, which is a bad number. Lower oil prices are also contributing to Loonie weakness. (Click chart to enlarge)

Euro (EUR): The Euro is mixed this morning and is virtually flat against Dollar and Yen. No news is good news out of the Euro zone today.

Pound (GBP): The Pound is mostly higher after today’s CPI report. Tomorrow’s BOE rate policy meeting minutes will determine the near-term fate of the Pound. (Click chart to enlarge)

Dollar (USD): The Dollar is mostly weaker as QE2 is driving the bus right now. Were it not for its safe-haven properties, the Dollar could be a lot lower. It is unfortunate that it takes bad news from around the globe to maintain Dollar strength.

Yen (JPY): The Yen is weaker across the board after the Nikkei posted massive gains of over 4% last night as it was closed on Monday for holiday. The nuclear crisis is obviously the major news, and the G-7 stands ready to intervene further if the news gets worse.

With all the problems going on around the globe, it is sometimes easy to lose track of the individual stories in various regions. The inflation story in the UK would be major news were it not for these other events taking place.

Perhaps the BOE is relying too much on other to make this problem go away. Tomorrow we will see if there is any conviction to combat inflation. The QE2 party will soon be coming to an end so perhaps various markets are attempting to “bubble up” so that when the inevitable burst comes, it will be farther to fall.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currency, currency market, currency trading, dollar, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, jpy, Mike Conlon, news, nzd, practice, practice account, ssi, time, USD, Yen

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February 8, 2011

Chinese Fireworks?

Filed under: Forex News — Tags: a-decreases-the, about-the-value, aud, aussie, currency, currency trading, dollar, forextrading, gbp, inflation, jpg, time — admin @ 1:11 pm

Overnight, China raised interest rates another 25bp, marking the third time since October that they have raised rates as inflation has stubbornly remained above 4%. But the question is, is it inflation that is stubborn or is it the Chinese government?

Part of the “problem” taking place in China is that they are on a potential collision course with the laws of economics as they continue to raise rates yet keep their currency artificially low through the Yuan peg to the US dollar. Should this continue, there could be a display of economic fireworks unlike anything the Chinese have ever experienced. Keep an eye on this.

Meanwhile, this story has affected the commodity currencies, particularly the Aussie, as the prevailing thought is that a Chinese slowdown will reduce demand for raw materials and energy. The Euro is seeing a bit of strength this morning as an ECB policy-maker asserted that the Central bank would raise rates if the inflation the EU is seeing is not temporary, despite the debt crisis which still is largely uncertain.

In the forex market:

Aussie (AUD): The Aussie is mostly lower as the news of the Chinese rate hike is seen is bad for the export of Australian raw materials as China is the largest importer. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is higher across the board after comments from the PM showed a government commitment to spending restraint to keep inflation under control in order to take pressure off of rates to help encourage NZ exports.

Loonie (CAD): The Loonie is mixed as oil prices are lower on the heels of the Chinese rate hike. US dollar weakness to start the morning may reverse before the end of the US trading session.

Euro (EUR): The Euro is mostly higher despite worse than expected German Industrial Production figures that showed a decline of 1.5% vs. an expected gain of .2%. This was out-weighed by comments from an ECB policy-maker who claimed the Central bank was prepared to raise rates if inflation continues. (Click chart to enlarge)

Pound (GBP): The Pound is mostly lower despite retail sales figures that came in better than expected showing a gains of 2.3% after December’s dismal number. While this is a positive for the UK economy, the market is viewing a new tax on UK banks as negative. The financial sector in the UK is an important driver of growth.

Dollar (USD): For the second day in a row, there’s not a lot of news out for the US so that means it is time for more “Fedspeak”, where Fed officials while attempt to confuse and placate the markets at the same time.

Yen (JPY): The Yen is mixed this morning as current account balance figures came in slightly better than expected. While a slowdown in China decreases the demand for carry trades which would give the Yen strength, the fundamentals do not support this view as of yet.

I think it is only a matter of time before China has to do something about the value of the Yuan as their belief that laws of economics do not apply to them. While it is admirable that they are attempting to do something about the inflation they are seeing, this may be misguided.

While a weaker Yuan keeps their exports attractive and supports employment, wages are not keeping up fast enough with prices and people are starting to feel the pain. This keeps domestic demand low as people do not have excess money to spend outside of necessities.

At some point, something has to give. If wages need to rise to keep pace with inflation, then Chinese exports become less attractive. If the value of the Yuan increases, then their exports become less attractive. So this is a damned if they do, damned if they don’t type of scenario.

Although it certainly helps that Chinese currency reserves are so massive that they can potentially deal with this. Either way this goes down, expect to see economic fireworks! This could end up being the most important economic story of the year, so stay tuned!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currencies, currency, currency trading, dollar, dow, economy, EUR, Euro, forex, forextrading, fx, fxedu, gbp, Il, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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February 4, 2011

Who’s Working?

Filed under: Forex News — Tags: a-barometer-for, a-certain-view, a-tight-range, aussie, crisis, currenc, currency, economy, forextrading, free, mike conlon, morning, north, overall, usd — admin @ 12:56 pm

That is the question that will be answered later this morning as today is “jobs Friday” and we eagerly await the release of the Non-Farm Payrolls report and the unemployment number. This is one of the most important data releases as it shows whether or not meaningful jobs are being created. The expectation is for a gain of 140K jobs.

The unemployment rate is also due out and this can sometimes be a deceiving number as the participation rate will sometimes affect the overall numbers. A higher participation rate usually means that workers are less discouraged and looking to get back in the workforce. Our neighbors to the north, Canada will also be reporting their unemployment rate. As goes the US, so goes Canada. At least that has been the market action of late, as part of the fate of Canada’s economy lies with US economic recovery, for better or worse.

There is no other economic data due out for the rest of the day, so expect the markets to trade off of that NFP number.

The Aussie is higher as the RBA lifted both its economic and inflation forecasts despite the recent natural disasters and previous comments form the RBA head.

And lastly, the Euro zone head honchos are meeting today in Brussels for a debt summit where the hope is that they will produce some meaningful response and solution to how to deal with the crisis. Don’t count on it.

In the forex market:

Aussie (AUD): The Aussie is higher across the board as the RBA raised its GDP outlook for 2011 to 4.25% growth from a previous forecast of 3.75% and they raised their inflation outlook with CPI set to increase 3% from a previous forecast of 2.75%. If they are correct in the new assessment, then we will see further rate hikes in Australia some time this year unless another global crisis emerges. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is mostly lower getting a bit of follow-thru from the negative employment report that came out on Wednesday night. In addition, money flows are potentially returning to the Aussie after the RBA raised its outlook.

Loonie (CAD): The Canadian employment report just came out and showed a gain of 69.2K jobs vs. an expectation of 15K, handily beating the estimate. The unemployment rate remained steady at 7.8%. (Click chart to enlarge)

Euro (EUR): The Euro is slightly positive ahead of the US NFP report and has been in a tight range holding just above 1.36. While there was no meaningful data out this morning, the debt summit could produce fireworks if the sides don’t move any closer to resolution.

Pound (GBP): The Pound is somewhat mixed as a reading of house prices showed a gain of .8% for last month vs. an expectation of a decline of .3%. While on reading does not make a trend, this does contribute to the overall sentiment that inflation is rising in the UK.

Dollar (USD): All eyes will be on the NFP report where the US economy is expected to add 140K jobs. The unemployment rate is expected to tick higher to 9.5%, though that may be a function of the participation rate scenario that I mentioned above. Back in the day on the trading desk, we used to wager on the number so I will proffer my guess. My feeling is that the economic data has been too rosy of late so I think the number may disappoint. So I’m calling for a gain of 94K. Note: this is not a trading recommendation or advice, but rather a guess.

Yen (JPY): The Yen is slightly lower as Asian markets were higher overnight and it really is just puttering around waiting for the NFP number. A better than expected number will likely encourage some Yen selling and risk-taking through carry trades, and a worse than expected number could induce Yen strength as a safe haven going into the weekend with Egypt situation still unresolved.

Today’s NFP report really serves as a barometer for the economy and this is one of the reasons why it is so closely watched. While the economic data of late has been better than expected, my intuition always tells me that when expectations are high, they sometimes disappoint.

I am not trying to be Debbie downer here, its just that I think that while the economy is recovering, I don’t think it is happening as fast as people would like to believe. If I’m wrong, I’ll be more than happy to admit as much.

But realize that just because I have a certain view, doesn’t mean that I am married to it and as a trader I will perfectly happy to throw that view aside and join the trade to go the other way.

I also wanted to mention the situation in Egypt, which is still uncertain as to what the likely outcome is going to be. So we could see some selling later in the day and Dollar strength as the flight to safety trade picks up ahead of the weekend.

So be careful around the NFP number as the volatility will be intense. And trade well!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

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January 11, 2011

Mother Nature Unleashed!

Filed under: Forex News — Tags: cad, climate, currency trading, eur, forex, forextrading, gbp, jpy, money, portuguese — admin @ 3:07 pm

The Aussie is once again lower as flooding continues to ravage the country. This could have a seriously negative effect on the Australian economy, as this is the worst flooding in nearly 100 years. Here in the US, we are bracing for another major snowstorm along the eastern coast, which could also cause an economic slowdown. This could have inflationary consequences in the energy sector, as supply and demand are affected accordingly.

One region whose climate is looking better is the Euro zone, as overnight Japan said they would be looking to buy Euro bonds to help the support the region. While not truly a philanthropic venture, this makes sense from an investment perspective as yields are likely to be higher than elsewhere. In addition, the Portuguese PM has stated that no aid is needed, though we’ve heard that before. So the Euro is higher, the Yen is lower.

Retail sales in the UK were lower putting pressure on the Pound as austerity measures begin to take effect. The market is waiting on Thursday’s BOE rate decision.

The Loonie is higher as oil is up trading just under $90, as the weather on the East coast may increase demand, and the Alaska oil pipeline situation is still in flux. Adding to Loonie strength is the notion that Canada, and not New Zealand, may be the next to raise interest rates sometime in Q2, according to range of analysts.

Here in the US, we have some Fedspeak going on today, with no major news slated. Both stocks and commodities are higher, so today looks like some risk taking.

In the forex market:

Aussie (AUD): The Aussie is lower in the wake of the flooding, and trade balance figures came in lower than expected on dwindling exports. This is a major natural disaster which could cause economic slowdown, which means that the RBA would stay steady with rates for some time.

Kiwi (NZD): The Kiwi is also lower as signs that NZ may have avoided an official recession have increased, though the economy is far from operating on all cylinders. Home-building approvals rose 8.8%, and improved confidence may help improve GDP figures, which were negative last quarter after NZ was rocked with an earthquake.

Loonie (CAD): The Loonie is higher across the board as eyes are turning toward the Canadian economy for the next sign of interest rate growth. Increased US demand has helped Canadian exports and higher oil prices due to inclement weather and possible supply shocks have buoy the Loonie higher. Money flows from the antipodean currencies show that the market expects the BOC to be the next to move on rates. (Click chart to enlarge)

Euro (EUR): The Euro is trading higher in a bit of a relief rally as Japan has said that they want to buy Euro debt as well, providing the region with yet another bidder. This may help keep rates from spiraling out of control, which will allow PIIGS countries to issue debt without having to offer inflated rates of interest that the market may demand. The ECB is also releasing its rate decision on Thursday, but expect that to have little impact. (Click chart to enlarge)

Pound (GBP): The Pound has regained some earlier losses and is trading higher despite retails sales figures which came in showing a decrease of .3%. Thursday’s rate decision will show whether there is a shift in policy statement or not.

Dollar (USD): Not much happening here in the US from an economic data standpoint, but US stock earnings season is upon us and so far positive results have lifted markets higher. Fedspeaker Plosser today said that he expects to see growth this year of 3-3.5%.

Yen (JPY): The Yen is weaker as Finance minister Noda said that Japan would buy European debt. It looks like Japan is about to start making its own carry trades!

While the weather outside may be frightful, the climate inside is delightful if you are a currency investor!

Economic stability appears to be taking place and we are seeing signs that economies that were slow to grow may be catching up; and those who were quick to grow may be slowing down. As the economic landscape evens itself out, money flows will make their way to best the best performing economies.

Investors who can stay ahead of the curve can profit from these global shifts. Inflationary pressures and austerity measures will be two of the biggest clues as to where money flows will go, as Central bankers scramble to find balance.

So buy the winners and sell the losers and your account balance will thank you later!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

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January 4, 2011

Fundamentals In Focus!

Filed under: Forex News — Tags: a-guiding-the, a-has-pushed, aud, board, currency, forextrading, markets, morning, performance — admin @ 3:18 pm

2011 has started out of the gate with a focus on the fundamentals and less on the risk themes that were so dominate in 2010. While this is not tacit approval of where prices may be, there is some semblance of individual data guiding the markets.Case in point—this morning has started out with stocks higher across the board, but commodities are lower. Under last year’s risk scenario, this would be more of an anomaly than anything. As a result, we are seeing a lot of mixed trading as the market is unsure how to proceed.

As commodity prices are lower, so are the commodity currencies. Yet there is individual strength in both the Euro and the Pound, as economic data has dictated strength today. In the Euro zone, CPI data came in higher than expected, showing signs that inflation may be rearing its ugly head. In the UK, better than expected PMI figures and mortgage approvals data has pushed the Pound higher across the board.

Later today, we will get the minutes from the Fed meeting as well as factory orders which will likely give support to the idea of a US economic recovery.

In the forex market:

Aussie (AUD): The Aussie is lower as manufacturing slowed for the 4th straight month, according to the performance of manufacturing index, which showed a decline to 46.3 from last month’s reading of 47.6. Higher borrowing costs due to rate hikes helped dampen consumer spending. Also, the flooding is affecting commodity production facilities, particularly steel and coal. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is following the Aussie lower, as it is apt to do. Lower commodity prices, particularly gold off nearly 2%, has reduced demand. In addition, Bloomberg reported that carry trade strategies made slightly negative returns last year, which may be fresh in the minds of investors.

Loonie (CAD): The Loonie is lower as oil prices have retreated to 91 as demand has seemingly lessened. It was reported this morning that Canadian bonds performed the best of all countries last year, which could help drive money flows to Canada.

Euro (EUR): The Euro is higher this morning as CPI data came in hotter than expected, posting a 2.2% increase vs. an expectation of 2%. Unemployment figures in Germany gained vs. an expected loss (jobs gains) and French consumer confidence came in worse than expected. With the ECB mandate to control inflation as its primary function, this could set up for some interesting action as the balance between Euro debt crises and inflation muddies the water. (Click chart to enlarge)

Pound (GBP): The Pound is higher across the board as PMI figures came in better than expected, reporting a reading of 58.3 vs. an expectation of 57.2. In addition, mortgage approvals and net lending figures came in higher than expected as well showing signs that the UK may not be dead just yet.

Dollar (USD): The Dollar is mixed and showing some strength as economic data and conditions appear to be improving. The Fed minutes later will likely show no change in sentiment among policy-makers, who at this point are content to let QE2 play out. Yesterday’s manufacturing data rose to a 7-month high.

Yen (JPY): The Yen is weaker against all but the Pac Rim commodity currencies, as economic conditions in the US are driving Dollar strength. There is no news or data due out for Japan this week.

As you can see, it is possible for both the Dollar and the equity markets to strengthen at the same time. As I mentioned in my 2011 preview, this may be a recurrent theme that we see this year. If you take stocks out of the equation, then today looks like a risk aversion type day, with notable Pound and Euro strength.

However, I don’t think 2011 is going to be as easy as “risk on, risk off” types of trades. It is important now more than ever that you have a good understanding of the fundamentals that can drive forex markets.

Everyone wants to be a technician these days and read the charts; however to take your trading to the next level, a fundamental understanding of the big picture can help turbo-charge your results!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currencies, currency, currency trading, dollar, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, interest, jpy, market, nzd, practice, ssi, time, trade, USD, Yen

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December 29, 2010

Year End Highs!

Filed under: Forex News — Tags: cad, course, currenc, eur, forex, forextrading, gbp, looks-as-though, market, morning — admin @ 3:13 pm

As we near the end of 2010, both US stocks and commodities are at 2-year highs. Part of these moves is due to economic recovery, the other part due to accommodative US monetary policy. In other words, a cheap Dollar.

But will this continue into 2011? Well at some point the scam that is the official inflation report will be unable to contain rising prices, even if housing continues to fall. Just yesterday we saw lower than expected housing prices, though this should not come as a surprise given the fragile recovery.

This means we are likely to see higher interest rates both here in the US and abroad. Countries that are counting on austerity measures to slow down demand may be deluding themselves as folks have to eat. No one is going to care that TV prices have come down if milk cost $6 a gallon and it costs $4 gallon in gas to get to the store. Rising interest rates will put further pressure on housing prices, so next year is going to be interesting from a monetary policy perspective.

In Germany, CPI data has already come in higher than expected this morning and while not at critical levels, could be a sign of things to come.

At what point will public backlash influence weak-willed politicians, or will calls for action fall on deaf ears? China is attempting to control inflation by every means policy EXCEPT monetary policy. Eventually this dam will burst and I can foresee social tensions rising.

Are we having fun yet? Today is pretty much finished with economic news, so let’s see if the risk appetite that we are seeing this morning continues throughout the day.

In the forex market:

Aussie (AUD): The Aussie is mostly higher as risk appetite has increased due to a weak USD. The Aussie looks as though it may be putting a double top vs. USD which could signal a reversal. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is higher across the board as the market is anticipating NZ as the next commodity currency to raise interest rates. Because markets are forward-looking, the Kiwi is faring better then the Aussie today.

Loonie (CAD): The Loonie is taking its cues from the oil which is “lower” to 91.25. I guess market participants read my blog yesterday and saw the folly of their investment decisions. Oil inventories will likely show a build-up in supply despite the recent cold weather.

Euro (EUR): The Euro is mixed this morning as higher than expected CPI data in Germany (1.7% vs. an expected 1.5%) and Dollar weakness is offset by a stronger Pound and Yen.

Pound (GBP): The Pound is higher this morning as reports show that mortgage repayments in the UK are taking place as expected. The “wait and see” approach adopted by the BOE may result in further inflation before the effects of the austerity measures begin to kick in.

Dollar (USD): The Dollar is weaker across the board to start the day as risk appetite appears to have heightened. Yield-seeking investors who may seem confident that the lack of economic data supports an economic recovery theme may be set up for a fall.

Yen (JPY): The Yen continues to show some strength as exporting companies buy Yen to repatriate their earnings abroad, providing temporary demand. However, should the market continue to push Yen strength, then we could see the BOJ heat up the jaw-boning rhetoric again. (Click chart to enlarge)

The lack of news to close out the year has some market participants thinking that it is “game on” to take on risk. With markets near two-year highs, this may make sense to some. However, this is not the time to initiate new positions.

End of the year window-dressing plus a convenient story to push commodities higher (foul weather) may be short-lived.

Be on the lookout for my 2011 economic predictions later this week!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Tags: account, AUD, Aussie, blog, cad, course, currenc, currency, currency trading, dollar, dow, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, jpy, market, Mike Conlon, news, nzd, practice, ssi, time, USD, Yen

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