Ssi | Forex Blog

June 28, 2011

The Final Countdown!

Filed under: Forex News — Tags: austerity, australia, currenc, currency, economy, eur, jpy, ssi, trade — admin @ 7:14 am

The market is in a bit of a holding pattern today as the countdown to the Greek vote on austerity is due in the next 24-hours, and as I have mentioned before, this is most certainly not a done deal. Protests in the streets of Greece (riots) have demonstrated the displeasure with the austerity measures and all it would take is a few votes against the austerity to sink the Euro.

Contagion is a much larger concern than Greece itself, which only represents some 3% of the Euro zone economy. If the Greeks end of not accepting the measures and end up defaulting, then this could set off a downward spiral which the Central bankers may not be able to prevent. So there is still a good deal of risk in the marketplace, and this is reflected so far this morning with lower equity prices and mild risk aversion to start the morning. But overall, the markets appear confident that this deal will get done, and that Greece will live to fight another day.

In the UK, GDP figures came in showing a decline in GDP to 1.6% from an expected 1.8%, though the quarterly number came in as expected at .5%. Yesterday noted BOE dove Adam Posen dismissed the BIS call for higher interest rates as “nonsense”. I guess he doesn’t consider 4.5% CPI data as inflationary and cites lower wage growth as reason enough to be dovish.

Later this morning the Case/Shiller home price index is due out and is expected to show declining home prices of around 4%, though consumer confidence figures are expected to have risen from last month’s reading.In the forex market: Aussie (AUD): The Aussie is now higher as the markets have just flipped from risk aversion to risk taking without a major catalyst that can be identified. It should be noted that there is now sentiment in the market that next move for the RBA in Australia may be a rate reduction rather than a rate hike as China attempts to slow their growth. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is mostly lower after yesterday’s trade balance figures came in lower than expected, but there is additional sentiment that the recovery in Christ Church after the earthquakes has been slowing.

Loonie (CAD): The Loonie is mixed as higher oil prices trading up to a 92 handle have counter-balanced the weak US economic outlook that is causing some US dollar selling this morning. Tomorrow CPI data will be released which could show inflationary pressure.

Euro (EUR): The Euro is mixed as all eyes are on the Greek vote for austerity as riots in the streets of Greece are taking place. Tomorrow will bring German CPI data but this is of little importance in the grand scheme of things.

Pound (GBP): The Pound is mixed after GDP figures came in lower than expected showing that stagflationary forces may be rearing their ugly head. BOE dove Posen’s comments may not be so far-fetched if the economy continues to worsen. (Click chart to enlarge)

Swissie (CHF): The Swissie is higher across the board as money flows from the Euro to the safe haven currency with the risk of the Greek vote in full force.

Dollar (USD): The Dollar is actually weakening at this point despite the risk in the market as investors want to get in one more day of risk-taking going into the Greek vote. Home price figures are expected to show declines later this morning, though consumer confidence is expected to be up from last month.

Yen (JPY): The Yen is mostly weaker but not by much as risk is still prevalent in the marketplace. Retail trade figures came in better than expected showing gains of 2.4%, but big box retail sales decrease by that same amount.

The Greek vote is expected tomorrow morning and represents the single largest risk event currently in the markets. The US debt ceiling debate is also something to be concerned about, but that discussion is for another day.

It is no secret that economies are contracting around the globe, however the days of extend and pretend are over and it is time to face the harsh realities. Look no further than what is taking place in Greece as a microcosm for the global economy.

What happens if the citizens of the UK decide that they have had enough of 4.5% inflation even though the BOE continues to avoid dealing with it for fear of sinking the economy? Or what happens if the confidence in the full faith and credit of the US is called into question if the debt ceiling debate can’t be resolved?

These are all precarious positions which need to be handled by governments and not avoided. Unfortunately, most wait until there is a crisis to provide political cover for making difficult choices which can have negative effects going forward.

So keep an eye on this Greek vote and mitigate your risk exposure.

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

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June 15, 2011

Quick Turnaround!

Filed under: Forex News — Tags: cad, chinese, dow, eur, fire, free, marketplace, risk, ssi, unemployment — admin @ 6:29 am

Well that was short-lived. All of the relief from yesterday’s Chinese economic reports can basically be thrown out of the window as leaders in the Euro zone can’t seem to get there act together. In what has been become a spectacle that would make Sophocles proud, the Greek debt crisis has appeared on all stages: first starting as a drama, then becoming a tragedy, then a comedy, then back to drama, now approaching tragedy again!

Yesterday’s emergency meeting of leader failed to produce anything and the major outcome that was reported was “bickering”. EU leaders need to come up with a solution by the end of the month in order for Greece to secure an IMF payment which could be withheld if no action is taken. Germany is still insisting on measures that would constitute a default, and no resolution appears close.

It is patently clear that Germany is the obstacle in this process and while bailouts aren’t my cup of tea, if they want to save the Euro then they need to compromise. Germany stands the most to lose in this entire ordeal, so in my opinion they are negotiating from a position of weakness and not strength. Stay tuned for this one!

In the UK jobless claims came in three times higher than expected and wage growth has slowed though the unemployment rate has remained steady at 7.7%.

US CPI data is due out later this morning and is expected to vindicate Bernanke as fuel costs have come down. Yesterday’s regalia of Bernanke and the Fed may have stolen the headlines from the re-opening of “Spiderman” on Broadway as the best staged event of the day!

So the markets have started the day in risk aversion mode, with stocks and commodities lower around the globe. Lost in yesterday’s excitement over tame Chinese CPI is the fact that raised bank reserve requirements in an attempt to slow their economy.

In the forex market:

Aussie (AUD): The Aussie is higher to start the morning despite the risk aversion in the marketplace. Yield-seekers see a positive economy and the RBA honcho’s conflicting comments that inflation was more likely than not could foreshadow a possible rate hike. New dwelling starts rose 3.1% vs. an expectation of a decline of .8%. (Click chart to enlarge)

Kiwi (NZD): The Kiwi is lower across the board despite a much better reading of consumer confidence from last month. Considering that they were dealing with an earthquake last month, this was to be expected. Risk aversion and money flows are putting pressure on the Kiwi.

Loonie (CAD): The Loonie is mixed despite lower oil prices to start the morning. The fate of the Loonie lies somewhat with the US CPI data and what the market response to the release may be.

Euro (EUR): The Euro has given back all of yesterday’s gains and then some. While Euro zone industrial production figures came in better than expected, the problems with the Greek debt crisis are weighing heavily on risk in the markets. (Click chart to enlarge)

Pound (GBP): The Pound is mostly lower after jobless claims came in showing an increase of 19.6K vs. an expectation of 6.5K. While the UK economy is definitely slowing, how the avoid stagflation is anyone’s guess.

Swissie (CHF): The Swissie is mixed as its safe-haven properties are counter-balanced by the sentiment that the SNB will not raise interest rates due to recent franc strength. Declining import prices reflect Swissie strength.

Dollar (USD): The Dollar is higher across the board as risk aversion ahead of this morning’s CPI data release and specific Euro weakness are driving demand. Should inflation come in less than expected, pressure for higher rates would abate.

Yen (JPY): The Yen is surprisingly mixed this morning as well, as risk aversion has increased demand, yet not enough to unwind carry trades. With the risk coming from Europe, it appears as though money flows are driving price action. The Nikkei was actually higher last night, the only major market index to post gains.

As you can tell by now, sentiment in the marketplace can shift on a dime and there is still major risk around the globe. Some days the positives are emphasized (like yesterday), while others the negatives shine through.

The problems in Europe are too great and the Greek situation may be a microcosm of what is really taking place. Germany is playing with fire in this situation and ultimately they might end of getting burned before they drag everyone else into the fire.

While the rest of the globe has a “wait and see” attitude at this point, European leaders essentially have 2 weeks to get this figured out. So while the only fireworks expected this summer should occur on July 4th, there may be other “independence” celebrations taking place.

Of course this bound to bring about a lot of pain as well, and certain market volatility. So don’t take time away this summer, as the action may be too great to miss!

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

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

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

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June 14, 2011

Chinese Growth Steady!

Filed under: Forex News — Tags: account, cad, currency, currency trading, current, despite, dollar, earthquakes, economy, japan, market, retail, ssi, usd, yen — admin @ 6:30 am

Overnight, news out of China that CPI figures came in as expected was a welcome relief to the markets. Inflation in China rose 5.5%, and in industrial production figures came in as expected, posting a gain of 14%. Retail sales figures were slightly lower than expected, coming in at a gain 16.9%.

The fear was that if inflation came in higher than expected in China, the Central bank would raise interest rates to try to slow growth. If Chinese growth slows, then the global economy is in BIG trouble. Think about these figures for a moment. Everything is showing double-digit gains, with retail sales figures growing close to 17% YoY. Contrast that with the US advanced retail sales figures due out later this morning which are expected to decline by .5%.

You tell me which economy is more important to the world right now?

Another piece of news that had the potential to move markets was the release of the UK CPI data, which also came in as expected showing headline inflation of 4.5%, with core inflation coming in better than expected at 3.3% vs. an expectation of 3.5%. At this point it is apparent that the BOE is content to allow this extraordinary inflation (by UK standards) to persist with the hope that government austerity will reduce demand and cause prices to fall naturally. Sounds like they are heading more toward stagflation to me.

In Japan, the BOJ rate policy decision left policy unchanged, and there was a minor hope that the BOJ would move to be more accommodative to try to help the recovery.

This all adds up to risk-taking in the markets, with stocks trading higher, though commodities are lower.

In the forex market:

Aussie (AUD): The Aussie is higher as steady Chinese growth means it is unlikely that the government will enact slowdown measures which is good for Australian exports. Business confidence figures were slightly lower than last month, but risk appetite is strong to start the morning.

Kiwi (NZD): The Kiwi is higher on risk appetite, shaking off yesterday’s decline after the earthquakes that just occurred. While expectations for the next rate hike have shifted dramatically, as long as China keeps growing the New Zealand economy should recover.

Loonie (CAD): The Loonie is mostly higher despite lower oil prices which are trading at 96 and change. While there is no major news out this week for Canada, expect the Loonie to trade with US economic data, especially if it is weak.

Euro (EUR): The Euro is trading mostly higher despite yesterday’s S&P downgrade of Greece’s credit rating to CCC from B. To be honest, I didn’t even know that that rating exists! This makes Greece the second lowest-rated country of those with ratings. Nevertheless, the market believes that a resolution is forthcoming by the end of the month.

Pound (GBP): CPI data in the UK came in as expected at 4.5%, as did retail prices though home prices fell slightly. The UK still has a persistent inflation problem and the BOE has chosen to allow it to continue in the face of declining economic data. This sounds like stagflation to me. (Click chart to enlarge)

Swissie (CHF): The franc is weaker across the board after the SECO report lower economic expectations for 2012, citing recent currency strength as an impediment to its exports. While growth has been steady for 2011, don’t look for the SNB to raise interest rates on Thursday as they don’t want to contribute to further strength.

Dollar (USD): The Dollar is weaker on risk appetite as we await the release of the US advance retail sales figures and PPI data later this morning. The expectation for a decline in the retail sales of .5% is alarming and indicative of a lack of confidence in the current direction of the US economy.

Yen (JPY): The Yen is mostly weaker on risk appetite and the BOJ left monetary policy unchanged last night. There was a slight expectation that they would ease policy to help with economic recovery, but it may be too soon for that. My guess is that they would wait until supply chains are repaired and factories are back to full capacity before enacting such measures. It doesn’t make sense to weaken now to encourage exports if companies aren’t ready for it. (Click chart to enlarge)

It’s their time now. China and other emerging markets are playing catch-up with the US and Europe and continue to grow at a rampant pace. The US is becoming less important on the global stage as China continues to grow. It won’t be long before the Chinese are able to exert their influence which may or may not be in-line with US interests.

In a nutshell, China has given us the rope to hang ourselves and we’re just about dead. But as long as China keeps growing, the global economy may not care. Politics in Washington are starting to heat up and it is patently obvious that our current path is wrong and unsustainable.

Whether or not we have the will to succeed in the face of adversity used to be undebatable, but now the question must be asked. Are politicians willing to share in the same sacrifice that they are asking of the general public? My heart tells me yes but my head tells me no, which means unfortunately that the US economy will continue to decline.

So invest in areas that seem to be on the rise, and there is no better way to do this than through 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!

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June 10, 2011

Summer Soft Patch?

Filed under: Forex News — Tags: account, aud, australia, cad, chinese, forex, government, jpy, markets, nzd, ssi — admin @ 7:10 am

Or something worse? The talking heads would like you to believe that the weak economic data we are seeing is only transitory and in fact the good times are just around the corner. I’m having a hard time rectifying this sentiment, as it seems like the “good times” are what has been transitory led by the temporary “free money” condition of QE2. Since that time, nothing has changed on the fiscal side of the ledger so I’m not surprised that the delay tactics by the Fed are not working.

The problem with all of these emergency and stop-gap measures is that everyone knows they are fleeting, so this does not change consumer sentiment or behavior. Temporary solutions provide temporary relief, and the complete lack of confidence in politicians to solve our problems is alarming.

But it’s not just here in the US where these issue occur, though we are the worst of the bunch. The ECB had to take the other tack, pressing the individual countries to solve the debt crisis and stating that the ECB would not be expanding its aid to Greece.

In the UK, the data has also gotten worse, with industrial and manufacturing production figures coming in way worse than expected, which may actually vindicate the BOE’s easy money policy. But therein lies the problem—people have caught on to the fact the economies are not healthy because monetary policy is so cheap so they act defensively which causes economic stagnation.

Would the reverse actually occur if Central banks stated raising rates? If you want to fool the people into believe things are well, shouldn’t they be doing the opposite of what they have been doing?

Things aren’t horrible everywhere, though, as China increased its imports by 28.4% showing signs that they may be pushing an agenda led by domestic demand. This will ultimately be a positive for New Zealand and Australia, and possible Japan when they get back on track.

In Canada, the unemployment rate shrank to 7.4% as more jobs were added to the economy, though the participation rate came in slightly lower. So all of this adds up to risk aversion in the markets, with declines in both stocks and commodities.

In the forex market:

Aussie (AUD): The Aussie is lower across the board on risk aversion as well as the fact that recent weaker economic data has shifted the focus more toward the Kiwi and Loonie.

Kiwi (NZD): The Kiwi is actually mostly higher despite the risk aversion as the increase in Chinese imports helps New Zealand’s economy. A fresh all-time high was made earlier vs. USD.

Loonie (CAD): The Loonie is mixed today as lower oil prices and a sputtering US economy put pressure on the currency, yet better than expected employment figures show that the economy is moving forward. Canada added 22.3K jobs vs. an expected 20K jobs gain, and the unemployment rate shrank to 7.4% from an expected and previous 7.6%. (Click chart to enlarge)

Euro (EUR): The ECB has re-assumed the role of parent and not enabler with regard to the member countries and the debt crisis. The message is loud and clear that the inaction over the past year to find a resolution will no longer be tolerated. German CPI data came in as expected and growth projections for the economy were also expanded.

Pound (GBP): The Pound is lower across the board after industrial production figures showed a decline of 1.7% vs. an expected no-change, and manufacturing production figures showed a decline of 1.5% vs. an expected decline of .1%. This is indicative of the weakening economic conditions in the UK. (Click chart to enlarge)

Swissie (CHF): The Swissie is mixed as it’s safe haven properties are causing demand, but less so than the Dollar and Yen as the economic problems in the Euro zone could have a carry-over effect.

Dollar (USD): The Dollar is showing some strength on risk aversion heading into the weekend on the usual “take risk off ahead of the weekend” play. No news out of the US is good news.

Yen (JPY): The Yen is stronger across the board on risk aversion as carry trades are abandoned, at least for the weekend carry. Rumblings of some type of monetary intervention keep making the rounds, and perhaps the market is willing to probe these suspicions by buying Yen.

So is it just a soft patch, or something worse? I have not seen any evidence that would lead me to believe it is the former, as long-term outlooks are still being held back by misguided government policy. So far nothing has changed.

QE2 was intended to buy the government time to make strides toward getting its fiscal house in order, but seemingly they have done nothing. Now that summer season is upon us, these guys in Washington can’t wait to get out of Dodge and retire to whatever golf course they can to avoid the scrutiny of the general public who elected them and are struggling to make ends meet.

Pretty soon election season will be upon us so that means its time to hit the campaign trail which will further delay any type of action. Meanwhile, the economy stagnates and the malaise and lack of confidence grow.

Not quite the recipe for growth, now is it? The beauty of the forex market is that you don’t have to stand idly by and take it! You can invest your hard earned money in the currencies of countries that are committed to solutions and not just kicking the can down the road.

Isn’t time you came to see what the forex market 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!

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June 7, 2011

Enough Already!

Filed under: Forex News — Tags: a-further-hike, a-respite-from, aussie, australia, currenc, economy, eur, gbp, interest, music, ssi, time, trade, usd — admin @ 7:01 am

What I am specifically referring to is the Fed monetary stimulus known as QE2. Chairman Bernanke will speaking today but don’t expect any earth-shattering news to be forthcoming. The FOMC meeting later this month will be important as we may get a better understanding of whether or not the Fed is going to continue its stimulus or stop it entirely.

This is excessive prodding by the Fed is having the reverse effect of what was intended and the costs no longer outweigh the benefits. So far, it has been all monetary policy guiding the ship and its time the politicians in Washington step up and do something about fiscal policy.

Don’t expect that to happen any time soon though as the US slips into further mediocrity because politicians are to busy campaigning and not doing the job they were elected to do. As the US loses further clout and credibility on the world stage, it will be much harder to maintain influence. In fact, Chancellor Merkel of Germany is here in the US accepting an award of some sort, yet she is completely vilified in her own country despite Germany’s economic strength.

And speaking of German strength, factory orders came in much better than expected earlier this morning, as did Euro zone retail sales figures. However, the Greek debt crisis is still present and the “solution” of a roll-over of Greek bonds is unclear as to the response.

Overnight in Australia, the RBA left rates unchanged as expected, and the dovish accompanying statement has caused some Aussie weakness this morning.

However today the markets are set to open higher, with global stocks and gold leading the way. Oil has pulled back to a 98 handle, as Saudi Arabia said it will increase production. So the markets are moving more on individual fundamentals this morning than broad risk themes, though reversion to mean could take place.

In the forex market:

Aussie (AUD): The Aussie is mostly lower after the dovish comments from the RBA who maintained that current interest rates are “appropriate”. At 4.75% they might be right, but expectations of a further hike have been diminished.

Kiwi (NZD): The Kiwi is the main beneficiary of the RBA rate pause, as the RBNZ rate policy meeting is tomorrow afternoon and it represents the next possibility of a rate hike. While no change is expected, the statement could be a bit more hawkish as the NZ economy has fared better than most have expected. (Click chart to enlarge)

Loonie (CAD): The Loonie is strengthening despite lower oil prices after yesterday’s PMI figures beat expectations. The Canadian Finance Minister Flaherty said yesterday that Canada is looking to balance its budget within the next 3 years which elicited a favorable response from the markets.

Euro (EUR): The Euro is mostly higher after retail sales figures came in better than expected, showing a gain of 1.1% vs. an expected no change as the monthly figure rose .9% vs. an expected .3%. In addition, German factory orders rose 10.5% vs. an expectation of 9% showing signs of strength. Now if they can just get that pesky debt crisis ironed out.

Pound (GBP): The Pound is mostly higher as well as Dollar weakness on risk taking is causing the safe-havens to sell off. While Thursday’s rate decision is expected to provide no change, the release of the minutes will be more important.

Swissie (CHF): The Swissie is getting a respite from recent high demand as the safe haven currency is out of fashion today despite CPI data which came in slightly higher than expected at .4%. A rate hike would seem inappropriate at this time.

Dollar (USD): The Dollar is mostly weaker as risk taking is picking up steam as there is no really important data from the US that could derail sentiment. Unless Bernanke says something dumb later today, which is unlikely.

Yen (JPY): The Yen is selling off this morning as safe haven demand is decreasing and carry trades are starting to be re-established after last week’s selling. Japanese GDP figures are due out tomorrow night and are expected to decline which could prompt the BOJ to act to jump-start their economy. (Click chart to enlarge)

It’s put up or shut up time here in the US. The markets and the economy have had ample to time to prepare for the day that the music died, i.e. the end of QE2. The fact that politicians have done nothing on the fiscal side of the equation has left us severely unbalanced.

While the Fed may have been the root cause of the crisis, they are now the only hope for a solution. The longer these non-actions play out, the more the uncertainty will persist which will continue to keep us in this economic malaise.

While I am not an economist, I’ve begun to hear rumblings that the true effects of QE2 haven’t been felt yet. As the massive liquidity makes its way through the markets, this could set off some inflationary factors which coupled with economic disinterest could land us square in the middle of stagflation which is the worst possible scenario.

Only time will tell what happens, and we are running out of it as the clock is ticking!

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, fxedu, gbp, Il, interest, jpy, market, Mike Conlon, nzd, practice, ssi, time, trade, 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!

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

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May 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.

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May 3, 2011

Fear Of Retaliation?

Filed under: Forex News — Tags: a-left-interest, aussie, currenc, economy, flight, gbp, jpy, killing, market, marketplace, morning, ssi, yen — admin @ 12:53 pm

This morning the markets are starting out clearly in risk aversion mode as there is a sense of fear of retaliation from Al Qaeda due to the killing of their leader Osama Bin Laden. However, it looks as though everything is lower, including the price of oil and gold which given the risk in the market may not make sense.

For if the “risk” in the marketplace is due to a potential retaliatory strike, wouldn’t that increase the price of oil, and not the other way around? Something to think about.

Overnight, the RBA in Australia left interest rates unchanged at 4.75% but issued mildly hawkish comments with regard to inflation, though the market has discounted this and is more concerned with the risk we are seeing.

Both the Euro and Pound are lower, but the Pound is particularly weak as PMI data came in at 7-month lows. While both the ECB and the BOE are giving their rate decisions on Thursday, the ECB will issue and accompanying statement whereas the BOE will not.

This could create divergence between the two currencies as there may be more weight of clarity given to the Euro. Both Central banks are not expected to raise rates.

Friday’s Non-Farm Payrolls report here in the US will round out the week and may set the tone for the month ahead.

So stocks and commodities are lower, as are the “risk” currencies with Dollar and Yen higher.

In the forex market:

Aussie (AUD): The Aussie is mostly lower on risk aversion as the RBA left rates unchanged to no one’s surprise. Mildly hawkish comments by the RBA have been discounted.

Kiwi (NZD): The Kiwi is lower for the same reasons as Aussie as the flight to safety trade is out-weighing yield-seeking today. Employment figures due out tomorrow will give a better clue as to how the economy is faring in New Zealand.

Loonie (CAD): The Loonie is also down as oil prices have retreated to just under $112. Lost in the shuffle is the Canadian employment report due out on Friday and yesterday’s election of a conservative majority may mean both tax and budget reform.

Euro (EUR): The Euro is mostly lower despite in-line PPI data that was reported. The anti-Dollar properties are in full-effect this morning as risk-aversion is driving the action today. (Click chart to enlarge)

Pound (GBP): The Pound is the worst performer this morning as PMI data came in at 7-month lows, showing a reading of 54.6 vs. an expectation of 57. This comes ahead of the BOE rate policy decision on Thursday that is expected to produce no change in policy, and data releases such as this may support that view. (Click chart to enlarge)

Dollar (USD): The Dollar is stronger this morning as risk aversion is causing a bit of the flight to safety trade as foreign currencies were at “extreme” levels vs. USD. The big news this week for the US is Friday’s NFP report, with lesser important placed on Wednesday’s ISM Non-manufacturing report.

Yen (JPY): The Yen is stronger across the board as carry-trades are reversed. There is no news of significance for Japan this week so the Yen will continue to trade on risk themes. A stronger Yen is undesirable at this point due to the recovery efforts so if Yen should continue to strengthen vs. USD, then we could see some action by the BOJ.

When markets begin to hit extreme levels, I always am on the lookout for the catalyst that could potentially reverse trends. While last week no one could have predicted this amazing development with the Killing of Bin Laden, I had a sense that something “had to give”.

To be honest, I was focused on the Royal Wedding where the potential for a risk event was obviously heightened.

So we have to look at both recent events as giving the people of sense of hope, in the face of seemingly dire economic conditions. For last Friday, UK citizens were able to forget about the 4% inflation they are seeing; and here in the US the euphoria over the Bin Laden killing occupies the minds of the people.

Not to be a complete skeptic, but these recent events are really nothing more than diversions that capture our attention for a while. The BOE will not change policy in the UK on Thursday, banking on the goodwill of the last week’s celebration to buy them more time for economic recovery.

So with heightened risk in the marketplace due to the potential for retaliation, the currency market will back away from extremes for a bit until policy comes back into focus.

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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.

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

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April 25, 2011

Fed Watching!

Filed under: Forex News — Tags: aussie, bernanke, course, dow, eur, euro, free, gbp, markets, nzd, ssi, thursday, yen — admin @ 1:01 pm

The week ahead! This morning European markets are closed for the Easter holiday just as the US markets were closed on Friday. With nothing major occurring over the weekend the markets look poised to resume last week’s trend: Dollar weakness.

This week will also be interesting in that it will be the first of Fed Chairman Bernanke’s quarterly reports, where he is going to try to sway public opinion to accepting his view of the marketplace. This may be extremely difficult to do with gold trading firmly above $1500, silver just short of $50, oil above $112, and gasoline approaching $5 in some parts of the country.

Meanwhile, US stock earnings reports are due out this week and they have been largely positive so far so that could help buoy the markets higher. US GDP figures are due out on Thursday and the market has already lowered expectations.

There are various GDP and CPI reports due this week and also some rate decisions. However, the big news will be Bernanke on Wednesday, as the market isn’t sure what to expect at this point.

So today is a lighter volume day, with only US New Home Sales figures to potentially affect currencies.

In the forex market:

Aussie (AUD): The Aussie is somewhat lower this morning despite higher commodity prices. CPI data is due out on Wednesday, which could put rate hikes back in play despite RBA officials’ attempt to jawbone the Aussie lower.

Kiwi (NZD): The Kiwi is also lower as Asian stocks were lower overnight. The RBNZ rate policy meeting is on Wednesday and while they are expected to leave rates unchanged at 2.5%, they could telegraph future hikes as inflation is has been creeping higher. (Click chart to enlarge)

Loonie (CAD): The Loonie is mostly higher catching its bid from higher oil prices ahead of Friday’s GDP report.

Euro (EUR): European markets are closed but nevertheless the Euro is higher as the market is invoking its anti-Dollar properties. CPI data is due out on Wednesday from Germany, followed by the German unemployment report on Thursday. At this point, as Germany goes, so does the Euro. (Click chart to enlarge)

Pound (GBP): The Pound is mostly lower ahead of Wednesday’s GDP report which is expected to contract a bit as the effects of government austerity are realized. However, the UK economy has been fairly resilient despite this, and the BOE may need to get its act together quickly.

Dollar (USD): Another day, another weak Dollar! US new home sales are due out later this morning, but the big news this week is going to be the Bernanke circus. Like much of what has gone on lately, this is bound to be a major let-down. GDP figures on Thursday and consumer confidence figures round out the week.

Yen (JPY): The Yen is mostly weaker as a slew of economic data is due out on Wednesday, followed by Thursday’s rate decision. The take-away here is that the BOJ is expected to remain accommodative and would love for the Yen to weaken, but it may not be possible thanks to the Dollar.

Without the benefit of European trading, today’s action may be on lighter volume. While the Dollar has been strengthening a bit, it is still weaker and the questions surrounding Wednesday are bound to leave traders guessing.

One of the major issues right now is inflation and the effect that it will have on the global economy. As we near the end of QE2, how the markets react in the coming weeks will tell the story.

So I’m going to keep my trading to the short-term, and will expect volatility on Wednesday as the market hangs on every word spoken!

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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