Practice | Forex Blog

July 20, 2011

Get It Done!

Filed under: Forex News — Tags: account, australia, carry trade, decision, europe, fundamental, new zealand, pound, practice, release, trend, week, whether-or-not — admin @ 6:52 am

Markets Call For Debt Deals Now!There is major optimism that tomorrow’s meeting of EU Finance Ministers in Brussels is going to produce a sensible solution to the debt crisis in Europe which means that the politics of doing the unpopular have been cast aside. This could come in the form of the bond buying from the emergency lending facility, which would essentially be quantitative easing to help keep individual countries’ yields low and then allow them to buy back later.

This situation practically mirrors what is going on here in the US with the debt ceiling debate, as the markets will take any solution at this point. While I personally don’t believe it’s a good idea to raise taxes in this economic climate, fixing loopholes is not the same thing. If unemployment gets worse as a result, then let the leaders bear the blame.

But we have been down this road before, where the markets anticipate a deal because they are weary and because it makes perfect sense; and then the politicians defy logic. By the end of this week we should have more clarity, and the risk appetite in the market is reflecting that sentiment.

In the UK, the release of the BOE rate policy meeting minutes confirmed there was no change of stance, though some have noted that there may be lesser resolve for additional bond purchases.

In the US, existing home sales are due out later this morning and yesterdays housing starts numbers surprised to the upside, showing that the housing market may not be dead just yet.

So this all adds up to risk taking this morning, with stocks and oil higher, and gold giving back prices gains as it sheds some of its safe haven status.

In the forex market:

Aussie (AUD): The Aussie is mostly higher on risk themes despite an index of leading indicators number that came in slightly negative, showing a decline of .1%. More pressing was the release of the RBA minutes, which showed that Central bank might not move on rates for some time.

Kiwi (NZD): The Kiwi is also mostly higher ahead of tomorrow’s release of consumer confidence figures. One item that has escaped attention is that the Chinese Yuan has appreciated the most in nearly 17 years (though still less than the weekly swings in Euro), which could be good for NZ exports.

Loonie (CAD): The Loonie continues to approach 2011 highs vs. USD after yesterday’s hawkish statement from the BOC at the rate decision. Today’s release of the monetary policy report may confirm that if not for global instability, rates might be higher. Oil back to $99 is also pushing Loonie.

Euro (EUR): It’s make-or-break time for the Euro this week as the entire globe is looking for a resolution to the debt crisis. The major impediment so far has been German political opposition, but as world opinion moves against them, they may be forced to bite the bullet. While no one expects the solution to emerge tomorrow from the meeting in Brussels, the market is optimistic that significant steps will be taken. (Click chart to enlarge)

Pound (GBP): The Pound is bouncing off of earlier lows as the indeed the BOE confirmed that they are willing to turn a blind eye to inflation (some say up to CPI gains of 5%!) in order to ride out the government austerity. Tomorrow’s retail sales figures will show whether or not the consumer in the UK is active, or if they are heading straight for stagflation. (Click chart to enlarge)

Swissie (CHF): The Swissie has been the most-favored safe haven currency of late so naturally it is giving back some of those gains as risk appetite has increased due to increased market optimism. Tomorrow’s trade balance figures will show whether or not a stronger currency has damaged the trade balance significantly.

Dollar (USD): The market is hoping that yesterday’s news on housing starts carries over to existing home sales figures due out later this morning. However, if the data begins to improve too much, then the market may assume that QE3 is off of the table which may cause some Dollar strength. What is more likely though is that good news will be received well by the stock market, which has been reporting great corporate earnings.

Yen (JPY): The Yen is mostly lower as safe haven demand has lessened. If the global economy can get past these two major debt hurdles, then it could be game on again for significant carry trades.

Markets are a forward-looking and discounting mechanism so gains we are seeing now are in anticipation of these debt problems getting fixed. This in and of itself does not mean that deals have been reached, however.

The politics surrounding all of these deals has been the major impediment so far, so the markets are saying just get it done. Uncertainty at this point is worse than bad policy and while the devil is in the details, the markets will decide later whether or not they approve. Let’s face it, I have very little confidence that any of these deals will be perfect, so just let the chips fall where they may.

If the markets do not see significant progress or agreements in principle to resolve these issues, then we could see this week’s gains vanish. For that is the problem with rising expectations; the letdowns hurt that much more!

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, carry trade, China, commodities, commodity, course, currencies, currency, currency market, currency pairs, currency trading, decision, dollar, dow, economic, economy, EUR, Euro, Europe, fear, forex, forex market, forex trading, fundamental, fx, fxedu, gbp, gold, interest, interest rate, interest rates, invest, Japan, jpy, Kiwi, live, loonie, lower, market, Mike Conlon, new zealand, news, nzd, oil, pound, practice, practice account, rate decision, RSI, sentiment, stock, time, trade, trader, trades, trend, unemployment, USD, Yen

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July 18, 2011

No Stress Relief!

Filed under: Forex News — Tags: aud, cad, fear, interest, interest-rate, interest-rates-, japan, kiwi, new zealand, pound, practice, week, yen — admin @ 6:49 am

Last Friday’s Euro Bank Stress Tests have come and gone and have the left the markets feeling unsatisfied as fears have not been assuaged. The major problem of how a sovereign default would affect these banks has been largely ignored, which means that the tests are ineffective.

Meanwhile, we are no further along in the debt ceiling talks here in the US, which adds additional uncertainty to the mix and makes for a risk-averse investing environment. As we would expect in a risk-averse environment, gold is reaching new nominal all-time highs, trading over $1600, as the additional threat of QE3 has the inflation hawks squawking.

The Swiss franc, US dollar, and Japanese yen are all higher as well, with oil and the commodity currencies trading lower, as well as stock markets around the globe.

Two countries moving in seemingly different directions with regard to inflation are New Zealand and the UK. In New Zealand, CPI data came in hotter than expected, showing inflation of 5.3% vs. an expectation of 5.1%, and in the UK, home prices fell 1.6% last month.This means that there is the possibility that the RBNZ may have to “normalize” interest rates (hike), while the BOE is content to do nothing. If QE3 pops up here in the US though, look out!In the forex market:

Aussie (AUD): The Aussie is mostly lower on risk aversion as world markets are lower to start the day ahead of tomorrow’s release of the RBA rate policy meeting minutes. The market expects the next move in Australia to be a rate reduction, rather than a hike at this point in time.

Kiwi (NZD): The Kiwi is mostly lower though seeing some strength as CPI data came in hotter than expected. In addition, the Performance of Services figure also came in better than last month showing signs that the NZ economy is improving and that a return to “normalized” rates may be necessary to thwart inflation after the RBNZ lowered more recently in response to the devastating earthquakes.

Loonie (CAD): Tomorrow’s rate policy decision is expected to produce no change to interest rates, leaving them steady at 1%. Wednesday’s monetary policy report could give some further clarity, but expect the Loonie to trade on risk themes and with oil prices, as well as US economic data. CPI data is due out on Friday.

Euro (EUR): While there is some ancillary data due out this week on manufacturing, we all know that the market will be focused on the bond yields of the periphery countries and whether contagion spreads to Spain and Italy in a big way.

Pound (GBP): The Pound is mostly lower after house prices came in lower than expected, but the big news this week will be the release of the BOE rate policy meeting minutes which will show if they have any concern about inflation at all, or if they will continue to allow austerity alone to hopefully bring prices lower. Retail sales figures on Thursday will show how citizens are responding to the economic times. (Click chart to enlarge)

Swissie (CHF): The Swissie continues to be the safe haven currency of choice for the moment, and new highs vs. the Euro at 1.14 have already induced the calls for parity and SNB intervention. Economic expectations figures are due out on Thursday. (Click chart to enlarge)

Dollar (USD): The Dollar is higher on risk aversion though overall sentiment is for weakness with the debt ceiling debate and the possibility of QE3 on the table. There is a slew of housing data due out this week which is likely to show continued weakness, but US corporate stock earning have been coming in better than expected which could balance out the weaker economic data.

Yen (JPY): Congrats to Japan for winning the women’s World Cup, though that happiness may be short-lived if the Yen continues to strengthen. Expect the Yen to continue to trade as a proxy for risk, and for BOJ officials to try to jawbone it lower if given the chance.

This week is apparently setting up as just more of the same. Euro bank stress tests from last week were essentially a joke, and the US is no closer to a debt ceiling resolution as the clock continues to tick.

Meanwhile, corporate stock earnings here in the US have been pretty good to start out and with week monetary policy in place markets could rally if either the US or Euro zone can get their house in order.

While no one is expecting a solution to either problem to happen overnight, meaningful progress needs to be made to show the markets that solutions do indeed exist and that they may actually happen despite the political climate.

Otherwise, these politicians will be fighting over smoking embers as the whole system will come crashing down!

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, commodity, course, currenc, currencies, currency, currency market, currency trading, data, dollar, dow, economic, economy, EUR, Euro, fear, forex, forex market, free, fx, fxedu, gbp, home, Il, interest, interest rate, interest rates, invest, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, new zealand, news, nzd, oil, pound, practice, practice account, RSI, short, ssi, stock, time, trade, USD, Yen

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June 8, 2011

Bubble Ben Bungles!

Filed under: Forex News — Tags: economic, interest, markets, politicians, practice, practice account, risk-aversion, yen — admin @ 7:31 am

Yikes! I guess I was mistaken in my assessment that Fed Chairman Bernanke wouldn’t say anything “dumb” at yesterday’s speech. It wasn’t so much what he said but how he said it. While Bernanke is known as an academic and a reluctant public figure, his mumbling, stumbling, and bumbling through the Q & A session did not inspire confidence in the least.

While we all know that the US and the global economy are weakening, we need real leadership to guide us through these troubling times. Unfortunately, Bernanke is out on an island by himself, and he is getting no help from the politicians in Washington DC. Trying to solve our nations economic woes with monetary policy alone will not work. Period. Until we get our fiscal house in order, we will always be teetering on the edge of the cliff. Where is the leadership?In the Euro zone, German Industrial production figures came in lower than expected, and another ratings agency stated that indeed a rollover of Greek bonds would constitute a default. Let’s not forget that a default will trigger a massive event, led by credit default swaps (CDS) which were termed “financial weapons of mass destruction” and greatly contributed to the economic collapse of 2008. GDP figures came in as expected.

The Fed’s Beige Book report is due out later today but will tell us what we already know, that the economy is weakening. The powers that be are attempting to pass this off as a “soft patch” so that their summer vacations can go interrupted.

Later today we will get New Zealand’s interest rate decision, which is expected to produce no change. Tonight will bring Japan’s GDP figures, and as the Yen strengthens the talk of Bank of Japan monetary intervention increases.

Tomorrow is the rate decision in both the Euro zone and the UK.

So the markets are trading lower this morning on risk-aversion, as the outlook continues to worsen.

In the forex market:

Aussie (AUD): The Aussie is trading lower on risk aversion ahead of tomorrow’s employment report, holding support currently just above 1.06 vs. USD. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is lower on risk aversion as well and this afternoon’s RBNZ rate decision is unlikely to produce a change in policy or a hawkish statement. A weaker Kiwi will be desirable in the event of a global slowdown.

Loonie (CAD): The Loonie is mostly lower on lower oil prices and risk aversion despite the fact that housing starts came in better than expected, posting gains 183.6K vs. an expected 182K. While these are not world-beating numbers, anything positive is welcome at this point.

Euro (EUR): The Euro is mixed to lower as GDP figures came in expected showing moderate growth of 2.5%, though German industrial production figures came in lower than expected. The potential resolutions to the Greek debt crisis are being met with scrutiny, and not all members of the Euro zone are on the same page. (Click chart to enlarge)

Pound (GBP): The Pound is mostly lower ahead of tomorrow’s rate policy decision as Moody’s suggested that the UK’s current credit rating may be in jeopardy. No change is expected for tomorrow’s release.

Swissie (CHF): The Swissie is strong today as dual effect of risk-aversion and an unemployment report showed a rate of 2.9% unemployment are increasing demand.

Dollar (USD): The Dollar is stronger on the safe haven demand despite the weakening economic picture here in the US. If we don’t start to tackle the fiscal side of the equation, we may be in big trouble.

Yen (JPY): The Yen is the strongest today on risk aversion as carry trades are un-wound and tonight’s GDP release is expected to show negative growth. While this is no surprise after the natural disasters that hit them, it appears as though the calls for BOJ intervention may not be worrisome to the markets.

Poor Bubble Ben. The guy is getting no help from Washington DC and is the unfortunate whipping boy for all that ails us. Nevertheless he is doing all he can given the circumstances.

While I give him a lot of heat for the decisions he makes, he is merely reacting to the lack of leadership in government today. I think yesterday’s Q & A session was very telling, and he may not be getting a lot of sleep at night these days.

There are tougher times ahead for us, the longer we continue to extend and pretend is only going to make it worse.

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, cad, course, currenc, currency, currency market, currency trading, dollar, dow, economic, economy, EUR, Euro, forex, free, gbp, Il, interest, jpy, Mike Conlon, nzd, practice, practice account, ssi, time, trade, USD, Yen

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June 6, 2011

Now What?

Filed under: Forex News — Tags: account, cad, course, currencies, currency, currency trading, economy, euro, forex, forextrading, market, party, practice, usd — admin @ 7:20 am

After Friday’s dismal jobs report, it may be lucky that there is relatively little economic data due out from the US as all signs point to a weaker economy. Nevertheless the “Fed Heads” will be out in full force this week, attempting to obfuscate the situation to the best of their limited abilities with various speaking engagements on the state of the US economy.

Around the globe, this week will bring many rate policy decisions with no one expected to change policy this time around. Australia kicks off the party tomorrow, followed by New Zealand on Wednesday afternoon, and then the Euro zone and UK on Thursday. It should be noted that the UK rate policy decision which will be the only one that does not have an accompanying statement.

Japanese GDP is also due out this week and while it is expected to come in negative as a result of the effects of the natural disaster, recent Yen strength could prompt the BOJ to attempt to further ease monetary conditions to jump-start the economy.

Stocks and commodities are lower to start the morning, though I could see this turning around as there relatively little to derail sentiment and now that the bad news about the US and global economy has been digested, what’s left to do?

This week’s market action may be an important harbinger of things to come if Dollar weakness and risk appetite return to the market because this may mean the continuation of QE2 well into the second half of the year.

In the forex market:

Aussie (AUD): The two big pieces of news that highlight the Australian economy this week are tomorrow’s rate policy decision (and accompanying statement) and Thursday’s employment report. While no change is expected this time, expectations are increasing for a rate hike at the next meeting. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is mostly higher on yield-seeking ahead of Wednesday’s rate policy decision. While no change is expected, don’t forget that the most recent rate reduction was in direct response to the earthquakes and as the economy recovers, a return to a more “normalized” level may be appropriate.

Loonie (CAD): With oil below $100 and Canada’s largest trading partner (the US) looking extremely weak, the Loonie has been selling off as of late. The big news for Canada this week will be Friday’s employment report.

Euro (EUR): An election over the weekend ousted the Portuguese PM Socrates which could potentially affect bailout discussions among the Euro countries needing assistance. While the Greek situation is still lingering, signs point to a resolution sooner than later. Euro zone PPI data came in slightly higher than expected, and Thursday’s rate policy decision should produce no change despite inflationary pressures. It is interesting to note that CPI data is due out on Friday AFTER the rate decision. (Click chart to enlarge)

Pound (GBP): The UK rate decision on Thursday is expected to produce no change and is likely to be less of a factor than the other announcements as the market will have to wait for the release of the BOE meeting minutes to get a better understanding of the decision as there is no accompanying statement.

Swissie (CHF): Want to know why the Swiss franc is one of the most sought after safe-haven currencies? Wednesday’s unemployment rate figures should give you a clue as it is expected to come in at 3%. By contrast, the US unemployment rate is more than 3x that figure.

Dollar (USD): I think Friday’s NFP really summed up the situation here in the US succinctly—stagnation. With little economic data due out this week, Fed speak will rule the week with the usual contradictions.

Yen (JPY): All eyes will be on the release of Japanese GDP figures which could be a catalyst for BOJ action if they come in worse than expected. While it is no surprise that the Japanese economy has been weak as a result of the natural disasters, a strengthening Yen is not desirable at this point.

When governments enact temporary solutions and don’t actually fix the long-term problems, it should be no surprise to anyone that growth and recovery is temporary as well. In today’s instant information gratification society of social media, government tactics intended to shift sentiment and fool people into taking action no longer work.

So where does that leave us now? Well, the majority of the gains that have been realized so far in the stocks and commodities markets have taken place without the individual investor on board. With continued Dollar weakness, people have to find a place to invest and the negative returns of owning Dollars no longer out-weigh the risks that are present in the market.

This summer may be a slow one as investors weigh risk sentiment, but I expect the strong to continue to be strong and the weak to continue to weaken.

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, time, USD, Yen

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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!

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May 25, 2011

The Saga Continues!

Filed under: Forex News — Tags: account, bank, cad, course, currency, forex, free, government, japan, practice, risk, trade, yen — admin @ 7:02 am

Overnight, the Euro was lower and tested support vs. USD at 1.40 after a rumor was floated that Greece was going to have a “snap election” which would essentially allow the public to weigh in on the austerity measures. This rumor has since been denied, but it is obvious to see how this could have a negative effect on the Euro as it is highly unlikely Greek voters are supportive of these measures. As a friend of mine likes to say, ” 100% of the people enjoy a free lunch!”

With little other news emanating from the Euro zone, our attention has turned to the UK and the release of its GDP figures which came in as expected. While personal consumption was lower, exports were higher making up for the lack of domestic demand.

In Japan, trade deficit figures rose the fastest in nearly 2-years though this was expected as the supply-chain disruptions that occurred as a result of the natural disasters there have hurt exports. However, the BOJ is apparently ready to boost lending to help in the rebuilding effort, mostly likely in coordination with further government spending.

US durable goods orders are due out later this morning and are expected to show a decline of some 2% and the home price index is also expected to show declining prices. With economic expectations this low, the worst might already be factored in.

Stocks are slightly lower to start the morning as is oil, though gold is trading higher.

In the forex market:

Aussie (AUD): The Aussie is lower across the board as mild risk aversion and a lower than last month leading indicators index have reduced demand.

Kiwi (NZD): The Kiwi is mostly higher despite the risk aversion as it is still catching a bid from yesterday’s inflation expectation report.

Loonie (CAD): The Loonie continues to move lower as oil retreats and the market expectation is that slowing growth will keep the Bank of Canada from raising rates any time soon. (Click chart to enlarge)

Euro (EUR): The Euro was lower but has since bounced higher after the rumor of the snap election was squashed by Greece. Allowing the fate of Greek austerity to be determined by the populace would be disastrous.

Pound (GBP): The Pound is mostly higher after GDP figures came in as expected showing .5% quarterly growth and 1.8% YoY. Private consumption figures came in lower at -.6% vs. an expected gain of .1%, but this was largely offset by exports which were up 3.7% vs. an expected 2.1%.

Dollar (USD): The Dollar is showing strength this morning after durables goods orders came in worse than expected, showing a decline of 3.6% vs. the expected decline of 2.5%. This may invoke further risk aversion as the trading day moves forward, but the house price index due out later this morning could surprise.

Yen (JPY): The Yen is mostly weaker as trade balance figures showed a deficit, though not as bad as had been expected. It is widely assumed that the Bank of Japan will take further action to help the economy re-build, though they may wait to coordinate with the government on further spending. (Click chart to enlarge)

So far this week, not much has changed. The risk in the marketplace is still looming, there is nothing positive coming out of the Euro zone regarding the debt crisis, and the economic data continues to point to a slowing global economy.

It is always times like this that put me on heightened alert as I hate to wait. The uncertainty of the situations and the fact that the various currency pairs are trading at critical levels means that sentiment may be about to shift as we breach these support and resistance levels.

For now, it looks as though the markets will trade around these levels until the next significant piece of news can establish a market direction. What that news will be is anyone’s guess, and it may not be something as obvious as what we know about today. While the Euro debt crisis is likely to drag on for some time, it will be interesting to see if the summer trading season brings opportunity or disinterest.

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, Il, interest, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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May 10, 2011

Euro Danger!

Filed under: Forex News — Tags: a-great-deal, australia, commodities, course, fire, forextrading, free, greece, jpy, mike conlon, practice, prices-as-there, ssi, trade — admin @ 7:27 am

Where there’s smoke, there is fire and it is no different for the Greece and the Euro zone. The stories that are being floated insinuate everything from Greece leaving the Euro zone, restructuring debt, or receiving further bailouts. At this point it is difficult to determine what is actually going to happen, but one thing is clear: Greece is in need of help.

Yesterday S&P poured gasoline on the fire and downgraded Greece’s credit rating again, and the current rates Greece would have to pay to re-finance are not feasible in the market. So there is heightened structural risk for the single currency.

In the UK, retail sales figures came in better than expected, but the market is looking ahead to tomorrow’s GDP estimate, which is likely to set the bar low so that the BOE can act surprised when it comes in “better than expected”.

China’s trade balance figures came in better than expected with better exports and worse imports. If they cared to have a stronger Yuan as I mentioned yesterday, perhaps they would be willing to buy more of other people’s stuff. Chinese CPI data is due out tomorrow and there is an expectation that they will raise rates again to try to slow growth.

Oil prices are lower to start the day, as the CME raised margin requirements for oil, but stocks and other commodities are trading higher.

In the forex market:

Aussie (AUD): The Aussie is mixed despite better than expected trade balance figures as the potential for a Chinese slowdown could affect Australia greatly.

Kiwi (NZD): The Kiwi is mostly lower after the IMF came out and said that the Kiwi was over-valued by roughly 20%. Thanks guys! (Click chart to enlarge)

Loonie (CAD): The Loonie is mostly higher today despite lower oil prices as the soundness of the Canadian economy is has been highlighted today after last week’s elections which the market perceives as adding to fiscal responsibility.

Euro (EUR): With all that is going on with Greece, it’s easy to lose sight of the fundamental data that still exists. Tomorrow will bring CPI data and Friday will be the GDP report. The Swiss franc is lower today as CPI data came in less than expected.

Pound (GBP): The Pound is mostly lower as the market is expecting tomorrow’s GDP estimates to be reduced, despite today’s better than expected retail sales figures which showed a gain of 5.2% vs. an expectation of 2.5%. How much longer the UK can deny better than expected data is anyone’s guess. (Click chart to enlarge)

Dollar (USD): The Dollar is showing some strength today despite higher stocks and commodities (except oil) prices as there is still some risk from the Euro zone pushing the safe-haven play.

Yen (JPY): The Yen is lower across the board as the Nikkei was higher on better than expected stock earnings which out-weighed Euro debt concerns.

While there is certainly a great deal of risk in the marketplace emanating from Greece and the Euro zone, the market doesn’t seem to be overly concerned about it. While everyone expects some sort of resolution to be forthcoming, the way in which it is handled could have a major impact.

As I mentioned above, there are many different competing financial interests that could be affected by different outcomes, and the ECB should have come up with a credible plan for Greece (and the others) long ago, as no one expected these problems to just disappear.

But without them we would have little to talk about so the outcome will be important going forward. But I don’t expect Greece to leave the Euro zone, nor do I expect to see a major restructuring of debt. What is most likely is that Germany will reluctantly agree to further aid, and the IMF will get Greece more favorable terms.

However until this occurs, it is wise to be cautious.

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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May 2, 2011

Bin Laden Bounce!

Filed under: Forex News — Tags: a-and-various, account, aud, aussie, cad, economy, morning-as-home, nzd, practice, time, whether-or-not — admin @ 1:09 pm

Overnight it was revealed that Osama Bin Laden has finally been brought to justice and was killed by US forces. The sense of relief that came over the markets may be short-lived however as there are still many sources of risk in the global economy, each posing a different threat.

Oil sold off immediately on the news and stocks are higher to start the day and while this certainly is an important development, it may not be enough to reverse recent trends. Those trends of course are a weak US dollar and higher commodity prices, especially oil.

This week there are a few rate policy decisions that we need to keep an eye on: Australia on Tuesday and Europe and the UK on Thursday.

In addition, the US Non-Farm Payrolls report is due out on Friday and this leading indicator may show whether or not the economy is on the mend. It is expected that we will add 190K jobs and that the unemployment rate will remain steady at 8.8%.

With the end of QE2 coming next month, it will be interesting to see if the old market adage, “sell in May and go away” has any merit.

In the forex market:

Aussie (AUD): The Aussie is mostly lower despite the risk appetite in the market as home prices came in lower than expected. This comes a day ahead of the RBA rate policy meeting where it is expected that they will leave rates unchanged at 4.75%. The Aussie eclipsed 1.10 vs. USD earlier this morning. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is mixed as well as the US dollar is picking up a little strength this morning as commodity prices are lower to start the day. Employment figures are due out in New Zealand on Wednesday.

Loonie (CAD): The Loonie is mostly lower as oil prices have pulled back from recent highs on the Bin Laden news. However, it must be noted that oil is still trading above $112. Canadian employment figures are due out on Friday.

Euro (EUR): Euro zone PMI figures came in this morning better than expected and Thursday’s rate policy decision will be important as even though there is no change expected, the accompanying statement could provide more clarity into whether or not the ECB will tighten further in the ensuing months. (Click chart to enlarge)

Pound (GBP): The Pound is mixed this morning as home prices stayed steady in the UK, halting previous declines. The BOE rate policy decision on Thursday is also expected to yield no change but unlike the ECB, there will be no policy statement so this decision may have less impact than that of the ECB.

Dollar (USD): It is always good to get news that can give people hope however once the reality of current economic conditions comes back into focus, there could be continued worry. The Non-Farm payrolls report due out on Friday will be an important metric to watch, but stocks and commodities prices may ultimately tell the story.

Yen (JPY): The Yen is weaker across the board as some sense of risk-taking has reduced demand for the safe haven. The Nikkei average made it back to just over 10K for the first time since the natural disaster took place.

While it is definitely a bittersweet moment to know that Osama Bin Laden is no more, it would be a major mistake to think that terrorism has ended. There is still considerable risk in the world today, and the conflict in Libya and various other regions remind us of it daily.

While a slowing economy here in the US is a major problem, commodity price inflation due to loose monetary policy may be a bigger detriment. The US dollar has been the worst-performing currency over the last three months so this is no coincidence.

Whether or not the end of QE2 will bring about further declines is anyone’s guess at this point but one thing is certain: there may be some bumps and bruises to the economy once the training wheels are removed and it will be interesting to see if the economy can function on its own!

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!

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April 27, 2011

Fed Fun!

Filed under: Forex News — Tags: aud, bernanke, chairman, currency trading, economy, fiscal, fomc, fxedu, intellectual, markets, practice, ssi, transparency, usd — admin @ 12:14 pm

Today all eyes and ears are on the FOMC meeting and the new “format”, where Fed Chairman Bernanke will hold a Q&A session after the release of the interest rate decision. So make not of the time changes, as the rate decision has been moved up to 12:30 EST, with the press conference to follow at 2:15 EST, which was the old rate decision time.

It will be extremely interesting to say the least to see how this goes and whether or not Bernanke is a better salesman than the market believes. It is no secret that QE2 has been wildly unpopular with the public and that indeed it has been responsible for higher commodities prices despite the intellectual dishonesty surrounding that fact.

However, what QE2 has also done is help stabilize asset prices so that the economy did not become over-ridden by deflation. Bernanke is essentially acting alone to help the economy from a monetary policy perspective, as politicians in Washington have done virtually nothing on the fiscal policy side. Considering this, perhaps Bernanke is under-appreciated and the scape-goat in the whole sordid mess.

Overnight in the UK, GDP figures came in as expected with strength in the services sector showing promise that the economy is improving, and all but erasing last quarter’s contraction.

In Australia, CPI data came in hotter than expected and even thought the RBA said they wouldn’t raise rates despite inflation, they may be forced to re-think that policy.

So the markets are in mild risk-taking mode ahead of the FOMC meeting today, with both stocks and commodities higher to start the day.

In the forex market:

Aussie (AUD): The Aussie is higher across the board as CPI data came in hotter than expected, showing a gain of 3.3% vs. an expectation of 3%, with the quarterly figure gaining 1.6% vs. an expected 1.2%. While it is no secret that there is inflation in Australia, this figure may cause the RBA to re-think it stance that it wouldn’t raise despite inflation concerns. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is also higher against all but the Aussie as risk appetite has increased. In addition, both business confidence and activity outlook figures came in better than expected. The RBNZ rate decision is due out later this afternoon.

Loonie (CAD): The Loonie is mostly lower despite higher oil prices as it appears as though rate differential expectations are somewhat muted between the commodity currencies.

Euro (EUR): The Euro is mostly higher as Dollar weakness is driving markets ahead of today’s FOMC. With relatively little news today, the Euro should continue to trade opposite the Dollar.

Pound (GBP): The Pound is higher across the board as GDP figures came in as expected, showing a gain of .5% for the first quarter which essentially negated last quarter’s contraction. The YoY GDP grew at 1.8% as expected, but the highlight of today’s data may have been the increase in the Index of Services which grew at the largest clip in nearly 5 years and represents underlying strength in the UK economy. (Click chart to enlarge)

Dollar (USD): The Dollar is mostly lower ahead of today’s FOMC meeting. While volatility is expected as the market weighs in on every word spoken by Bernanke, he will try to stick to the script as much as possible.

Yen (JPY): The Yen is weaker across the board as retail sales figures came in lower than expected, showing a decline of 7.7% vs. an expected decline of 4.7%. While the effects of the natural disaster are largely to blame, S&P decided to pile on and downgraded the Japanese debt outlook to negative.

Yesterday I wrote about the transparency vs. honesty debate going on today with regard to monetary policy and how Bernanke is basically doing all he can despite no help from the fiscal policy side of the equation.

This doesn’t change the fact that current monetary policy is responsible for commodity inflation not just here but around the globe and that the US economy is not nearly as healthy as some would like you to believe. As better than expected stock earnings continue to pour in, the overall malaise affecting the economy cannot be discounted.

This new format for the Fed could be either a blessing or a disappointment, depending upon how honest the Fed Chairman decides to be. My guess is that while volatility surrounding the press conference is expected, it could end up being much ado about nothing.

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!

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April 18, 2011

A Familiar Game!

Filed under: Forex News — Tags: a-light-week, a-raised-the, course, economy, euro, free, jpy, practice — admin @ 1:02 pm

The markets are starting the week lower as risk aversion is dominating the action in this holiday-shortened week. In what has become a familiar scene, oil is trading lower as it gets bid up on Friday’s as market participants do not want to go short over the weekend as the risk in the Arab countries is still present.

Adding to risk sentiment are the usual Euro debt crisis rumors, which propose that rate hikes are going to cause Greece and Ireland to default. While this has to be a concern for the ECB, I’m surprised that more clarity isn’t being proffered. Perhaps some Euro weakness in the face of rising rates would be just what the ECB is hoping will happen.

In an attempt to slow down inflation, China raised the reserve requirements for banks again which is intended to curb lending.

Overnight, New Zealand reported CPI data that showed that inflation increased slightly less than expected. In the UK, asking prices for homes came in higher as lack of supply and overall inflation contribute to seller confidence. I guess it doesn’t hurt that London has become the “preferred destination” of former Arab dictators so the market could remain strong for some time.

It will be interesting to see if the US market can shake off the lower start and turn it around by the end of the day. Recently, the US market has seemed immune to negative news and keeps going higher, as Bernanke’s dollar destruction leaves traders few other alternatives.

In the forex market:

Aussie (AUD): The Aussie is mostly lower on risk aversion, but is faring better than the other commodity currencies due largely to its interest rate differential. The minutes from the RBA rate policy meeting are due out tomorrow, which I expect to have a dovish tone as a result of the recent run-up.

Kiwi (NZD): The Kiwi is lower across the board as CPI data came in lower than expected, perhaps dampening hopes of a rate hike any time soon. CPI showed a quarterly increase of .8%, pushing the YoY number to 4.5%, vs. expectations of 1% and 4.6% respectively. (Click chart to enlarge)

Loonie (CAD): The Loonie is also lower as oil has pulled back a day ahead of the release of CPI data. While Canada has not been seeing the inflation that some other regions have, building permits and housing starts figures will show whether or not the economy is moving forward.

Euro (EUR): The Euro is lower against all but the Kiwi as the rumors of a Greek debt restructuring and a possible block of aid to Portugal are making the rounds. PMI data is expected to contract slightly, and PPI data is expected to increase. (Click chart to enlarge)

Pound (GBP): The Pound is mixed under what would be considered a “normal” risk aversion day despite the fact that home asking prices came in higher than expected. The BOE rate policy meeting minutes will be released on Wednesday which could show increased worry over inflation. Retail sales figures come out on Thursday.

Dollar (USD): The Dollar is mostly higher on risk aversion, and Friday markets are closed here in the US. It’s a light week for news in the US, without today bringing some Fedspeak at various locations, and the Philly Fed is due out on Thursday, which could see higher volatility as we have a long market weekend.

Yen (JPY): The Yen is higher across the board on risk aversion as Asian markets were down over night. Trade balance figures are due out on Tuesday night, and I am a little surprised to see Yen continue to strengthen considering the major economic challenges they are facing.

We’ve seen this one before, folks. The markets push both oil prices higher on Friday’s because of the risk in the marketplace and when nothing significant happens, it sells off going into Monday. This helps take markets down (which isn’t a bad thing), and then US stocks tend to rebound to start the week. Rinse and repeat.

Except there is going to be the time when this game does not work, and the selling that starts the day could bring about a “big one”. The markets have been so pumped up on Fed easy-money steroids that sooner or later the bubble is going to burst. What the exact catalyst will be is anyone’s guess but at this point these markets are climbing the “wall of worry.”

In times like these it makes sense to proceed cautiously as no one knows where or when the next risk event may come from.

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, fxedu, gbp, Il, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, USD, Yen

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