Forex Blog

May 3, 2010

April 27, 2010

No Resolution!

Filed under: Forex News — Tags: , , , , , , , , , — admin @ 7:40 am

Hopes were dashed when the G-20 meeting ended without a resolution to the Greek crisis.  While no one expected the G-20 to solve the problem, having all of these finance ministers in one place there was optimism that some good would come out of it.  But alas, the drama continues, causing one analyst to claim, “Greece burns while Germany fiddles.”

What this has accomplished is not only causing the yield on Greek bonds to rise, but contagion is starting to spread to Portugal.  As yields continue to rise, the cost of borrowing becomes more expensive for the issuer which in turn makes it less economically feasible to service debt.  The longer this Greece thing plays out, the worse it may get for other members of the EU.

So clearly today is marked by risk aversion, despite signs that inflation may be picking up in Australia.  German consumer confidence was higher, perhaps because Germans believe that they won’t bail out Greece so there is no problem!  Not sure what they are thinking over there.

US consumer confidence figures are due out, and some housing data from the US and UK are adding to the risk aversion in the market today.  World stock markets are lower, as are commodities.

In the forex market:

Aussie (AUD):  Producer Prices advanced 1% from the fourth quarter marking the fastest rise in almost two years showing signs that inflation may be on the way.  The Aussie is holding up remarkably well despite the risk-aversion in the market.  It is higher vs. all but the Dollar and Yen.  Tomorrow brings the CPI figures which are a truer gauge of inflation.

Loonie (CAD):   The Loonie is lower on risk fears as well as oil prices which are down roughly 1% to 83.25.   Oil inventories are expected to rise which could slow the demand for the “black gold” adding further downward pressure on the Loonie.  There’s no real news for Canada until Friday when they announce GDP figures so expect the Loonie to trade on risk themes this week.

Kiwi (NZD):   The Kiwi is lower on risk themes as well, and tomorrow the market will get the RBNZ interest rate decision.  The market is expecting rates to remain unchanged, but there was speculation that they could signal a future hike based on recent good economic news.  However, the problems with the Euro zone mean that there is too much risk in the market which may delay any signals.

Euro (EUR):  Well consumer confidence was higher in Germany, yay!  I’m not sure how anyone can be confident in the Euro situation unless you were sure that it wouldn’t affect you.  Perhaps this is telling about Germany’s role in this crisis and how their hesitation to act may collapse the entire economic union.  As bond yields continue to move higher for suspect countries, contagion may be so great that massive defaults occur.  This Greece thing needs to be buttoned up FAST.  Oh, and everyone’s corporate citizen of the year candidate, Goldman Sachs, decided to add fuel to the fire by claiming that bailout may be closer to $200 billion, more than three times the current deal.  Someone check their Euro CDS positions please!

Pound (GBP):  The Pound is lower this morning as home loans rose less-than expected in a sign that the housing market may not be rebounding as robustly as previously estimated.   Hung parliament concerns are to the fore-front again, so expect the Pound to trade sideways going into the May elections unless global risk-aversion takes all markets lower.

Dollar (USD):   US consumer confidence figures are due out later this morning and Fed Chairman Bernanke is set to speak this afternoon about financial reform.  Tomorrow is the FOMC interest rate decision which is expected to leave rates unchanged.  The Dollar is higher on risk-aversion against all but the Yen.

Yen (JPY):  The Yen is up the most this morning as the un-wind of carry trades due to risk aversion is creating demand for Yen.  Japanese companies have been reporting strong corporate earnings which have buoyed Japanese stocks.

As I mentioned yesterday, we are starting to see signs of inflation in the market despite that the fact that everyone sells stocks and commodities and runs to the US dollar when risk-aversion crops up.

Until the EU can get the Greece situation rectified and provide support for its members, there will be risk in the market.  EU ministers have been out saying that global recovery is taking place at different speeds and recovery is not happening as fast for the EU.  Noted.

There are a slew of CPI figures due out this week which will show how inflation is faring around the globe.  While rates aren’t expected to rise in countries where economic recovery is tenuous, look to the price of gold to see where we are in the inflation spectrum.

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, Bernanke, cad, canada, carr, carry trade, commodities, course, crisis, currenc, currency, currency market, currency trading, data, decision, dollar, dow, economic, EUR, Euro, fear, fed, financial, forex, forex market, free, fx, fxedu, gbp, gold, home, housing market, Il, interest, interest rate, ISM, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, news, nzd, oil, pound, practice, practice account, rate decision, RSI, ssi, stock, stocks, time, trade, trades, USD, Yen

April 20, 2010

A Traders Paradise!

Filed under: Forex News — Tags: , , , , , , , , , — admin @ 7:20 am

Yes, I am speaking about the forex market!  For starters, yesterday’s rebound from the fear in the market was nothing short of remarkable.  Apparently the SEC voted “along party lines” to formally charge Goldman Sachs with fraud.  Two thoughts on this: 1) it is beyond me why a supposedly independent watchdog agency would have “party lines” to begin with, and 2) the case against Goldman must not be that strong which means this amounts to nothing more than political pressure to get the financial reform bill passed.  Time will tell.

Regardless, the markets have rebounded from that news and are pushing higher this morning, as risk-taking is in the air.  And that’s what I mean by “traders paradise”.  One day it looks like we are going to fall off a cliff with all of the doom and gloom, and the next we are high-fiving over how great things seem to be.  All you have to do is be on the right side of sentiment and keep your trades shorter-term in nature, and you can ring that cash register day in and day out.

A couple of pieces of news to consider today: 1) CPI came in less than expected in New Zealand last night, 2)  Consumer prices came in higher than expected in the UK, 3) the Canadian interest rate decision is due out today, and 4) Goldman Sachs has thumbed its nose at the government and reported blowout earnings.

What this means for the forex market:

Aussie (AUD):  The Aussie is higher on improved market sentiment and the minutes from its central bank’s policy meeting were released overnight, showing that the RBA was concerned that a mining boom might stoke inflation.  Should inflation figures come in higher the next time around, expect the RBA to remain hawkish.  Concern over Chinese demand is a factor to consider, but I believe that the RBA will act on what is and not on what might be.

Loonie (CAD):  The Loonie is higher this morning as oil prices have rebounded and the Bank of Canada is meeting on interest rates today.  Speculation in the market is that they will use this opportunity to foreshadow a rate hike in June if they increase their forecasts for inflation and economic growth.  There is virtually no chance they will change rates today, though stranger things have happened.

Kiwi (NZD):  The Kiwi is slightly lower this morning as consumer prices came in lower than expected, showing a rise of 2% vs. an expectation of 2.3%.  Recovery in NZ has been more tepid than expected, and this may allow the central bank to keep rates at a record low 2.5% for a longer period of time.  The central bank will be holding its interest rate policy meeting next week.

Euro (EUR):  Wow, horrible news isn’t dominating the headlines in Europe!  In fact, there is actually some encouraging news, as German Investor Confidence levels came in higher than forecast to seven- month highs.  This comes in contrast to the fear over the economic impact of Greece and the volcano and shows that the economy in Germany is still very strong despite all of the structural problems of the Euro.

Pound (GBP):  The Pound is higher this morning as inflation in the UK surged 3.4%, higher than expectations of 3%.  The BOE rate policy meeting minutes are due out tomorrow and are expected to be dovish, though this figure comes in outside of the BOE mandate to keep the inflation target rate within 1% of its target.  What this means is that should this pattern continue, we could start to see rate hikes despite the uncertainty over the May 6th elections.

Dollar (USD):   US corporate earnings are higher this morning, prompting the futures to trade higher and the Dollar to trade lower as risk appetite is back to the marketplace.  Goldman Sachs reported earnings much higher than analyst expectations, practically laughing at the government and the SEC. There’s no real news for the Dollar until Thursday, when PPI and initial jobless claims are reported.

Yen (JPY):   The Yen is lower across the board as risk-taking is back in play.  Carry traders sell yen and buy higher yielding currencies when risk appetite is high.  In addition, the Japanese Finance Minister says that the BOJ should shoot to have an inflation target of “1 or 2%.”  Now I’m not sure that this is even possible from a monetary standpoint, as Japanese interest rates are at .1%.  Sure they increase bond buying and quantitative easing, but right now they are in a deflationary spiral and adding to the deficit is a fool’s folly.  Perhaps the government should impose a “non-consumption tax” to discourage savings and get the domestic economy moving by encouraging consumption.  Good Luck with that.

As you can see, one day it’s doom and gloom and the next day it is pizza and ice cream for everyone!  That is why the forex market is the ultimate trader’s paradise.  There is literally trillions of dollars flowing through this market on a daily basis, and savvy investors are taking advantage of these moves to reap financial gains.

The basic risk-on, risk off theme is one of the most basic plays in financial markets.  Traders with a marginal sense of timing but with superior money management skills are raking it in.

Isn’t it time you see what the excitement is all about?

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, bank, BOE, cad, canada, carr, carry trade, central bank, course, currenc, currencies, currency, currency market, currency trading, decision, dollar, dow, economic, economy, EUR, Euro, Europe, financial, forex, forex market, free, fx, fxedu, gbp, gold, Il, interest, interest rate, interest rates, invest, investor, IRA, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, minutes, money, new zealand, news, nzd, oil, pound, practice, practice account, rate decision, release, sentiment, short, ssi, time, trade, trader, trades, USD, Yen

April 16, 2010

Fearful Friday!

Filed under: Forex News — Tags: , , , , , , , , , , , — admin @ 7:25 am

This morning is starting out with a moderate bias toward risk-aversion.  There is no real news in the marketplace that should change this bias going into the weekend.  The themes are very familiar, as I pointed out yesterday, and I would be surprised if traders weren’t lightening the load going into the weekend.

Let’s start with the Euro.  Greece has requesting a meeting with the EU, IMF, and ECB that will begin on Monday.  Many believe that this will begin the process of requesting aid under the terms of the previous agreement.  However, Germany is balking and the situation may become untenable as Greek bond yields are soaring through the roof, thereby raising the cost to Greece to receive funding.

In the UK, the first televised debate occurred last night and the consensus winner was….neither the conservative nor labor party candidate.  It was actually a third-party candidate, now throwing the notion of political gridlock even further in the mix.

Lastly, Chinese Yuan forwards are higher as the market believes that China may be closer to relaxing it’s currency peg to try to slow down it’s overheating economy.  No one is really 100% sure of what this is going to mean for the global economy, so uncertainty abounds.

In the US, Google (GOOG) earnings last night disappointed, but US housing starts came in higher than  expected this morning.  Consumer confidence figures are due out at around 10AM EST.

So all of this equals risk aversion, and I don’t expect a reversal going into the close today.

In the forex market:

Aussie (AUD):   The Aussie is lower on risk aversion this morning.  A potential Chinese slowdown will affect Australian exports.  No other news from down under.

Loonie (CAD):  The Loonie is lower this morning for the same reasons as the Aussie, and is now trading below parity with USD.  Expect the Loonie to hover around parity until either a major risk event occurs in the marketplace prompting a flight to safety, or the BOC hints of a rate hike prior to its next policy meeting.

Kiwi (NZD):  All is not lost in New Zealand!  The Kiwi is actually higher this morning despite risk-aversion, as housing prices rose 1.7% from last month.  However, this blip on the screen of inflation will not be enough to convince the central bank to raise rates, as the NZ economy is still mired in high unemployment and tight credit conditions.

Euro (EUR):   The Euro.  Wow. All I can say is wow.  It didn’t take long at all for Greece to start asking for money and for Germany to already start back-pedaling.  I think it’s unfortunate that Greece may not be given a chance to turn its economy around despite the position they have put themselves in.  Germany’s holier-than-thou attitude is a major detriment to the entire structure of the EU, despite the fact that Germany was allowed to thrive on the back of the countries like Greece.

Pound (GBP):   So now a third-party candidate has emerged in the battle for control over the UK government.  At first it was the showdown between incumbent, Labor Party Brown vs. Conservative Party Cameron.  Now Liberal Democrat Clegg has emerged as the winner of last night’s first televised debate, further complicating matters.  So the Pound is lower and expect it to trade in a range heading into the May elections, all things being equal.

Dollar (USD):   US equity futures are lower this morning as are commodities, as Google reported worse than expected earnings last night.  The Dollar is higher as the flight to safety trade is in effect, and while housing starts came in better than expected, the market is starting to realize that more housing starts may mean further supply which could further depress prices, especially if these new projects come in under current market rates.  Consumer confidence is coming out and if the number is worse than expected, I think we could see a further strengthening of US and weakening of stocks.

Yen (JPY):   The Yen is higher as carry trades are being un-wound going into the weekend.  Risk aversion affects the Yen as it is the vehicle of choice for most carry trades.  The Yen pulled back a bit as a Japanese government official said that the BOJ should shoot for a 2% target inflation rate.  It is widely believed that the only way to combat Japanese deflation is through a weaker Yen.

Despite encouraging economic data emerging from various parts of the globe, there is still MAJOR risk in the markets.  While the US stock market may be humming along, there is still a major disconnect between Wall St. and Main St.  The world is counting on US recovery but this may drag out for a long, long time.

In the meantime, if the Euro collapses because they can’t get their act together, it could set off a chain reaction the likes of which no one has seen before.

And throw China into the mix, which no one knows what they’re going to do, and it all adds up to a Fearful Friday.

Now is not the time for the “hero trade”, and I suggest paring back positions going into the weekend.  Better to be safe than sorry.

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, carr, carry trade, central bank, China, commodities, course, currenc, currency, currency market, currency trading, demo, dollar, dow, economic, economy, EUR, Euro, fear, forex, forex market, free, fx, fxedu, gbp, Il, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, money, new zealand, news, nzd, pound, practice, practice account, rate, RSI, ssi, stock, stocks, time, trade, trader, trades, unemployment, USD, Yen

March 31, 2010

Not So Fast!

Filed under: Forex News — Tags: , , , , , , , , , , , , , , — admin @ 7:33 am

Earlier this morning, the market was in a good mood as a Greek Plan to issue bonds in Dollars was widely accepted which may help them reach their goal to raise capital to fund debt.  In addition, news out of Ireland that they will raise private capital to help their banks after “appalling lending” was also met with approval as it would keep the Irish banks out of government control and thus adding to Irish debt.

Canadian GDP came in better than expected, beating the estimate by .1% signaling that Canada may be the next country to raise rates.

On the negative side, Australian retail sales came in worse than expected, which could temper speculation that the RBA will hike rates again next week.

And then the ADP jobs report came in here in the US, showing that 23K private sector jobs were lost vs. an expectation of a GAIN of 40K.  This could foreshadow Friday’s NFP report which is also expected to show job growth.

In the forex market:

Aussie (AUD):  The Aussie is down this morning as retail sales unexpected fell 1.4% vs. an expected gain of .3%.  In addition, building permits fell 3.3% vs. an expectation of a gain of 2.1%.  This illustrates that domestic demand in Australia is diminishing as previous rate hikes may be taking hold.  The RBA is meeting next week with its decision on rate hikes, and this could mean a pause.

Kiwi (NZD):  The Kiwi is down in sympathy with the Aussie as signs that domestic demand in the region may be slowing.  Nevertheless, commodities are higher which is providing some support for the Kiwi, as well as the news out of the Euro zone that debt challenges may be met.

Loonie (CAD):  The Loonie is higher as Canadian GDP came in at .6% showing the best gain in nearly three years.  In addition, oil is higher which also benefits the Loonie.  It is widely expected that Canada may be the next to hike rates, and Friday’s NFP report will be significant for the Loonie as it will show how economic recovery in the US, Canada’s largest trading partner, is doing.

Euro (EUR):   The Euro has positive momentum as news regarding the debt problems of its members (particularly Greece and Ireland) has been met with approval by the market.  Also, to note is that French PPI came in as expected so inflation seems tame, but German unemployment figures showed a loss of 31K vs. an expected gain, showing signs that the Euro zone’s strongest economy may be weakening just a bit.  Nevertheless the news is positive for the Euro this morning, as reflected by its gains.  The Euro is above 1.35 vs. USD.

Pound (GBP):   The Pound is also higher this morning in a continuation of yesterday’s move as a result of better than expected GDP and housing prices.  The Pound has been beaten up as of late with debt fears surfacing; however confidence is rising that the elections will produce a government which is attentive to servicing UK debt.

Dollar (USD):   The Dollar is mixed this morning, showing gains vs. Pacific region currencies, but losses against the rest.  The ADP jobs report came out showing private sector losses vs. gains (see above) which while negative for the US economy, also mean that rates may be allowed to remain at extraordinarily low levels.  The Dollar initially gained on the news in a flight to safety, but may be reversing that initial move.

Yen (JPY):   The Yen is lower against all but the Aussie and Kiwi, as we may be seeing some unwinding of carry trade positions.  With news out of the Euro zone, today “should be” a risk-taking day with the exception that the usual beneficiaries are not favored today due to economic concerns.

So today is the day were acceptance of Euro zone plans to combat debt have helped global economic stability, which should generally show risk-taking.  I expect that the Aussie and Kiwi may shake off the news out of Australia and to possibly show gains by the end of the day.

While the ADP report was discouraging here in the US, the market is inclined to disregard this news in favor of better stories abroad.  Now if this was the NFP figure, the story might be different.  However, the market is getting used to the idea of a jobless recovery here in the US, as government spending has all but replaced output normally provided by employment.

If NFP does show the job growth that our government has “sold their soul” to try to get; then it could be “game on” for risk-taking.  As inflation “seems” tame here in the US, we could see a slow but protracted decline of the Dollar as yield seekers send money elsewhere.

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, commodities, course, currenc, currencies, currency, currency market, currency trading, decision, dollar, dow, economic, economy, EUR, Euro, fear, forex, forex market, free, fx, fxedu, gbp, idea, Il, jpy, Kiwi, live, loonie, lower, meeting, Mike Conlon, momentum, money, news, nfp, nzd, oil, pound, practice, practice account, rate, retail sales, RSI, ssi, time, trade, unemployment, USD, Yen

February 1, 2010

Australian CBank to raise rates again

Filed under: OANDA News — Tags: , , , , , , , , , , , , , — admin @ 7:30 am

Futures market pricing indicates a 71 per cent chance that the RBA will increase the official cash rate by 25 basis points to 4 per cent when the board meets in Sydney today, for the first time this year.

Ahead of the meeting, the Australian dollar fell US1c to US88.33c while the sharemarket extended January’s 6.2 per cent loss into the new month with a 1 per cent, or 45.5 point, fall in the S&P/ASX 200 index.

ICAP senior economist Adam Carr said the financial markets judged that there was a small chance — 30 per cent — that the central bank will choose to keep interest rates on hold, and this was a reasonable assessment.

The Australian

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