Meeting | Forex Blog

December 14, 2011

Forex Market Outlook 12/14/11

Filed under: Forex News — Tags: australia, below-support, christmas, erring-on-the, euro, franc, further-as-some, inability, meeting, morning, possibility, report-positive, switzerland — admin @ 6:43 am

The Euro carnage continues as I showed in the chart of the day from Monday, as we are now under 1.30 vs. USD and possibly moving lower. While I was surprised by Friday’s market reaction (positive) to the EU Summit where they decided to further delay action, now the market is waking up to the harsh reality of the situation. Though perhaps there was some hope that the US Fed, and not EU leaders, would save the day through monetary policy at yesterday’s FOMC meeting.

However Bernanke did not budge yesterday despite the market sell-off that began before the meeting and then continued throughout the remainder of the day. His comments at the meeting were consistent with previous statements that have already placed the possibility of further easing on the table, but he did not take it a step further as some in the market may have been hoping.

There is a “see-saw” relationship between the US dollar and the Euro as the Euro is considered the “anti-Dollar”. This inverse relationship has been ruling the markets for some time and is partially responsible for the “risk trades” in the market. But I get a sense that those correlations are starting to break down as I mentioned yesterday. US stocks were largely higher for most of the day even as the Euro was tanking, though they caught up and finished lower by the end of the day.

Markets have followed through this morning to the downside this morning with stocks and commodities poised to start lower. US dollar strength has been fueling these declines, but again I am in the camp that thinks these relationships can break from one another.

Overnight in Europe, industrial production figures came in lower than expected, and an Italian bond auction pushed yields higher on 5-year notes to the highest levels in nearly 14 years in stark contrast to yesterday’s Spanish note auction. This is indicative of the headwinds that the Euro zone faces for failing to address the debt problems at the last meeting. Credit downgrades are looming.

On a brighter note in the UK, the employment report came in better than expected with jobless claims coming in lower than expected at 3K vs. 13.5K. The unemployment rate remained steady at 8.3%. This reflects the rising economic tide in the UK that appears to be improving the overall health of the economy. Next week’s release of the BOE rate policy meeting minutes will shed light on whether or not they are in favor of further monetary easing. The Pound has risen vs. the Euro over the last three days as money flows make their way to the stronger economic situation.

One country that is still “strong” but experiencing some economic malaise is Switzerland where the SNB will give their rate decision tomorrow. The Swiss are starting to see some Japanese-style deflation as the franc has strengthened prompting some to believe that the SNB will try to weaken the franc vs. the Euro by lifting the target area from 1.20. With the current tumult in the Euro zone, they may hold steady for now.

Overnight in Australia, consumer confidence figures came in worse than expected, showing a reading of 94.7 vs. last month’s 103.4. This decline has helped impact the Aussie as it is now trading below parity vs. USD. Take a look at my chart of the day from yesterday for a technical perspective.

There is no real news due out here in the US for the rest of the day. Mortgage applications were up 4.1% but that was basically all people trying to re-finance and not new applications. There is some Fedspeak due out later this morning.

CPI data from the EU tomorrow and the US on Friday could be potential market movers but I think it unlikely that this will affect monetary policy in the near term.

While politicians and central bankers around the globe believe that time is on their side, I think they are mistaken. Markets “want” to go higher but are having a hard time because of all of the global economic uncertainty despite the fact that there are some decent economic stories taking place, particularly here in the US. Markets however are forward-looking so with little hope on the horizon, it may be tough sledding going into the end of the year.

Santa Clause may be staying home for Christmas, and investors might end up with coal in their portfolios!

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November 10, 2011

Pound (GBP) Holds Support On BOE Inaction!

Filed under: Forex News — Tags: after-yesterday, economy, features, meeting, minutes, pound, program-at-275, recent-economic, safety, top stories — admin @ 7:43 am

The British pound has held support vs. USD at just under 1.59 after the Bank of England made no change to its monetary policy, leaving rates unchanged at .5% and the asset purchase program at 275 billion. This has helped strengthen the Pound this morning after yesterday’s risk-based selling sent investors to the safety of the US dollar.

One of the features of the UK rate policy meeting is that they do not issue a statement with the release of the policy. We will have to wait two weeks to see the minutes from the meeting but there is a decidedly dovish tone to the BOE given the recent economic stagnation that have been seeing in the UK economy.

They will also likely take a wait and see approach to monetary policy and see how the Euro debt crisis unfolds. Should the economy worsen, then further easing could be next. But for now, short-term support at 1.59 looks to be in tact.

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May 17, 2011

Inflation Running Wild!

Filed under: Forex News — Tags: commodity, food, japan, meeting, stock, time, whether-or-not, yen — admin @ 7:20 am

At least that’s what is happening in the UK, where CPI data came in showing 4.5% inflation, way hotter than the expectation of 4.1% and now getting to the point where the BOE may have to act. It should be noted, however, that this figure is from last month and was recorded prior to the recent commodity sell-off.

*Sorry technical problems with the video this morning* This situation is telling in that it represents a stagflationary environment, and it will be interesting to see what, if anything, the BOE can do to avoid this peril. The minutes from the rate policy meeting are due out tomorrow, and hopefully the BOE will be moving toward policy adjustment.

In Australia, the RBA minutes from the rate policy meeting revealed concern about inflation and the potential need for higher interest rates despite an elevated Aussie value if “current conditions persist”.

In Japan, the BOJ chief said that the economy is in a “very severe state” which has given the market reason to suspect that further monetary easing may be forthcoming, perhaps as early as the end of this week.

So there is a bit of risk appetite in the markets, with Yen weakness driving stocks and commodities slightly higher, though those are giving back early gains. New home starts and building permits here in the US may be the decider.

In the forex market:

Aussie (AUD): The Aussie is mostly higher though giving back some gains after the release of the RBA rate policy meeting minutes showed a need for potential higher rates if inflation persisted. Consumer confidence figures are due out tomorrow.

Kiwi (NZD): The Kiwi is mixed, benefiting from a lower Yen but also seeing gains pared as more risk aversion creeps into the market. Tonight will be the release of PPI input and output data, which could be a harbinger of inflation.

Loonie (CAD): The Loonie started the morning higher but is giving back gains as oil prices have retreated further now trading closer to 96.50 than 97 and change earlier. Thursday will bring the review release from the Bank of Canada, and Friday’s CPI data and retail sales figures will show whether or not the BOC is any closer to rate hikes.

Euro (EUR): Economic sentiment figures are mostly lower as EU meeting of finance ministers tries to get back on track after the shocking arrest of the head of the IMF. ECB policy-makers are set to speak this week on the state of the Euro zone’s economy, and the debt crisis is still very much a problem.

Pound (GBP): The Pound is mostly higher after the CPI data release which showed very hot inflation, and the UK may be the first domino to fall into stagflation (besides Japan of course) as the global economy slows down. The BOE minutes tomorrow will show whether or not they will attempt to fight inflation through a change of policy, or will be content to allow the situation to worsen. (Click chart to enlarge)

Dollar (USD): The Dollar is gaining strength as the morning progresses as the mild risk appetite in the market is being replaced by risk aversion. This is because housing starts figures came in way worse than expected, showing a decline of 10.6% vs. an expectation of a gain of 3.6%. New starts were 523K vs. 569K. In addition, building permits were down 4%, vs. an expected gain of .9%. This highlights what the true problem is here in the US—declining asset prices.

Yen (JPY): The Yen is weaker across the board as the head of the BOJ stated that the Japanese economy is in trouble and hinting that further monetary easing may be forthcoming. Friday’s rate decision could be a time that further easing is announced. (Click chart to enlarge)

Just throw the old economic handbooks away and take a look at what is going on in the global economy today. It is a complete government failure by policy-makers around the globe that is making the economic situation worse and not better.

Today’s housing starts figures highlight the problem—biflation whereby commodities prices rise and asset values fall. Rather than attempting to help the common man by keeping commodity price inflation in check, Central bankers and policy-makers prefer to protect the banks who by all accounts are about to see another wave of defaults come in if the demand for home continues to fall along with prices.

Would you buy a declining asset right now? In the face of higher food and energy costs? With an uncertain economy that is not creating jobs? What happens when more people lose their jobs and then can’t afford to buy stuff, creating another wave of losses as businesses pare back to service the now-lower demand?

Inflation? Stagflation? Biflation? What type of “flation” is it? Well it doesn’t matter what you call it—just know that it is being fostered by bad government policy and weak-willed politicians unwilling to face the hard truths. Not to mention fat-cat bankers who will still take big bonuses and try to pay dividends, ahead of the next impending leg down in housing.

We’re in an unfortunate situation folks, and rest assured that your pain won’t be felt by the powers that be. It’s really easy to make policy when it doesn’t apply to you and the damage that’s created will be left for someone else to clean up.

All we can do is attempt to make sense of it all, and put our money where it will earn the most. For me, that’s the forex market!

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, Australia, bank, blog, BOE, cad, canada, commodities, commodity, course, currenc, currency, currency market, currency trading, data, dollar, dow, economic, economy, EUR, Euro, forex, forex market, forextrading, free, fx, fxedu, gbp, home, Il, interest, interest rate, interest rates, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, money, nzd, oil, pound, practice, practice account, retail sales, RSI, ssi, stock, stocks, time, USD, Yen

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December 13, 2010

China Holds Steady!

Filed under: Forex News — Tags: a-due-out, account, environment, euro, free, gbp, interest-rate, lower, markets, meeting, political, portugal, time, unemployment — admin @ 3:22 pm

Heading into this past weekend, there was much speculation that China was going to raise interest rates to try to thwart the inflation they have been seeing. Inflation came in at 5.1% last month and despite the obvious detriment this poses to the Chinese economy, China increased bank reserve requirements to try to slowdown lending but left rates unchanged. This has helped buoy markets higher this morning as risk appetite has increased.

However, this does not tackle the root of the problem and it is expected that China will have to quicken the pace of Yuan appreciation and raise rates in the not-so distant future. As of right now, Chinese demand is really the only thing keeping the global economy afloat. Should China take appreciable measures to slow down its economy, then risk aversion would be expected to increase. But for now, it is game on!

Here in the US, the markets are still grappling with the effects of the tax deal vs. the Fed’s QE2 program. Bond vigilantes have pushed yields higher as there is renewed concern over the budget deficit. Expect the political wrangling to heat up for the remainder of this lame-duck Congress. The FOMC rate policy meeting is tomorrow so we’ll have to wait and see if Bernanke addresses the tax issue.

There is various CPI data due out this week, most notably her e in the US and also the UK. I’ll be keeping an eye on the latter, as inflation is still outside of the target band. The minutes from the BOE rate policy meeting will be released next week so we will see at that time if any policy-makers have flipped their stance.

In the forex market:

Aussie (AUD): The Aussie is higher this morning as risk appetite has increased after news that China did not raise interest rates. While there is a lot of talk about China trying to stave off inflation, they do not appear to be willing to slow down their economy at the expense of economic growth. This is a light week of news out of Australia so expect the Aussie to trade this week on risk themes.

Kiwi (NZD): The Kiwi is also higher on the Chinese news and later tonight we will get retail sales data. While current economic conditions appear to be unlikely to warrant a rate hike anytime soon, the positive interest carry keeps it near the top of traders’ books.

Loonie (CAD): Like its antipodean counterparts, the Loonie is facing a light week of news so expect it to trade on risk themes and its high correlation to oil, which is trading an 89 handle this morning. The Loonie is making another run at parity vs. USD. (Click chart to enlarge)

Euro (EUR): The Euro is mostly higher as the increase in risk appetite has encouraged buying this morning. Now that the Irish banking crisis is somewhat handled, it will be interesting to see when the market turns to Portugal and Spain. Economic sentiment figures are due out tomorrow, followed by CPI data later this week. (Click chart to enlarge)

Pound (GBP): The Pound is lower this morning as anti-Euro sentiment has subsided and has reduced some of the hot money flows the Pound had been seeing of late. PPI input data came in higher than expected which could mean that CPI data due out tomorrow may come in hotter than expected.

Dollar (USD): The Dollar is lower across the board as risk appetite has picked up and reduced safe haven money flows that sought refuge last week. Tomorrow will be busy as both the FOMC meeting and advance retail sales figures will be heard. CPI data is due out on Wednesday.

Yen (JPY): The Yen is lower as it resumes its position as the funding currency of choice for carry trades. The Tankan index surveys are due out later this week which will show business sentiment going forward.

While the tax debate appears to be a “done deal” here in the US, the negative sentiment surrounding how this affects the budget deficit will partially off-set the “free money” scenario espoused by the Fed through its QE2 program.

It is interesting to watch the political backlash over the extension of the tax cuts, as partisanship is at an all-time high. But make no mistake about it; the extension of the tax cuts is an economic stimulus. In fact, this form of stimulus may be more effective than the $800 billion one the government rolled out.

By putting more money in people’s pockets, they can deploy capital as they see fit. Of course government types don’t like this because they don’t get to decide how the money is spent. As more money gets spent, more jobs get created to service the new-found demand.

With our unemployment rate just below 10%, putting people back to work should be priority number one. Enough with the ideology, embrace practicality!

Economic forecasters here in the US are already raising their growth forecasts for next year, so it is clear what the markets think of the extension.
Whether or not this translates into new jobs remains to be seen, but the environment for growth is clearly improved. If the US economy can get back on track, then economic expansion should improve tax receipts. Combine that with a reduction in government spending and we could be well on our way to deficit reduction.

Then we could return to “normal” monetary policy, instead of having to rely on Dollar debasement to stay afloat.

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, Australia, bank, blog, cad, carr, carry trade, China, course, currenc, currency, currency market, currency trading, data, dollar, dow, economic, economy, EUR, Euro, fed, forex, forex market, forextrading, free, fx, fxedu, gbp, Il, index, interest, interest rate, interest rates, jpy, Kiwi, live, lot, lower, market, meeting, Mike Conlon, money, news, nzd, oil, pound, practice, practice account, ssi, time, trade, trades, unemployment, USD, Yen

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November 20, 2010

Irish Cabinet to endorse 4-year Budget plan Sunday

Filed under: OANDA News — Tags: aud, billion-between, document, economy, finance, forex round up, irish-times, meeting, state, the-160-page, the-document, the-project-, usd, which-agreement, which-charts — admin @ 12:38 pm

THE IRISH GOVERNMENT’S four-year recovery plan for the economy will be published on Tuesday, senior departmental officials have confirmed. The Cabinet will meet tomorrow to sign off on the 160-page document, which charts how the State will reduce its outgoings by €15 billion between now and the end of 2014. It follows a marathon eight-hour meeting of Ministers on Thursday at which agreement was reached on the bulk of the final plan.

Minor details have yet be finalized, said a Government official yesterday who is familiar with the project. The Department of Finance has been pressing for the document to be published on Monday, if possible. However, it accepted that it was now more likely to be Tuesday.

The Irish Times

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June 23, 2010

BOE Not Unanimous!

Filed under: Forex News — Tags: australia, eur, europe, gbp, kiwi, live, meeting, new zealand, north, retail-sales, time, yen — admin @ 1:12 pm

Minutes released from the Bank of England’s rate policy meeting showed that the vote was not unanimous to keep rates unchanged at .5%, for the first time in nearly 7 months. Inflation concerns were the cause of the dissenting vote, as CPI figures in the UK have been above targets. While the BOE expects inflation to subside in the ensuing months, that may not necessarily be the case.

This comes a day after the emergency budget which was announced yesterday, calling for a reduction in spending and an increase in taxes.

In the US, the FOMC rate decision is due out later today, so expect to see some volatility in dollar-related pairs. It is widely held that there will not be a change in policy, but some market participants are betting that we may see a change in the language regarding policy. This would give credence to the rising sentiment that the Fed may raise rates later this year. Personally, I don’t see this happening and I think the Fed will be on hold for the remainder of the year.
Yesterday’s abysmal housing data confirmed that deflationary forces in the housing market may be the start of another leg down.

In the Euro zone, German consumer confidence came in slightly better than expected and PMI figures were largely in line. However, concerns over Greek debt have perked up again.

Overnight, the Yen was higher as the Nikkei was down taking its cues from yesterday’s sell-off in the US stock market.

This morning will bring US new home sales figures as well as Canadian retail sales figures. Any major deviations could send the respective currencies lower.

But expect volatility going into the FOMC announcement at 2:15 EST.

In the forex market:

Aussie (AUD): The Aussie is lower as stocks sold-off in the overnight session but it is gaining back some ground heading into the US session. Risk aversion has driven the Aussie lower, and there is some concern that Chinese demand for metals and energy is causing a rift in the Australian economy.

Kiwi (NZD): The Kiwi is higher this morning in anticipation of GDP figures which are due out later tonight. The expectation of .5% growth will likely be exceeded as demand from China for raw materials has the NZ economy picking up steam. Should the number best expectations, then the likelihood of a rate increase at July’s policy meeting will increase.

Loonie (CAD): The Loonie is lower this morning as oil prices are pulling back from the $78 level, and retail sales figures came in worse than expected. Analysts were expecting a decline of .4% and the figure showed a decline of 2.2%, a big miss. Canada is to the US what Australia and New Zealand are to China. If recovery here in the US is floundering, then it may not bode well for the Loonie and the Canadian economy in general.

Euro (EUR): The Euro is a mixed bag this morning, as it is up against the North American currencies but down against the rest. The EU is considering a bond levy on countries that don’t adhere to debt-to-GDP guidelines which of course brings the Greek debt crisis back to center stage. In addition, business confidence was down in France, though consumer confidence was higher in Germany. Go figure.

Pound (GBP): The Pound is higher across the board, giving a vote of confidence to both the government for their budget and the BOE. The lone dissenter in the rate policy meeting is concerned about inflation, as growth targets may exceed expectations. That’s a “nice” problem to have, considering the economic condition of the US.

Dollar (USD): The Dollar is mostly lower prior to today’s FOMC meeting. Yesterday’s poor housing data sent stocks lower, and today’s new home sales aren’t expected to be much better. This should be enough to keep the Fed unchanged in both language and policy, and the market is starting to catch on to the fact that the smoke and mirrors of government spending may not be enough to stoke the economy. Go back and take a look at my discussion of biflation from a few days ago.

Yen (JPY): The Yen is mixed as well, trading higher vs. USD and CAD (both showing weakness) and the Euro (debt concerns) but lower vs. GBP, AUD, and NZD. So today can neither be classified as risk-taking or risk-aversion, but much of the yen strength was derived from weakness in the Nikkei, which sold off following the US stock market decline.

I think today really shows the difference to how the market reacts to different policy pursuits from around the globe heading into this weekend’s G-20 meeting. On the one hand, you have the EU and the UK who are committed to reducing deficits and trying not to raise taxes too much to discourage business (in fact the corporate tax rate was lowered in the UK), and the policies taken by the US.

The US is going the other way, expanding deficits and throwing good money after bad at our financial problems which can only result in higher taxes when it comes time to pay the piper. President Obama was rebuffed by Chancellor Merkel of Germany with regard to how to best combat the global financial crisis, and it appears as though the market agrees with the EU.

Weak housing data here in the US show that the stimulative effects of government spending may have slowed a decline in the economy, but have not fixed the problem. Now taxpayers (and their children and grandchildren) face an enormous burden for what adds up to temporary conditions.

The change people voted for was for less government spending and indeed we’re seeing change—even more and more spending! Hopefully this course can be reversed before it’s too late. I never thought I’d say this but now is the time we should be taking our economic cues from Europe, and not their prior policies that landed them in this mess.

Those who don’t learn from the past are doomed to repeat it.

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, Australia, bank, BOE, cad, canada, China, course, crisis, currenc, currencies, currency, currency market, currency trading, data, decision, dollar, dow, economic, economy, EUR, Euro, Europe, fed, financial, forex, forex market, franc, free, fx, fxedu, gbp, home, housing market, Il, jpy, Kiwi, live, loonie, lower, meeting, Mike Conlon, minutes, money, new zealand, nzd, oil, pair, pairs, pip, pound, practice, practice account, rate, rate decision, release, retail sales, RSI, sentiment, ssi, stock, stocks, time, USD, Yen

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June 21, 2010

Yuan Gone!

Filed under: Forex News — Tags: account, aud, aussie, australia, china, chinese, currency, forex market, gold, intervention, jpy, market, meeting, morning, yen — admin @ 1:34 pm

In a move that the market was anticipating and hoping for, the Chinese government announced that they would loosen the peg on its currency and allowing it to float more freely. This hopefully will allow for greater balance in the global economy and help China curb inflation.

However, expectations for Yuan gains fall anywhere in the 3-5% range, as any appreciation will be gradual. This news sent stocks and commodities higher, as this is seen as a vote of confidence by the Chinese. But there is still much work to be done, as China needs to increase domestic demand to support balanced growth.

China has always been the “X factor” in the forex marketplace, as their currency peg and government intervention have created imbalances and uncertainties and have essentially impacted every financial market. There has been increasing pressure on China to make this move, and perhaps recent dollar strength vs. the Euro has encouraged this change.

So this news is very welcome by the markets, and risk appetite is the theme of the morning. Oil is higher this morning to $78.25 and gold reached a 1260 handle earlier. The commodity currencies are higher as a stronger Yuan will increase Chinese purchasing power.

This week is pretty light for news, with the FOMC meeting and the UK budget report due out ahead of this weekend’s G-20 meeting. The timing of the Chinese announcement is somewhat conspicuous, as it was expected that Yuan valuation was to be a major topic of discussion.

In the forex market:

Aussie (AUD): The Aussie is higher on risk appetite, as the Chinese news has the market betting that Australia will be a major beneficiary of a stronger Yuan. There’s no real news for the Aussie this week, so expect it to trade on risk themes this week.

Kiwi (NZD): The Kiwi is higher for the same reasons as the Aussie, though we are going to get some economic data from NZ this week. The current account balance and GDP figures are due out mid-week, which should reveal how the economy is faring and what the RBNZ may be thinking with regard to interest rates.

Loonie (CAD): The Loonie is moving closer to parity with USD, as higher oil prices and risk-taking are drivers behind gains. There is data due out from Canada this week, with CPI and retail sales figures expected to show the state of the economy. In addition, Canada hosts the G-20 meeting this weekend.

Euro (EUR): The Euro is lower this morning against all but Japanese yen, as potential benefits from the Chinese news is out-weighed by the austerity measures to be enacted to deal with the debt crisis. European banks have agreed to publish the results of bank stress tests in July, which may or may not be a good thing.

Pound (GBP): The Pound is mixed this morning trading lower vs. the commodity currencies and USD but higher vs. Euro and Yen. This comes in advance of the emergency budget report due out tomorrow, which is causing increased volatility as the “fear factor” of measures to be enacted leaves the market both hopeful and concerned.

Dollar (USD): The Dollar is lower on risk taking, as equity futures are up big time this morning and stocks are going to open higher. This week’s FOMC meeting is expected to yield no change, but GDP data due out on Friday with other data could tell a different story.

Yen (JPY): Yen is trading lower as selling in order to buy higher yielding assets is taking place. In addition, the Nikkei was up some 2.5%. The Yuan news is widely expected to be positive for Asian countries as a stronger Yuan should benefit other Pac-Rim exports.

I cannot underscore how big this news out of China is. The market has been begging for this for some time to help re-balance the global economy. However, the actual effect of this announcement and how it will play out is highly uncertain.

While it is widely expected that the Yuan will appreciate, I’m hearing rumblings that some analysts thing it could depreciate because of Euro zone issues. While I think this is highly unlikely, the Yuan has been gaining ground as dollar strength due to the Euro debt crisis has lifted its relative value higher.

In addition, the timing of this announcement ahead of the G-20 meeting has bought China time and shifted the focus of the meeting back onto Europe. How and when this actually occurs remains to be seen.

But this could end up being a case of “be careful what you wish for”, as unexpected outcomes could cause market uncertainty and increased volatility. So don’t break out the Champagne just yet; as this move is both necessary and desired, but still a long way away from fixing the global economy.

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, Australia, bank, cad, canada, China, commodities, commodity, course, crisis, currenc, currencies, currency, currency market, currency trading, data, dollar, economic, economy, EUR, Euro, Europe, fear, financial, forex, forex market, free, fx, fxedu, gbp, gold, Il, interest, interest rate, interest rates, intervention, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, news, nzd, oil, pound, practice, practice account, retail sales, ssi, stock, stocks, time, trade, USD, Yen

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June 15, 2010

Greek Junk!

Filed under: Forex News — Tags: commodity, currenc, economy, european, fundamental, invest, japan, japanese, jpy, lower, meeting, news, oil, practice account — admin @ 1:22 pm

Yesterday, Moody’s ratings agency cut Greece’s credit rating from investment grade to junk, citing the economic risks the nation is facing. This derailed yesterday’s rally, and reversed some of the gains just as the Euro session closed. However, defenders are quick to point out that this news has already been factored in by the market and that conditions in Greece have improved since the data used to make the downgrade.

So it looks like the Euro has dodged a bullet—for now. In addition, German economic sentiment came in well below expectations showing signs that the picture is not as rosy as today’s market would have you believe. However, the Euro is higher vs. the Dollar and European stock markets are higher despite what some would consider heightened risk.

In the UK, CPI data declined for the first time in 3 months though housing prices ticked higher showing mixed results in the inflation picture.

Overnight at the Japanese rate policy meeting, BOJ officials unveiled a 33 billion stimulus program despite the comments that the export-led recovery is starting to spread to private domestic demand.

So this morning is a bit of a mixed bag, with stock markets higher, USD lower, but Yen and Euro higher. It will be interesting to see if these markets fall back in line with their usual correlations, or continue on their own path.

In the forex market:

Aussie (AUD): Overnight, minutes from the Australian central bank showed that concern over the European debt crisis may cause the bank to pause from future rate hikes. The RBA has “flexibility”, as previous rate hikes have appeared to have quelled inflation. In addition, in what some may view as counter-intuitive, an RBA Governor said that he would welcome slower Chinese growth, as it would allow the Australian economy to grow at a more moderate pace.

Loonie (CAD): The Loonie is higher this morning as oil has gained to $75.75 due to an increase in demand and a potential supply shock due to the gulf oil spill. In addition, there is a report out that corporations are diversifying away from the Euro and are issue bonds in Loonies, which could be a driver of demand.

Kiwi (NZD): From the not-so-fast department, the Kiwi is lower across the board after 4 days of gains following its rate hike. Overnight, home prices came in lower than expected, falling 1.4%. This may give the RBNZ a reason to pause rate hikes and to move slowly. The RBNZ would like to see a weaker Kiwi to help exports, and this housing figure may be a harbinger that inflation is tame in NZ.

Euro (EUR): So it looks like the Euro is brushing off the Greek credit downgrade as it is trading higher this morning. In addition to the downgrade, German business sentiment came in way below expectations, yet the Euro is higher. There are rumblings around the market of other potential downgrades and measures that other countries should be taking. In my mind this is heightened risk, but the market isn’t seeing that way. Remember to trade what you see and not what you think you know!

Pound (GBP): The Pound is mixed this morning as inflation data slowed for the first time in 3 months. CPI figures came in at 3.4% vs. an expectation of 3.5%. This is higher than the government target figures of 3%, though economists are predicting a decline back below the upper band of the range by mid-year. However, housing prices also rose as demand picked up the most since January. While there is a lot of talk that inflation in the UK is “contained”, only time will tell if this is the case.

Dollar (USD): Stock markets appear to be driving the forex market today, as higher equities prices are reducing the demand for dollars. Empire manufacturing figures came in slightly less than expected but showing growth nevertheless, and import prices came in lower, probably due to recent dollar strength.

Yen (JPY): The Yen is surprisingly strong this morning as risk appetite appears to be happening this morning. Perhaps there is hesitation that carry trades may not be due to advance due to interest rate pauses in Australia and New Zealand. In addition, the BOJ signaled they would be instituting a $33 billion stimulus program to encourage business lending.

So today is kind of an “odd” day, as the currencies are trading more on their own fundamentals and not so much on risk themes. Today is seemingly a risk-taking day, though the demand for carry trades has been reduced due to Yen strength and possible interest rate pauses from the commodity currencies.

The Loonie is catching a bid as oil trades higher and Canada becomes a destination for capital-raising as an alternative to the Euro zone.

The UK is telling us there is no inflation, but the market may be thinking otherwise.

And lastly, the Euro is defying gravity and shrugging off credit downgrades. Perhaps these credit ratings agencies are losing their own credibility, or the market needs to see more from a risk perspective in order to sell-off the Euro. Either way, there is still risk in the market and the market may want to “see” problems occur than “hear” about them.

So don’t fall for the game of “show and tell”—and trade what you see and not what everyone wants you to know!

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, Australia, bank, cad, canada, carr, carry trade, commodity, course, currenc, currencies, currency, currency market, currency trading, dollar, dow, economic, economy, EUR, Euro, Europe, forex, forex market, free, fundamental, fx, fxedu, gbp, Il, interest, interest rate, invest, Japan, jpy, Kiwi, live, loonie, lot, lower, market, meeting, Mike Conlon, new zealand, news, nzd, oil, pound, practice, practice account, RSI, ssi, stock, time, trade, trades, USD, Yen

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June 9, 2010

Ban The Shorts!

Filed under: Forex News — Tags: a-strong-grasp, account, china, currencies, currency trading, fed, forex market, interest, invest, jpy, meeting, pound, stock, trichet — admin @ 1:24 pm

Both France and Germany have called on the EU to ban short-selling on certain stocks and government bonds with the intention to curb speculation in the market. While I am never a fan of this type of regulation, there does need to be some sort of “fix” for the market as speculation has gotten a little out of hand.

However, there are always unintended consequences to this type of action, and this could end up hurting their ability to raise capital. This could also hurt the forex market, as Euro-related pairs lack the volume to trade orderly. Nevertheless, there still is a ton of risk related to the Euro, with sovereign debt defaults the primary driver.

In addition, ECB President Trichet helped push the Euro higher with comments on the state of the Euro. As I mentioned yesterday, expect the game of “show and tell” to pick up, with officials telling us how great everything is but showing us little.

Also today, the US Fed Beige Book report comes out, with Bernanke expected to echo his comments from the other night.

In the forex market:

Aussie (AUD): Consumer confidence fell for the 3rd straight month down under, nevertheless the Aussie is higher on risk appetite. Fears of a global slowdown (particularly in China) and the raising of interest rates have added to the sentiment that the economy will slow in Australia.

Loonie (CAD): The Loonie is also higher this morning as oil prices have bounced higher and equity futures are set to open higher on risk-taking in the market.

Kiwi (NZD): The Kiwi is higher ahead of its interest rate policy meeting tomorrow, where the market is anticipating a 75% chance that the RBNZ will raise rates 25bp to 2.75%. Put me in the camp that is betting against the rate hike, as I feel the NZ economy rides on the coattails of Australia, and that the risk in the market may be too great to warrant a hike just yet.

Euro (EUR): The Euro is mixed this morning, trading higher against the safe-haven currencies, but lower against the commodity currencies. Comments from the ECB have helped push the Euro higher slightly, but let’s not forget about the huge risk the Euro poses as they struggle to get their fiscal houses in order.

Pound (GBP): The Pound has a bid this morning after a 4-day decline as investors seems more confident in the UK’s ability to combat their fiscal woes, much more so than the EU. The UK trade balance missed estimates, but narrowed from last month’s reading.

Dollar (USD): Today we get “Fedspeak”, as Bernanke gives his beige book report to Congress. I do not expect any change in language from the Fed Chief, and at this point I’m guessing that we will not see a rate hike this year. The Dollar has been higher this year on the flight to safety trade, and at this point I believe that inflation is a non-issue.

Yen (JPY): The Yen is lower this morning as risk-taking inspired carry trades are taking place ahead of the New Zealand rate decision. Japan will report its own GDP figures tomorrow, which are expected to show moderate but steady growth. In addition, new Finance Minister Noda said he would like to see price gains above 1%, but didn’t make that an “official” inflation target. Japanese deflation has plagued its economy for some time.

As I mentioned yesterday, this is “cheer-leading” week for the various markets, as the lack of hard economic data is supplanted by discussions of various economic situations.

I am always skeptical when it comes to government announcements and prefer to analyze the hard data myself. But with that in mind, you have to pay attention to what they are saying.

As a trader, it is important to trade what you see and not what you think should happen. If Bernanke wants the market to go up, you should play along even if you think the fundamentals don’t match. However, be sure to exit quickly at the first sign of market sentiment change as the market is always right, regardless of what is said.

So pay close attention to the technicals as the various market participants digest the rhetoric.

Do you have a strong grasp of technical analysis?

If not, be sure to check out our affordable 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, analysis, AUD, Aussie, Australia, Bernanke, cad, carr, carry trade, China, comments, commodity, course, currenc, currencies, currency, currency trading, data, decision, dollar, dow, ECB, economic, economy, EUR, Euro, fear, fed, forex, forex market, franc, free, fundamental, fx, fxedu, gbp, Il, interest, interest rate, interest rates, invest, investor, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, new zealand, nzd, oil, pair, pairs, pound, practice, practice account, rate decision, sentiment, short, ssi, stock, stocks, technical, time, trade, trader, trades, Trichet, USD, volume, Yen

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May 3, 2010

What a Mess!

Filed under: Forex News — Tags: chancellor, commodity, crisis, currency market, economic, euro, forex, lower, market, meeting, nfp, pound, practice, trader — admin @ 7:36 am

The impact of the gigantic oil spill in the Gulf region of the US is impacting oil prices to the upside as traders are actually using potential supply and demand issues to rule their decision-making. Well actually, it’s more like never let a good crisis go to waste.

In the Euro zone, the potential for the bailout of Greece not gaining support is weighing heavily on the Euro. The plan calls for increased austerity measures, as well as EU and IMF monetary support to the tune of $110 Billion Euro.

Purchasing Manager Indexes are coming in higher from around the globe showing signs that economic recovery may be taking hold, and the Dollar is stronger as consumer spending was higher though personal incomes rose less than expected. This also contributes to higher oil prices as demand picks up as manufacturing increases.

Elections are taking place this week in the UK and Germany, and the EU will meet on Friday to discuss approval of the Greek bailout.

In the forex market:

Aussie (AUD): The Aussie is higher against all but the Loonie, as commodity prices are pushing the markets higher. The market is in a general risk-taking mood despite the uncertainty over acceptance of the Greek bailout. Home prices rose faster than expected down-under, and tomorrow’s decision on interest rates is expected to show another increase to 4.5%.

Loonie (CAD): The Loonie is higher on oil prices as the market is anticipating a supply problem down the road due to the Gulf oil spill. There is no major news on tap in Canada until Friday when employment figures are due. Expect the Loonie to trade on risk themes this week.

Kiwi (NZD): The Kiwi is higher as the NZ Treasury Dept. put out a forecast that the economic growth rate was probably about .8%, showing positive economic signs. In addition, NZ PMI figures expanded at the fastest pace in nearly two years, and commodity prices were slightly higher. This bodes well for Kiwi strength, in addition to the overall risk appetite in the market.

Euro (EUR): So the final figure is $110 Billion Euro to bailout Greece and keep contagion from occurring throughout the Euro zone. Chancellor Merkel is patting herself on the back for holding steadfast and requiring further Greek Budget cuts. Yet the Euro is lower, as it is not entirely clear that the bailout package will be approved by the other EU members and the austerity measures agreed to are bound to cause strikes (riots) in Greece. In addition, the ECB agreed to accept Greek paper as collateral, thereby negating the effect of the rating agencies whose own competency has been questioned. A meeting is scheduled on Friday for approval, so stay tuned!

Pound (GBP): The Pound is mixed this morning as a report came out that home prices in the UK are expected to rise 5% as a result of record-low interest rates despite the uncertainty surrounding this Thursday’s elections. Expect some volatility going into the elections as the potential for a “hung parliament” weighs heavily on investors.

Dollar (USD): The Dollar is higher against all but the commodity currencies as consumer spending was higher posting its best reading in nearly 6 months, though personal incomes didn’t follow suit nearly as fast. ISM Manufacturing numbers are due out later this morning and a better than expected reading could support the economic growth story. However, the real story in the US this week will be Friday’s Non-Farm Payrolls (NFP) report which will show whether or not recovery is taking place as everyone is focused on jobs, jobs, jobs.

Yen (JPY): There’s no news this week out of Japan that is expected to move the market, so expect the Yen to trade as a proxy for risk, as traders increase or decrease risk appetite and also on commodity prices. Oil prices are expected to rise as PMI figures around the globe signal an increased demand for oil and also the potential supply shock due to the Gulf oil spill.

As we get closer to the summertime, expect commodity prices to move higher as global demand picks up as economic recovery takes hold. As a result, the commodity currencies could move higher as record low interest rates in the US could be the catalyst for commodity inflation.

Unless the jobs picture begins to improve, the Fed will maintain record low rates to encourage growth which is bound to foster inflation as well. This Friday’s NFP will be the first sign, but commodity currencies could also get a additional boost with another rate hike in Australia tomorrow.

And lastly, keep an eye on the Euro zone and the Greek situation. Any further hesitation to ratify a bailout could cause further losses in the Euro, and any chirping from any of the other PIIGS nations to reach for a piece of the “bailout pie” could show that contagion has occurred.

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, Australia, cad, canada, commodity, course, crisis, currenc, currencies, currency, currency market, currency trading, decision, dollar, dow, ECB, economic, EUR, Euro, fed, forex, forex market, free, fx, fxedu, gbp, home, Il, index, interest, interest rate, interest rates, invest, investor, ISM, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, news, nfp, nzd, oil, payrolls, piigs, pound, practice, practice account, ssi, time, trade, trader, Treasury, USD, Yen

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