Jpg | Forex Blog

June 3, 2011

It’s Ugly Out There!

Filed under: Forex News — Tags: a-few-countries, account, currency, employment, forextrading, interest, jpg, market, mike conlon, nzd, practice, service, ssi — admin @ 7:19 am

Pay Day?This morning, the all-important Non-Farm Payrolls report will be released at 8:30AM EST which will show the state of the employment situation here in the US. As a result of Wednesday’s dismal ADP employment change figures, analysts have revised their initial projections lower so it is highly uncertain how the market will react to the release.

What we do know however is this: that the US and the global economy is slowing and that there are still major risks to stability. The debt crisis in the Euro zone, the unstable situation in the Arab countries, and Japan still dealing with the nuclear crisis as a result of the natural disaster all have the potential to add fuel to the fire.

In the Euro zone, they are preparing for the reaction to the news that a second bailout for Greece is near completion with potential ramifications from both an economic and political standpoint.

PMI service data for the Euro zone came in slightly better than expected, and Merkel’s comments yesterday that the economy in the EU is healthy but for a few countries with excessive debt may be spot on.

But the big news this morning is the NFP, where forecasts have been revised to as low as an addition of 100K jobs, with the new median being somewhere around 165K. The unemployment rate is expected to remain steady at 8.9%.

Both stocks and commodities are lower to start the day, and it is so hard to say what will happen on a day like today as expectations are all over the board, so volatility could be extreme of non-existent.

In the forex market:

Aussie (AUD): The Aussie is mostly lower ahead of the NFP as risk aversion going into the weekend is a safe bet. The Performance of Service Index came in lower than last month’s reading, posting a figure of 49.9 vs. last month’s 51.5.

Kiwi (NZD): The Kiwi is lower across the board as building permits figures missed expectations, showing a decline of 1.6% vs. an expectation of a gain of .5%. This in addition to making recent highs and today’s risk aversion make the Kiwi a likely candidate for profit-taking.

Loonie (CAD): The Loonie is mostly lower as oil prices have retreated to under $100 ahead of this morning’s NFP report. The Loonie will be extremely sensitive to this release as what’s good (or bad) for the US affects Canada greatly.

Euro (EUR): The Euro is mixed but somewhat flat against USD as the market is unsure whether the anti-Dollar properties of the Euro make it a decent alternative to the Dollar despite the risk in the market. Euro zone PMI Composite and Services figures came in better than expected lead by Germany, and the news that another Greek bailout is forthcoming may allay market fears. (Click chart to enlarge)

Pound (GBP): The Pound is lower across the board as PMI services figures came in lower than expected posting a reading of 53.8 vs. an expected 54.2. While not a huge miss, rate hike expectations for the UK are at their lowest levels in nearly 6 months despite the inflation in the UK economy. (Click chart to enlarge)

Swissie (CHF): The Swissie has been on tear of late as the preferred safe-haven currency of choice, making new all-time highs vs. a range of currencies including USD. This makes it a likely candidate for reversal should risk abate in the market, and that could start with NFP today and the Greek bailout around the corner.

Dollar (USD): The Dollar is gaining some strength from risk aversion this morning ahead of NFP, but it has been losing its luster as a safe-haven as the economic data has been weak of late prompting the market to believe that QE3 may be an option.

Yen (JPY): The Yen is stronger across the board on risk aversion despite the notion that Prime Minister Kan’s plan could result in a lame-duck government which may delay the recovery.

Wow! Simply wow! The Non-Farm Payrolls report just came in a showed a dismal gain of 54K with the unemployment rate coming in at 9.1%. This is an absolutely horrible number and a sign that US economy is still very weak.

With uncertainty running rampant and the government doing absolutely nothing to fix our problems, this is a huge no-confidence vote by business who will not hire and add to their cost structure in the face of rising deficits, increased regulation, higher taxes, and unknown health care costs. Bad government policy and the focus on the wrong things is what has gotten us to this point, and it may be time for a nuclear enema in Washington DC.

The markets are obviously selling-off as a result, with the Dollar unbelievably strengthening despite the fact that QE3 may be a real possibility. So it looks like the only “pay day” is for the stooges in Washington, who take home a large check for doing relatively little.

Remember, you can take action against bad policy here in the US—invest abroad. One of the best ways to do this is through the forex market, where not only can you get off this sinking ship of the US dollar, but get paid interest to do so!

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, economy, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, interest, jpy, market, Mike Conlon, nzd, practice, ssi, USD, Yen

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May 6, 2011

Commodities Collapse!

Filed under: Forex News — Tags: a-good-thing, correlations, data, dollar, flexibility, japan, jpg, markets, payrolls-report, pound, risk, unemployment — admin @ 7:23 am

As we all know by now, the inputs that make up the global economy are all inter-twined and that’s what makes the forex market so interesting. Yesterday, commodities prices collapsed across the board, bringing down prices in oil, precious metals, and even agricultural products. Oil is now under $100, gold under $1500, and silver back to under $35.

This begs the question as to what is actually driving prices higher, and what caused this sudden decline. While I think declining commodity prices are a good thing as this can relieve headline inflation, the role of speculators, the US Fed and other Central banks, and supply and demand dynamics must all be examined.

But there was an interesting confluence events occurred yesterday which is likely the reasoning for such a sell-off. While in the US we had a dismal initial jobless claims numbers, the ECB rate policy statement did not confirm that further rate hikes would be coming and deferred to the flexibility the ECB has. The market took this as dovish and began selling Euros, which helped the Dollar rally the most in nearly 2 years.

So adding it all up, we have weakening global economic data, potential pauses in rate hikes abroad which cause Dollar strength, the end of QE2, and the Non-Farm Payrolls report later this morning which all could support a strong Dollar position. However, at this point we can’t rule out further Fed easing if the data continues to get worse here in the US.

So what we’ve been waiting for all week, the US Non-Farm Payrolls Report is expected a gain of 185K jobs.

In the forex market:

Aussie (AUD): The Aussie is mostly higher despite lower commodity prices to start the day as the yield differentials are just too hard to ignore.

Kiwi (NZD): The Kiwi is also higher for the same reasons as the Aussie.

Loonie (CAD): The Loonie is mostly higher as a better than expected employment report shows that there is economic improvement in Canada. Canada added 58.3K jobs vs. an expectation of 20K, and the unemployment rate ticked lower to 7.6% from 7.7%. (Click chart to enlarge)

Euro (EUR): The Euro is mostly lower after the market perception over the ECB statement yesterday is that there may be a pause in rate hikes. The Euro is improving this morning after the NFP figure was released. (Click chart to enlarge)

Pound (GBP): The Pound is mixed as “mum is the word” out of the BOE yesterday. By not issuing a policy statement yesterday, the Pound should continue to strengthen vs. Euro.

Dollar (USD): Wow again. NFP came in showing a gain of 244K jobs, which was much better than the expected 185K and quite a shock to the market. The one negative is that the unemployment rate moved higher to 9% from 8.8%, though it is uncertain what is driving that number.

Yen (JPY): The Yen is weaker across the board as it appears to be “risk-on” again in Japan after yesterday’s holiday.

It looks like some of the correlations that the markets rely on may be breaking down a bit as it appears as though the market is not sure what to make of the data.

On the one hand, good economic data here in the US means that Bernanke and the Fed could let QE2 expire without having to take further monetary action, which should strengthen the Dollar as it has been kept unusually low thanks to that policy.

But on the other hand, good economic data also means that the US economy is recovering, which could put the risk trade back on again, which would mean selling Dollars and buying commodities and higher yielding currencies.

Right now oil is still trading lower, the Euro has just gone positive vs. USD as it is weakening across the board. Stock markets are flying higher, so at this point it looks like the risk appetite is out-weighing the thought that the end of QE2 could bring Dollar strength.

I expect to see some volatility over the ensuing trading days as the market works this all out!

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!

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, nzd, practice, ssi, time, trade, USD, Yen

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March 23, 2011

What Are They Thinking?

Filed under: Forex News — Tags: account, euro, japan, jpg, jpy, mike conlon, morning, practice — admin @ 1:03 pm

It seems like there is a lot of “denial” going on around the globe these days, much to the detriment of those who just want to live their lives. Decisions made by those in power have been getting worse and are starting to negatively affect the very same people they are supposed to protect.

Some “questionable” decisions of late: Bernanke’s QE2 policy, Japan’s initial response to the nuclear damage, Obama’s decision to follow the French into bombing Libya, the BOE decision to maintain interest rates in the face of inflation, the EU non-decision on how to handle the debt crisis. All of these judgments have a serious impact on both economic and societal harmony and so far have done little to improve these situations.

So it makes me wonder who is benefiting? Right now, it is seemingly government itself and not the people they represent. This brings me today’s question of the government vote in Portugal, where they are weighing the decision whether or not to accept extreme austerity measures to avoid an EU bailout. Well in today’s economic climate everyone is seemingly out for themselves, so why should Portugal be any different?

It will be interesting to see what they do, but the market has already punished them by pushing bond yields higher, as if they have already chosen. The economic events of the last two years have proved that there is no longer any morality in finance, and once moral hazard is accepted as the norm, there is no reason to behave responsibly.

Thus there is some risk aversion in the marketplace this morning, with stocks and commodities slightly lower.

In the forex market:

Aussie (AUD): The Aussie is trading pretty flat to lower to start the morning as the relative risk in the market is just slight enough to apply pressure. With no news out of Australia this week, the Aussie’s rate differentials look very attractive.

Kiwi (NZD): GDP figures are due out of NZ later this evening which will likely show a hit to GDP in the short-run as a result of the earthquake, but there is optimism that the rebuilding efforts will add to GDP next year. (Click chart to enlarge)

Loonie (CAD): The Loonie is mixed after yesterday’s dismal retail sales figures. As the US goes, so goes Canada. With oil prices retreating slightly to just under $102, the Loonie is also somewhat lower.

Euro (EUR): Were it not for the Pound, the Euro would be lower across the board. Industrial new orders came in lower than expected and the vote by the Portuguese government over whether to accept aggressive austerity measures to avoid an EU bailout. (Click chart to enlarge)

Pound (GBP): The Pound is lower across the board as the there was no change in policy-maker stance to leave rates unchanged in the face of rising inflation. The UK doesn’t have the benefit that the US does by hiding true inflation by measuring things that no on cares about, so the BOE is likely to come under fire. “Merit in waiting” was the operative phrase used to justify their position.

Dollar (USD): The Dollar is seeing some mild strength this morning on risk aversion, though new home sales due out later this morning could change that sentiment. Despite Bernanke’s flooding the market with cash, greedy banks have been hoarding and the US consumer has finally caught on to the fact that now is not a good time to buy a home. Investors have been buying like there is no tomorrow, so I think the Fed might actually be content to let them experience the inevitable loss when interest rates finally have to rise.

Yen (JPY): Almost near the end of week two for the Japanese crisis, and thankfully there is no new news about nuclear problems. They just came out with a price-tag for the recovery, which is north of $300 billion dollars. Gulp.

Policy decisions by the few that affect the many are dangerous because you never can tell what motivates an individual. Part of the problem is that the majority of these decision-makers are NOT elected officials.

Social engineering, weak political will, ideology, and the need to be liked are all hallmarks of weak leadership, and we are seeing it around the globe time and time again. It is not surprising and quite unfortunate, but by not looking out for the “little guy” some of these governments may be in for a rude awakening.

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, interest, jpy, Mike Conlon, news, nzd, practice, ssi, time, USD, Yen

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February 10, 2011

The Wait For Rates!

Filed under: Forex News — Tags: account, australia, cad, central, currenc, jpg, risk-aversion, ssi, time — admin @ 1:09 pm

This morning, all eyes are on the BOE rate policy decision where it is expected that that they will leave interest rates unchanged at .5% and will keep the $200 billion pound bond purchase program in tact. So why is this so important?

Well, the BOE’s primary objective is price stability (low inflation) but the most recent reading is showing nearly double the Central bank’s target of 2%. While the government has pledged to reduce the deficit through austerity measures, the BOE has bet that prices will fall as a result of a lack of demand. This has not been the case so far, and the bank is in a bit of a pickle.

The market is betting that there will be a reduction in accommodative monetary policy at some point this year, and right now that mostly likely means May. But the question remains whether or not a non-action today will be positive or negative for the Pound. We shall see. By the time I’m finished writing this we will see the result.

Overnight, Australia reported employment data that on the surface was better than expected, adding 24K jobs vs. an expected 17.5K. However, the majority of these gains were in part-time employment, perhaps suggesting that business confidence is waning as employers are not willing to commit to the long-term.

So we are seeing some risk aversion to start the morning, with stock indices and commodities lower. Thought curiously, Yen is not benefiting as much as would be expected.

In the forex market:

Aussie (AUD): The Aussie is lower as the deceiving employment report showed a potential lack of business confidence which added to overall risk aversion in the market. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is also lower on the heels of the comments from the Finance Minister yesterday as well as risk aversion which took the MSCI Pacific stock index lower overnight.

Loonie (CAD): The Loonie is also lower on risk themes as oil prices have retreated to near 86.50. A measure of home prices is due out later this morning but is mostly a non-factor.

Euro (EUR): The Euro is lower on risk aversion and on Dollar strength despite better than expected industrial and manufacturing production figures.

Pound (GBP): The Pound is rallying higher as the BOE decision came in and they left rates and the bond purchase program unchanged, as expected. (Click chart to enlarge)

Dollar (USD): The Dollar is stronger across the board on risk themes as its safe haven is sought by investors. In yesterday’s Fedspeak, Bernanke did little to quell market fears about inflation. I actually watched some of his testimony and it is so painful to watch mostly dumb (for lack of a better description) Congress people ask the wrong questions! Give me 5 minutes with him televised!

Yen (JPY): The Yen is somewhat mixed which is surprising given the risk aversion in the markets. Under a “normal” risk aversion scenario, Yen would be stronger. Don’t be surprised to see some reversion to mean before the day is over.

So it seems as though Central bankers around the globe are content to let inflation move higher to further government agendas. Meanwhile, it is the people that suffer. They are playing a dangerous game and the belief that they will be able to control inflation once it gets out of hand reeks of hubris.

If they are so great at identifying problems and fixing them, why is it that we continue to move through these boom and bust cycles? Whether it is a stock, bond, or housing bubble makes no difference—the common factor is the same. Bad monetary policy combined with weak-willed politicians is a recipe for economic disaster.

At least in the UK that are upfront about their inflation which is in contrast to what we heard yesterday from Bernanke. He couldn’t give a straight answer to why food and energy are NOT included in his assessment of inflation, and dumb politicians let him off the hook.

I don’t feel sorry for the banks that made bad loans to people who made bad decisions about housing prices with the blessing of bad government policy. However, I am held hostage to the system, as are you. The moral hazard that is being created by Central banks with the rubber stamp of government brings us closer to lawlessness with each passing day.

So be nimble with your money—and invest in the countries that appear to be doing the right thing and selling the ones that don’t!

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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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 1, 2011

Game On!

Filed under: Forex News — Tags: aussie, course, currency, currency market, egypt, forex, free, gbp, jpg, middle-eastern, mike conlon, morning, picture, practice — admin @ 12:59 pm

The market is turning its attention away from the situation going on in Egypt as there is confidence that while this a political uprising and rally, there is no violence to speak of and that the government appears to be stable– for now. The uncertainty that caused last Friday’s risk aversion and subsequent sell-off is now becoming, well, more certain, as this appears to be less of a threat.

As a result, we have some risk taking in the market, with world stock indices higher and oil prices falling from recent highs. However, I don’t want to celebrate prematurely as the real threat going for forward is how other Middle Eastern nations that are similar to Egypt will react and if there will be any further uprisings which may not be as peaceful and therefore casue instability. Stay tuned.

Earlier this morning, the RBA left rates unchanged in Australia at 4.75% which was expected, and comments from the Governor while intended to be dovish may have left the door open for inflation to rise despite the flooding.

There is also strength in the Japanese yen this morning, as Dollar weakness as a prevalent theme has re-emerged and money flows shift to Japan to avoid Dollar losses.

In the Euro zone, unemployment declined slightly to 10% and PPI figures came in higher than expected showing signs that inflation may be afoot.

In the forex market:

Aussie (AUD): The Aussie is higher across the board after rates were left unchanged. House prices came in higher than expected which showed that the temporary economic lull form the flooding may have only dampened inflation temporarily. Rebuilding efforts to repair the damage from the flooding may contribute to excess demand which could alsopush prices higher. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is also higher as risk appetite in the market has improved and overnight they reported that wages remained steady to slightly higher.

Loonie (CAD): The Loonie is mixed this morning as declining oil prices are adding to sentiment that the Bank of Canada wants a weaker Loonie as it has attempted to jawbone it lower as of late. A higher valued currency affects Candian exports negatively.

Euro (EUR): The Euro is lower against all but the Dollar despite higher PPI figures that came in showing a gain of 5.4% vs. an expectation of 5%. In addition, Euro zone PMI figures came in better than expected, posting a reading of 57.3 vs. an expectation of 56.9. Lower oil prices are also weighing on the Euro due to the anti-Dollar effect.

Pound (GBP): The Pound is also mixed as Nationwide House Prices declined less than expected last month and a report came out that the BOE may need to raise rates 125 basis points this year to combat inflation despite austerity measures. IN addition, PMI figures came in much better than expected, posting a reading of 62 vs. an expecation of 58. (Click chart to enlarge)

Dollar (USD): The Dollar is weaker across the board as a resumption of selling due to QE2 has occured now that there is more clarity out of Egypt. The ISM Manufacturing number is due out later this morning and will show if we are making any economic progress.

Yen (JPY): The Yen is stronger acorss the board despite the risk appetite in the market as money flows are leaving the declining Dollar and setting up camp in Japan for its safe haven properties.

It appears as though the global economy is recovering, albeit slowly. Rising prices however are an artificial measure of increased activity because it doesn’t actually add more to the bottom line, it just shows that things cost more.

The situation in Egypt is an interesting “case study” as these types of uprisings may be the new paradigm for Middle East politics which couldn’t be more varied and different. Should these uprisings start to occur with more regularity, then it will inevitable that some will end badly. Attempting to paint this picture with one broad brush is not only insufficient but dangerous. So my caution goes up when I see market reactions like today’s action.

While its true that it may be “game on” again, look for the game to be interuppted more frequently and more rapidly.

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, economy, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, Il, interest, jpy, Mike Conlon, nzd, practice, ssi, time, USD, Yen

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December 22, 2010

GDP Growth Slows!

Filed under: Forex News — Tags: australian, cad, course, currenc, currency trading, economy, forex, free, japanese, jpg, market, morning, today-as-higher, trade — admin @ 3:27 pm

Earlier this morning, the UK reported lower than expected GDP growth which has sent the Pound lower to start the US session. GDP growth came in at 2.7% vs. an expectation of 2.8%. In addition, the release of the BOE rate policy meeting minutes showed no change in stance.

In the US, GDP figures were revised lower to 2.6% vs. an expectation of 2.8%. Personal consumption figures were also lower, coming in at 2.4% vs. an expected 2.9%. Existing home sales figures are due out later this morning.

Overnight, Japanese trade balance figures came in much less than expected with imports increasing and exports decreasing reflecting Yen strength. This most likely doesn’t sit well with Japanese officials and I would not be surprised to see action taken to attempt to weaken the Yen despite the recent statements from the BOJ rate policy meeting maintaining current policy.

Yesterday, New Zealand reported better than expected trade deficit figures, though that likely won’t impact tonight’s GDP report which is expected to show slowing growth below 2%.

In the forex market:

Aussie (AUD): The Aussie is higher this morning against all but the Yen as slowing GDP growth around the globe highlights the strength of the Australian economy. In addition, yesterday’s index of leading indicators came in better than expected. The Aussie still hasn’t broken parity with USD, despite Dollar weakness.

Kiwi (NZD): The Kiwi is flat to lower ahead of tonight’s GDP report. Growth is expected to have slowed to 1.8% as the economy in NZ had been harmed by earthquake.

Loonie (CAD): The Loonie is mixed today as higher oil prices (trading a 90 handle) are offset by yesterday’s dismal retail sales figures and lower CPI data.

Euro (EUR): The Euro is slightly lower but higher against the Pound as there has been no commotion surrounding the common currency today. Thankfully.

Pound (GBP): The Pound is extending recent losses as GDP figures came in lower than expected, posting a quarterly gain of .7% vs. an expected .8% pushing the YoY figure down to 2.7% vs. the expected 2.8%. The minutes from the rate policy meeting produced no change in sentiment, despite inflation gaining to its highest levels last month. Business investment figures did come in substantially higher. (Click chart to enlarge)

Dollar (USD): The Dollar is mostly lower as revised GDP figures and personal consumption figures came in lower than expected. Stocks are slightly higher as are energy commodities ahead of the existing home sales figures due out later this morning.

Yen (JPY): The Yen is showing strength this morning as the Nikkei was lower overnight as bond selling is pushing yields slightly higher as investors lock in stingy profits. Growth is expected to slow as a stronger Yen has decreased exports—unless the BOJ does something about it. (Click chart to enlarge)

It looks like the trading range in the forex market is beginning to tighten up ahead of the Christmas holiday. Pound and Dollar weakness are driving the markets, though risk appetite has not increased to what would be considered “normal” levels.

The market movements today are slight so it is hard to label the market action according to risk themes. Today is more about fundamental drivers without the massive over-reaction that the market usually incurs.

I’m going to head into the weekend holiday flat with no positions, you might consider doing the same.

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December 2, 2010

ECB Is Not Easy!

Filed under: Forex News — Tags: aussie, currenc, currency trading, free, fxedu, gbp, jpg, mike conlon, morning, nzd, practice, time, yen — admin @ 3:03 pm

All eyes and ears were on the European Central Bank (ECB) this morning as the interest rate decision and subsequent policy announcement were expected to show an “easy money” view in light of the recent debt problems with the PIIGS countries. No such luck.

Speculation in the market was that the ECB would attempt some form of quantitative easing to try to provide additional liquidity to help combat the debt crisis. Not only did the ECB leave rates unchanged at 1%, but made no such change in policy, disappointing the market which flipped from mild risk-taking to risk-aversion.

Additionally, Euro zone GDP figures came in as expected, posting a .4% gain for Q3 and the YoY figure at 1.9%. PPI figures for the region came in slightly higher than expected, besting estimates by .1%.

In Australia, retail sales figures came in way worse than expected showing a decline of 1.1% vs. an expectation of a .4% gain.

In the US, initial jobless claims figures came in higher than expected at 436K vs. an expected 424K. This is no longer a big deal and part of the “new normal”. However, combined with Trichet’s comments from the ECB meeting this served as additional fuel for the fire.

In the forex market:

Aussie (AUD): The Aussie is lower this morning as the lower than expected retail sales figures show an economy that may be slowing.

Kiwi (NZD): The Kiwi is also lower on risk themes but is hanging in there as money flows from the Aussie make their way to the Kiwi.

Loonie (CAD): The Loonie is higher despite lower oil prices and slight risk aversion as it too is receiving hot money flows from Australia. As markets are forward looking, traders are betting that Canada may be next in line to raise interest rates. (Click chart to enlarge)

Euro (EUR): The Euro is lower as the market was disappointed by the lack of monetary easing sentiment and lack of a solution provided by Trichet this morning in light of the recent events involving the debt crisis. Today was a “damned if they do, damned if they don’t” kind of day for the Euro. (Click chart to enlarge)

Pound (GBP): The Pound is lower this morning despite better than expected PMI Construction data as the recent safe haven bids it has been receiving are starting to decline.

Dollar (USD): The dollar is mixed as a lack of strong risk sentiment is prevalent in the market this morning despite the increase in initial jobless claims.

Yen (JPY): The Yen is slightly lower as it appears as the market is still attempting to decide which way it wants to go. Capital spending figures came in lower than expected overnight.

I’m not surprised by the ECB news this morning and I think the market got a little ahead of itself in expecting them to change policy to combat the debt crisis. Unlike here in the US, the ECB understands that the solution to its problems cannot be solved by accommodative monetary policy alone.

After the initial disappointment wore off, it looks like the market is content to continue yesterday’s risk taking.

So all in all, much ado about nothing.

As a quick aside, I just want to give a quick shout-out to FXCM, who went public this morning and is now trading under the ticker symbol (FXCM). Congratulations!

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, economy, EUR, Euro, forex, forextrading, free, fx, fxedu, gbp, interest, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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October 20, 2010

Dead Cat Bounce?

Filed under: Forex News — Tags: a-tipping-point, australian, budget, dollar, economy, global, higher-on-risk, however, jpg, market, opinion, pound, risk-appetite, today-as-dollar — admin @ 2:14 pm

This morning markets are looking to take back some of yesterday’s losses as Dollar weakness is driving risk appetite. But is this merely a technical bounce, or a continuation of recent trends driven by Dollar weakness. The thesis I put forth yesterday was that the Dollar would continue to strengthen going into this weekend’s G-20 meeting, as US officials want to attempt to shed the label of currency manipulator.

In my opinion, this is a short-term bounce and we could see continued Dollar strength. Today the market is waiting on the Fed beige book this afternoon, which will show the state of the economy. So it looks like the market is expecting the QE2 talk to continue but they may back away ahead of the G-20 which could induce some Dollar strength. Also, US corporate earnings have been strong, though on declining revenues.

In the UK, the BOE minutes came out and showed a slightly dovish stance, which should keep the Pound weak in the near-term. Additionally, the UK budget cuts were revealed today with a plan to eliminate the budget deficit through job cuts and bank levies. How this plays out is anyone’s guess.

Meanwhile in the EU, German PPI figures came in slightly higher than expected, showing signs that mild inflation is steady.

As a result, the market is starting the day in classic risk taking mode, with stocks and commodities higher and Dollar weaker. However, the Fed’s beige book could change this sentiment later today.

In the forex market:

Aussie (AUD): The Aussie is higher on risk appetite and it is being reported that the market thinks the RBA could raise rates next time around, though I didn’t get that feeling from the release of yesterday’s RBA minutes. While the Australian economy is still strong, the global economy is still fragile. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is also higher on risk-taking and will continue to trade on risk themes this week.

Loonie (CAD): The Loonie is mixed as risk appetite and higher oil prices are pulling against the negative forces due to the pause in rate hikes and the reduced Canadian economic outlook. However, Dollar weakness is driving the market at this point.

Euro (EUR): The Euro is higher taking advantage of its “anti-dollar” status benefiting from greenback weakness. German PPI figures came in slightly higher than expected which is seen as positive.

Pound (GBP): The Pound is mostly lower although higher vs. USD as the BOE minutes showed a slightly dovish stance going forward, and the budget cuts announced could force the BOE to ease further if the economy slows too much toward the end of the year. (Click chart to enlarge)

Dollar (USD): The Dollar is weaker today as the market is expecting the Fed to continue the QE2 rhetoric in its release of the beige book report today. However, my own belief is that recently the Dollar has fallen too far too fast and that if indeed they do want to ease further at the next FOMC meeting, they most likely won’t telegraph that today. If they do continue the easing rhetoric, then I expect they may not actually ease going forward.

Yen (JPY): The Yen is mixed today as Dollar and Pound weakness offset risk appetite in the market. Should Dollar continue to weaken against the Yen going into the weekend, we could see some sort of intervention-type action take place early next week.

A dead cat bounce is a brief recovery from a major price decline and in my opinion yesterday may have been the start of a reversal in the Dollar weakness trend. While Dollar weakness has been driving global markets, it cannot continue to weaken forever.

Already economies around the globe are crying foul, as emerging markets are seeing inflation (exported from the US naturally) and currency gains which could threaten their stability. This comes ahead of the G-20 meeting this weekend, where currency movement is likely to dominate talks.

How can the US chastise other countries for currency manipulation, when the US Fed might be the biggest manipulator of them all? Right now we are at a tipping point, where currencies have pulled back from recent highs against the Dollar, so the question must be asked if this is a temporary condition, or a short-term reversal?

Many are saying that the US wants to weak Dollars to encourage our exports; however I think the plan is to encourage inflation. This is a dangerous proposition which could get completely out of hand as the global economic marketplace can now move in speeds unfathomable in Bernanke’s textbooks. With a potential shift in the political landscape coming soon, I expect Bernanke to play it close to the vest.

This means we could see some Dollar strength and some range-bound trading at these levels.

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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