Stock | Forex Blog

August 16, 2010

China Surpasses Japan!

Filed under: Forex News — Tags: a-points-come, australia, boe, chinese, dollar, economic, forex market, health, japanese, loonie, money, nzd, stock, time — admin @ 1:58 pm

Overnight, Japan reported less-than expected GDP figures which allowed China to leap-frog into second place in global economic strength. Japanese GDP came in at .4% vs. an expectation of 2.3%, which was a major disappointment. This sent the Nikkei lower and the Yen higher, as risk aversion is mild but continuing from last week.

In the EU, CPI figures came in mostly in line with expectations, with July CPI falling .3% vs. an expectation of a .4% decline, and the headline figure matched expectations at an increase of 1.7% annualized.

Home prices in the UK fell 1.7% this month according to Rightmove, and the market is waiting for Wednesday’s minutes from the rate policy meeting which may show that the BOE is prepared to continue with accommodative policy to support the economy.

In the US, the Empire Manufacturing figures came in less-than expected, but higher than last month. This months’ reading was at 7.10 vs. an expectation of 8.0, but higher than last month’s 5.08.

Dollar weakness is the theme of the morning, as recent reports that China has been favoring the Euro may be behind the move higher from its June lows. As the world’s second largest economy, China will have a major impact on the global recovery.

In the forex market:

Aussie (AUD): The Aussie is mixed this morning, trading higher among the other commodity currencies and the Dollar, but lower vs. Yen, Euro, and Pound. Tomorrow the RBA will release the minutes from its rate policy meeting which will provide further insight into the health of the Australian economy. (Click chart to enlarge)

Kiwi (NZD): The Performance of Services Index fell to 50.5 vs. the previous month’s reading of 55.1, showing that the sector was expanding at its slowest pace in nearly 10 months. The Kiwi is lower as a result, also feeling the effects of Yen strength and mild risk aversion.

Loonie (CAD): This is a light week for news out of Canada, with Friday’s CPI data to be the headliner. Expect the Loonie to trade on oil prices and US sentiment this week, as a slowing US economy will affect Canadian exports and thus economic growth.

Euro (EUR): Euro zone CPI data came in this morning mostly as expected, and shows signs that the economy while slowing is still moving forward. Recent Euro strength from the June lows is being attributed to Chinese demand and general displeasure with the US dollar. (Click chart to enlarge)

Pound (GBP): The pound is mixed this morning as home prices came in lower, and the minutes from the rate policy meeting are due out on Wednesday. In addition, CPI data and retail sales figures will be out tomorrow which will contribute to Pound sentiment surrounding BOE monetary policy.

Dollar (USD): The Dollar is weaker this morning as US economic status is coming under fire from abroad. Concerns over massive deficits have led China to invest more heavily in Europe, and the viability of the path the US is following is being questioned.

Yen (JPY): The yen is higher across the board, as GDP figures came in worse than expected. The intervention chatter is starting to heat up as Yen strength vs. the US dollar is returning toward last week’s 15-year highs; however it is questionable as to how effective this would be. A higher Yen will affect demand for Japanese exports, which could negatively impact stock prices going forward. (Click chart to enlarge)

It should come as no surprise that the global economy is beginning to falter as little by little, policy makers are removing the stimulative measures designed to stabilize their economies. Falling GDP in Japan is just one of these signs.

Announced austerity measures in the UK and Euro zone have been met with market approval, which the US policy of “extend and pretend” continues to garner criticism. And when I talk about market approval, I really mean China.

The Chinese have amassed huge currency reserves due to their peg to the US dollar, among other factors which have tilted the global economic balance in their favor. Rightly or wrongly, China has established itself as the major player going forward.

As various data points come in around the globe, remember to follow the money. That is, do what China does. If they are not enamored with US policy, then you shouldn’t be either. As the newly-minted No. 2 economy on the planet, it will only be a matter of time before they really begin to flex their muscle.
So the US had better take notice, if they haven’t already. Because the new No. 2 won’t be satisfied until they become No.1, using whatever means necessary.

Of course it doesn’t help that current US policy re-enforces the Chinese position.

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, blog, BOE, cad, canada, China, commodity, course, currenc, currencies, currency, currency market, currency trading, data, dollar, economic, economy, EUR, Euro, Europe, forex, forex market, forextrading, free, fx, fxedu, gbp, home, Il, index, invest, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, money, news, nzd, oil, pound, practice, practice account, rate, retail sales, RSI, sentiment, ssi, stock, time, trade, USD, Yen

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June 30, 2010

Less Money Needed!

Filed under: Forex News — Tags: a-reversal-for, account, currenc, currency, currency market, europe, live, loonie, mie, rate, recession, rsi, stock — admin @ 1:40 pm

There was encouraging news overnight as the ECB said it would lend banks less than analysts had predicted, showing signs that the European banking system may not be in as weak a state as the market thinks. In addition, German unemployment changed less than expected and the unemployment rate remained steady showing signs of economic stability. Euro zone CPI figures fell back to 1.4%, slightly better than analyst expectations.

In the UK, consumer confidence figures fell to 6-month lows as residents prepare for budget cuts, and BOE policy-maker Adam Posen said that UK recovery is tentative and could risk sliding back into recession. Look for continued loose monetary policy unless inflation figures really heat up.

In the US, the ADP employment change came in less than expected and could serve as a harbinger of Friday’s Non-Farm Payrolls report.

In Australia, bank lending and house price gains showed that the economy has been resilient in the face of rate hikes but whether that trend continues remains to be seen.

Canadian GDP figures came in flat, showing neither growth nor contraction but missing analyst expectations of a .2% gain.

So today is a bit of a mixed bag, with earlier risk-taking on the European bank news giving back some gains. Stocks are mixed to slightly lower with commodities relatively flat. Today is the last day of the second quarter, so we could see some window dressing which could mean volatility in stocks.

In the forex market:

Aussie (AUD): The Aussie is giving back some gains after bank lending and home price figures showed how strong the Australian economy has held up despite the RBA’s rate hikes to cool the economy. While the trading day started off in risk-taking mode, the Aussie may decline if we flip to risk aversion.

Kiwi (NZD): The Kiwi is lower this morning as the RBNZ said in its annual Statement of Intent that it will continue to remove economic stimulus as the NZ economy recovers. Part of this statement has been construed as backing away from tighter monetary policy, citing global economic conditions.

Loonie (CAD): A bit of a reversal for the Loonie this morning as well, as risk-taking waned and GDP figures came in lower than expected. GDP stalled after gaining for 7 straight months as retail sales declined as the government removed temporary tax relief measures.

Euro (EUR): The Euro is higher across the board this morning as the ECB said it will lend less to banks to cover their debt payments than the market was expecting. This shows that the financial health of European banks may not be as bad as expected and that they are largely able to meet debt obligations. There has been major fear about the sovereign debt exposure of these banks, and this announcement took that fear down a notch.

Pound (GBP): The Pound is lower this morning as comments from the BOE said that recovery is tentative and consumer confidence figures fell to 6-month lows as budget concerns weighed heavily. However, house price figures rose to 2-year highs in a sign that the property market may be stabilizing.

Dollar (USD): The Dollar is mixed as the ADP employment change showed a gain of 13K vs. an expectation of 60K jobs gained. Friday’s Non-Farm Payrolls report will really show how far along we are in the employment picture and economic health, but this worse-than-expected figure may be foreshadowing.

Yen (JPY): The Yen is showing some strength against all but the Euro as risk aversion appears to winning the morning battle. Yen started the trading lower as Asian stocks continued to sell-off, but then reversed on the Euro bank news, only to reverse again on the ADP jobs report.

Yesterday’s sell-off may have been an over-reaction to negative sentiment in the market but the important thing to remember is that global economies are still fragile. As various governments remove stimulus, economies will now be forced to stand on their own.

In the US, it’s all about jobs, jobs, jobs. As long as people are unemployed and unable or unwilling to spend, economic recovery is going to be fragile. Part of the problem is that we don’t have policies in place that encourage private sector growth, as looming tax hikes to support out of control spending weigh heavily on private business.

So this most recent scare is all about confidence. It is obvious that people don’t have confidence in their government’s ability to improve conditions. It doesn’t matter what the policy is, there is NO confidence right now.

However, there are pockets of economic strength around the globe and those who are employed are experiencing a MUCH different economy than those who aren’t. Some are beginning to say that this is the “new normal”; where we will have economic growth AND high unemployment. I beg to differ.

I understand that emergency stimulus measures were necessary to prevent us from going over the cliff but enough is enough. The sooner the government removes the training wheels from the economy, the sooner citizens will learn how to ride again. Because at this point, the US government is holding us back, and not letting us move forward. Friday’s NFP will either confirm or deny this assertion, and the market will respond accordingly.

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

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

Tags: account, AUD, Aussie, Australia, bank, BOE, cad, comments, commodities, course, currenc, currency, currency market, currency trading, dollar, dow, ECB, economic, economy, EUR, Euro, Europe, fear, financial, forex, forex market, free, fx, fxedu, gbp, home, Il, jpy, Kiwi, live, loonie, lower, mie, Mike Conlon, news, nfp, nzd, payrolls, pound, practice, practice account, rate, recession, retail sales, RSI, sentiment, ssi, stock, stocks, time, trend, unemployment, USD, Yen

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June 11, 2010

Consumers Disappoint!

Filed under: Forex News — Tags: cad, comes, employment, euro, fear, government, morning, practice, rsi, stock, technical, time — admin @ 1:31 pm

Well so much for that. US retail sales figures disappointed this morning, coming in at a loss of 1.2% vs. an expected gain of .2%. While these numbers show that economic recovery is still fragile here in the US, much of this can be attributed to the lack of hiring by businesses. In addition, this also shows that households are saving more which may not be a bad thing, and much of the decline was in big ticket items as the economy prepares for the retraction of stimulus measures.

Across the pond, the UK reported worse than expected industrial production figures, sending the Pound lower across the board. This further adds to the fears that the UK may be facing a protracted slowdown as they attempt to control their budget deficits.

On a somewhat related note, US Treasury Secretary Geithner has turned up the heat on China. He has come out and said that the Chinese exchange-rate policy (and Yuan peg to the dollar) is preventing a balanced global recovery and causing inflation in China. Official reports showed an increase of 3.1% in consumer prices, the fastest rise in 19 months. In addition, Chinese workers are striking demanding higher wages as inflation heats up.

So this morning we are seeing some mild risk-aversion, as the Friday “unwind” occurs as traders are still hesitant to go into the weekend holding risk assets, with potential Euro landmines the primary fear driver.

In the forex market:

Aussie (AUD): The Aussie is lower this morning on risk aversion and a technical pullback after yesterday’s good economic news from the Pac Rim countries. Uncertainty over whether or not China will do anything to cool inflation has contributed to Aussie selling.

Loonie (CAD): The Loonie is lower on risk aversion, despite the fact that industrial capacity showed the largest increase on record. The Loonie has been higher lately as oil has been higher, though it is pulling back from $75 this morning. Oil will be a major factor going forward, as a potential moratorium on drilling offshore in the US is in the works due to the political backlash of the BP oil spill.

Kiwi (NZD): Despite the risk in the market, the Kiwi is higher across the board due to yesterday’s rate hike, though that could change by session end. Digestion of the economic reports show that NZ could be in for a series of rate hikes through the rest of the year as accelerating growth could push inflation much higher.

Euro (EUR): The Euro is lower also on risk themes, and the “Friday unwind” may be still be causing investors to ditch Euros over the weekend as risk fears still permeate the market. However, policy-makers in Germany raised their economic outlook for GDP higher. Still the looming threat of debt problems keeps investor cautious for now.

Pound (GBP): The pound is lower across the board as manufacturing weakened in the UK and fears that the economy may not be on sound enough footing to handle expected government fiscal belt-tightening. This comes even as a UK survey of consumer’s inflation expectations reached its highest levels in over 6 months. This may be a case of, “the consumer is not always right”.

Dollar (USD): Disappointing US retail sales figures have sent the dollar higher as risk aversion has picked up going into the weekend. However, the decrease wasn’t broad-based. The largest decreases were in building materials stores and auto sales. This comes ahead of the end of the home buyer tax credit, so it probably should have been expected. Households are saving more as the employment picture is still grim, and unless the government does something to encourage private business to start hiring, the retraction may continue.

Yen (JPY): Good gains in the Asian stock markets overnight pushed the Yen lower, though it is rebounding and has gained strength due to the unwind of carry trades as traders dump their risk assets for the weekend in favor of the safe haven the Yen provides. The Dollar and Yen are just about flat today vs. one another.

Today is an example of how bad government policy can distort economic figures and get everyone “drinking the Kool-Aid”. It should come as no surprise that retail sales are down as government stimulus measures are retracted, yet they fall for it every time.

The bottom line is jobs. Period. Not temporary census workers, not more bloated government bureaucracy, but jobs from the private sector. American consumers have finally woken up to the fact that you shouldn’t be spending money you don’t have, especially if you can’t get a job to afford stuff.

That game had gone on for way too long, and it is amazing to me to see some the debt levels people carry.

So what does the government do to help create jobs? Nothing. They hand out government cheese to keep the masses at bay and create a hostile environment for business through the threat of increased regulation and higher taxes. If you were an employer, would you be hiring?

Heck no!!!

And until hiring picks up again, expect the economy to drift downward as consumers lose faith in the recovery. And if consumers, who represent some 70% of US GDP, continue to save and not spend, then we could see a potential deflationary spiral as demand dries up.

This could lead to the dreaded “double-dip”. Not a pretty picture in my eyes. The only double-dip I want to see is in an ice cream cone!

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, carr, carry trade, China, course, currenc, currency, currency market, currency trading, dollar, dow, economic, economy, EUR, Euro, fear, forex, forex market, free, fx, fxedu, gbp, Geithner, home, Il, invest, investor, IRA, jpy, Kiwi, live, loonie, lower, market, Mike Conlon, money, news, nzd, oil, pound, practice, practice account, rate, retail sales, RSI, ssi, stock, technical, time, trade, trader, trades, Treasury, USD, Yen

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June 9, 2010

Ban The Shorts!

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

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

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

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

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

In the forex market:

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

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

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

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

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

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

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

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

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

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

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

Do you have a strong grasp of technical analysis?

If not, be sure to check out our affordable currency trading courses!

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

Tags: account, analysis, AUD, Aussie, Australia, Bernanke, cad, carr, carry trade, China, comments, commodity, course, currenc, currencies, currency, currency trading, data, decision, dollar, dow, ECB, economic, economy, EUR, Euro, fear, fed, forex, forex market, franc, free, fundamental, fx, fxedu, gbp, Il, interest, interest rate, interest rates, invest, investor, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, new zealand, nzd, oil, pair, pairs, pound, practice, practice account, rate decision, sentiment, short, ssi, stock, stocks, technical, time, trade, trader, trades, Trichet, USD, volume, Yen

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March 17, 2010

Dis-Interested Economies!

Filed under: Forex News — Tags: a-major-impact, aussie, australia, currenc, dollar, economy, euro, interest, interest-rate, interest-rates-, market, stock, trades — admin @ 7:35 am

Fed Stays the Same!

At yesterday’s FOMC meeting, the Fed didn’t move on interest rates and maintained the “extended period” language that we have been hearing for, well, an extended period. So how long exactly is “an extended period”? Well unfortunately for the US, this could be a long time. Take a look at Japan, who did not move on interest rates (as expected) either, and have been experiencing deflation for well over 10 YEARS!

Economists and government people in the US claim it “can’t happen to us”, but as every day passes, the similarities become more frightening. A look at today’s PPI figure confirms that prices are declining and not advancing, giving credence to the position that deflation is winning in the inflation/deflation debate.
In the meantime, employment is picking up in the UK, which is positive for their economy going into elections. The threat of a “hung Parliament” has some investors nervous that there won’t be enough political conviction to tackle the UK debt crisis. Time will tell.

Today we are seeing an increase in risk appetite, as both the US and Japan held steady with interest rates. Commodities and stocks are higher this morning, with oil above 82.

In currencies:

Aussie (AUD): The Aussie is higher on risk-taking and commodity prices today; especially after Japan help steady on rates and is going to expand quantitative easing. The Aussie is fast approaching its 2010 highs.

Kiwi (NZD): Same deal today for the Kiwi, though it is faring slightly better than the Aussie as the market is betting that rate hikes will be slowing in Australia and potentially picking up in New Zealand. Carry trades are on today, with the yen as the primary funding currency.

Loonie (CAD): In classic risk-taking fashion, the Loonie is the third best performer as oil prices are above 82 and the market has an appetite for risk. The Loonie is fast approaching parity with USD and could get there with Friday’s retail sales figures and CPI.

Euro (EUR): The Euro is mixed this morning as doubts over how the PIIGS countries are going to control their budget deficits. This is coming from the EU which is basically saying that the measures being taken are based on “favorable” economic forecasts and therefore may not be realistic.

Pound (GBP): The Pound is higher today as Jobless Claims fell at the fastest pace in over 10 years. The expectation was that claims would increase by 6K; the reality was that they shrank by 32K. This is positive for the UK economy, as they have taken on a record deficit to stoke economic recovery. Whether or not this is enough to leave the majority in power in the upcoming elections remains to be seen.

Dollar (USD): Well it looks like Bernanke can breathe easy as today’s PPI figure dropped .6% vs. an expectation of a decline of .2%, the largest drop in 7 months. The Fed maintained the extended period language and as I mentioned above it could be a VERY long time before the economy expands to the point where higher rates may be needed. Of course that doesn’t mean that food and energy prices won’t go higher; which would affect everyone. This is starting to look more and more like stagflation as we are not seeing the rebound in the economy and job creation that one would think we should see after enacting the ginormous “stimulus” package. Just wait until the higher tax receipts expected to pay for this don’t come in. Voila! Hello Japan 2.0.

Yen (JPY): Speaking of Japan and stagflation, the Bank of Japan kept interest rates at .1% as expected, and caved in to the pressure from the government and doubled a lending program to $220 Billion to try to combat deflation. Good luck with that one. Psst Bernanke! Here’s a road map of what NOT to do!

As you can see, the money faucet just keeps flowing with both US and Japanese Interest rates at record lows. This means that all kinds of other assets (commodities and stocks particularly) are going to benefit and go higher. However, just because the money supply is expanded, does not mean that the velocity with which it circulates is increasing. What does that mean?

It means that while money is being created, it is not being lent out to ordinary folks who could use it. Frankly, if I were a bank, I wouldn’t be lending money for home purchases either, as nearly everyone is a credit risk in this economy. And so we trudge forward, with no end to this mess in sight. Keep an eye on the US-China currency story, as this could have a major impact on the world economy.

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

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

Tags: account, AUD, Aussie, Australia, bank, Bernanke, cad, carr, carry trade, China, commodities, commodity, course, currenc, currencies, currency, currency market, currency trading, dollar, economic, economy, EUR, Euro, fed, free, fx, fxedu, gbp, home, Il, interest, interest rate, interest rates, invest, investor, Japan, jpy, Kiwi, live, loonie, market, meeting, Mike Conlon, money, new zealand, nzd, oil, pound, practice, practice account, retail sales, ssi, stock, stocks, time, trade, trades, USD, Yen

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Japan Wants Banks to Increase Lending

Filed under: OANDA News — Tags: 0-6-percent, amount, bbc, collapse, japan, japanese, jpy, keep-interest, lost-decade, lower-energy, offers-lending, retail-banks, stock, threatens-the, trillion-yen — admin @ 7:03 am

The Bank of Japan hopes to encourage lending at financial institutions by doubling to 20 trillion yen (US$220bn), the amount of cheap, short-term loans it offers lending institutions. The Bank will lend to retail banks at 0.1 percent, in an attempt to combat deflation which, once again, threatens the Japanese economy.

Japan first struggled with deflation following the collapse of the housing market in the late 1980s. This triggered a collapse in the stock market and an overall devaluation of consumer prices. It took years for the economy to recover and the 1990s has long been referred to as the “lost decade”.

Source: BBC News

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UK Unemployment Drops to 7.8%

Filed under: OANDA News — Tags: 1-59-million-, announced-today, bbc, collapse, figures, gbp, japan, lost-decade, lower-energy, made-on-the, offers-lending, people-seeking, retail-banks, stock, trillion-yen — admin @ 6:47 am

The Office for National Statistics (ONS) announced today that unemployment in the UK fell by 33,000 during the three months ending in January to 2.45 million, or 7.8 percent. The number of people seeking unemployment benefits fell by 32,300 in February to 1.59 million. THe ONS did point out an area of concern however regarding long-term unemployment. The number of people who have been out of work for more than a year, rose by 61,000 to 687,000.

Jobless Recovery

Economists pointed out that while the initial results show progress has been made on the employment front, there are still many people out of work. Jeegar Kakkad, senior economist at EEF, the manufacturers’ organisation, said: “Although the figures show that job losses in manufacturing are at their lowest since the recession began, the fall in employment increases the likelihood of a jobless recovery.”

Source: BBC News

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March 11, 2010

Which Way to Go?

Filed under: Forex News — Tags: account, aussie, bernanke, currency trading, england, europe, free, fxedu, japan, morning, stock — admin @ 7:55 am

As I mentioned yesterday, the currencies are now seemingly beginning to shed the risk on, risk off labels and are starting to trade more on individual fundamentals. While I don’t want to completely abandon risk themes, I’m not going to be so quick to dismiss market movement as risk-taking or risk-aversion.

That makes it a little easier when we have mornings such as today which are a bit of a mixed bag. I just watched the Aussie go from slightly positive to slightly negative; and the Pound and Euro are higher.

In news that is important to the global economy, inflation in China reached a 16-month high which should cause monetary tightening. This means that there could a decrease in global demand.

As I am typing this, the US Initial Jobless Claims numbers came out and while the news was expected to have a benign market impact; it has flipped the market into risk aversion mode. Maybe those fundamentals aren’t that important after all.

Let’s take a look at the individual currencies:

Aussie (AUD): The Aussie started the morning in positive territory but then slipped to negative as risk aversion is starting to steer the market action. There was “disappointing” news earlier as Australia reported the slowest amount of job gains in 6 months and unemployment stayed steady at 5.3%. This may give the RBA a little bit of wiggle room at the next interest rate meeting and they may not have to raise rates. I think it’s slightly amusing that this news can be viewed as negative, as just about every other economy would do anything to have such a “problem”.

Kiwi (NZD): The Kiwi on the other hand started the morning negative and has stayed there now that risk aversion has been added to the mix. The central bank left rates unchanged at 2.5% as was expected, but quashed hopes of a rate hike before mid-year. Apparently falling housing prices and weak consumer spending are contributing to a slower than expected economic recovery.

Loonie (CAD): The Loonie is down this morning on what I’m going to deem the “reverse Midas touch”. Apparently the Bank of Canada appointed a Ben Bernanke disciple as deputy governor to potentially change the way the central bank looks at interest rate policy. As of right now, the bank has a mandate which attempts to keep inflation at 2%, but they may want to change to a new system that targets prices rather than inflation. All the market is seeing at this point is that Canada may get wrapped up in the nonsense that is US interest rate policy and that doesn’t bode well for higher rates. Add that to lower oil prices, down slightly from yesterday’s move to above $82, and risk aversion.

Euro (EUR): The Euro is mixed this morning as Greek labor strikes (riots) are causing a backlash against austerity measures. In the meantime, the ECB maintains a cautious outlook and reiterated that interest rates are at appropriate levels.

Pound (GBP): The Pound is higher this morning halting a three-day slide and is trading back to 1.50 vs. USD. This much needed rest from selling came about as the Bank of England’s quarterly inflation attitudes survey showed that consumer price expectations rose to 2.5%, its highest reading since 2008.

Dollar (USD): The Dollar is higher this morning after the 8:30AM Initial Jobless Claims report which came in higher than the expectation. While the number 462K vs. the 460K expectation is not that significant, the market was clearly expecting a better figure and this provides pause to the notion that the US economy is in full recovery mode. Stocks in Europe sold off on this number as traders ran to the safety of dollar and yen.

Yen (JPY): Japanese GDP was revised lower to show growth rose at 3.8%, slower than the 4.6% reported in preliminary figures last month. The Yen is higher on, yep; you guessed it, risk aversion.

As you can see from today’s entry, things in the forex can change pretty quickly. That’s why is ultra-important to be aware of news events. I should have known better than to tempt the risk gods.

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, Bernanke, cad, canada, central bank, China, course, currenc, currencies, currency, currency market, currency trading, dollar, dow, economic, economy, EUR, Euro, Europe, forex, free, fundamental, fx, fxedu, gbp, Il, interest, interest rate, interest rates, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, news, nzd, oil, pound, practice, practice account, RSI, ssi, stock, stocks, time, trade, trader, unemployment, USD, Yen

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February 17, 2010

US Earnings Increase World Confidence!

Filed under: Forex News — Tags: aud, currenc, decision, free, fxedu, gbp, money, risk, ssi, stock, unemployment — admin @ 7:33 am

US stock futures are higher this morning in the wake of a flurry of good corporate earnings reports. Of course many will tell you that “it’s easy to make money when you fire all of your employees”, but regardless of how the money was made, it bodes well for world economic growth.

This has buoyed forward further stock gains in a continuation of yesterdays market action. As a result, we are seeing further risk-taking in the markets, with world stock markets and commodities higher, and the US dollar and Japanese yen lower. Whether or not the market can hold on to these gains remains to be seen.

In world currencies:

Aussie (AUD): Predictably, the Aussie is trading higher this morning, particularly against the yen as higher risk takers seek yield. Notes from the RBA meeting referenced higher rates were only a matter of time and that they were close to pulling the trigger at the last policy meeting. Thus traders have increased their bets that this rate hike could take place in March.

Kiwi (NZD): The Kiwi is also higher on risk-taking and higher commodity prices, though the economy in New Zealand is not as strong as its neighbor Australia. Rates are seen as being stable until the second half of the year, so expect the Kiwi to continue to fluctuate on the market risk themes. New Zealand will be reporting its consumer confidence numbers tomorrow so this could give some insight into retail sales and possible inflation or lack thereof.

Loonie (CAD): The Loonie keeps chugging along near its highest level this month, helped higher by oil prices over $77 and an overall good economic picture. However, Canada eased pressure on potential rate hikes by tightening mortgage requirements, trying to prevent a housing bubble through regulation rather than interest rate hikes. If Canada can stave off further housing gains, they may be able to contain inflation without having to move on rates.

Euro (EUR): The Euro is mostly down this morning, trading higher vs. only the Japanese yen. I could continue to beat this Greece theme to death but the market will be moving in and out of confidence in the common currency as more and more “news” comes out. There is still great structural risk to the Euro, and fears of contagion to the other PIIGS countries always keep investors on their toes.

Pound (GBP): The Pound is mixed this morning, as the BOE voted unanimously to suspend its Bond-Purchase (QE) program on optimism that inflation will return to their 2% target rate. Recall that just yesterday, inflation came in hotter than expected at 3.5%. The British are famous for their “wait and see” approach and conservative measures. In the meantime, unemployment jumped to its highest level in 13 years, against an expected decline.

Dollar (USD): The dollar is showing strength this morning despite the stock futures and commodities markets trading higher. I expect some sort of “reversion to mean” to mean to take place today, with either stocks or the dollar pulling back, or a combination of both. US housing starts came in higher than expected this morning, showing that the economic recovery may be getting stronger and increased demand for housing may be picking up.

Yen (JPY): The Yen is at a 2-week low, trading at over 91 per US dollar, further cementing itself as the fuel for carry trades. The yen is down across the board ahead of tomorrow’s interest rate decision, where policy makers are expected to keep rates at .1%.

In overnight markets, Asia was up big with the Nikkei leading the way up 2.72%. European stock markets are also currently higher, all nearly posting better than 1% gains at the moment. In commodities, oil is just under $77 and gold is around $1118.

Overall, today is a bit of a mixed bag, with US dollar strength competing with the stock market for investor dollars. While risk-taking seems to be en vogue today, this could change at any point in time. While there is no real news that should derail this theme today, anything is possible.

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

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

Tags: account, AUD, Aussie, Australia, cad, canada, carry trade, commodities, commodity, course, currenc, currencies, currency, currency market, currency trading, decision, dollar, dow, economic, economy, EUR, Euro, Europe, free, fx, fxedu, gbp, Il, interest, interest rate, invest, investor, Japan, jpy, Kiwi, live, lower, market, money, news, nzd, pound, practice, practice account, ssi, stock, stocks, time, trade, trader, trades, unemployment, USD, Yen

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February 4, 2010

No Recovery in Sight!

Filed under: Forex News — Tags: aussie, bank, dow, economy, fxedu, gold, greece, jpy, kiwi, money, nzd, oil, stock, trade, unemployment — admin @ 8:08 am

US Initial Jobless Claims came in worse than expected this morning, rising to 480K, the highest level seen in three weeks. Analysts were expecting a slight decrease, so that makes this number “unexpected”. (As a side note, how sick and tired are you of hearing about “unexpected“economic reports as reported by media outlets?) Also to note this morning is that both the UK and the Euro zone left rates unchanged, which was not “unexpected”. So needless to say, this morning is a risk-aversion day.

Here’s the rundown of world currencies:

Aussie (AUD): The Aussie is down this morning as expected. The major news for the Aussie will be made overnight as the RBA will come out with its quarterly monetary policy statement. There was a bit of new this morning that retail sales figures in Australia were down (MoM) to -.7%, showing a negative figure as consumers are starting to become more interest-rate sensitive.

Kiwi (NZD): The Kiwi is getting smacked this morning with the double whammy, losing value due to risk-aversion but also contributing was their unemployment report. Unemployment in New Zealand rose to 7.3%, the highest level in over 10 years, dampening hopes for any rate hikes in the near future.

Loonie (CAD): Building permits in Canada increased in December, showing signs that there may be hope for economic growth. However, the Loonie is down this morning, suffering from its correlation to oil and the general risk-aversion theme.

Euro (EUR): The Euro is down this morning against all but the Aussie and Kiwi, assuming its rightful place in the risk pecking order. The ECB voted to keep interest rates unchanged at a record low 1%, as concern about Greece stills weighs heavily on the common currency. There is a fine line the Euro zone countries are walking, attempting to encourage growth while at the same time reduce deficits and rein in budget shortfalls.

Pound (GBP): The BOE also kept rates unchanged at .5% and has also announced plans to not expand its bond purchase program (QE) for the first time since the program was initiated last march. The UK is trying to balance the threat of inflation at the expense of economic growth. It is also important to know that general elections are coming up in May and the “throw the bums out” mentality has made its way to the other side of the pond and is not only popular in the US. So the BOE is also taking potential political change into account.

Dollar (USD): I’ve already touched on the bad news about initial jobless claims, and tomorrow’s Non-Farm Payrolls Report (NFP) is weighing heavily on the US economy. Readers of this blog know that of course that means the dollar is up, as the flight to safety trade takes hold. Lost in the mix are pretty decent earnings reports coming out of the stock market, though as a most likely result of cost-cutting and firing workers. See the irony here?

Yen (JPY): Lastly, the Japanese yen is the big winner this morning, benefiting from the risk-aversion trade. Because of its status as the reserve currency for the carry trades, when risk aversion takes place, demand for yen goes up as traders flee riskier currencies.

As I scan the different news wires, I can’t help but notice that I haven’t seen one piece of encouraging news out there that would lead me to believe that economic recovery is gaining traction. The only silver lining I found, decent corporate earnings, is a joke compared to what’s going on out there.

At the US market open, stocks are down. Europe is down currently and Asia closed down overnight. Not to be Debbie Downer here but today could be ugly with a capital ‘U’. Oil is down to 76 and change, and gold is down testing 1100.

Remember, in order to benefit from a strengthening dollar, you have to sell a different currency and buy dollars to make gains! Just having dollars in your bank account does you no good except potentially influence your purchasing power. The only way to take advantage of these moves is through the forex market. When you’re sitting there looking at a red screen (because everything is down) and have no idea where to put your money, the forex market can give you a safe haven.

Isn’t it time you looked at this today? To get set up for a free, real-time practice account, click here.

Don’t know how to get started? Check out our affordable courses to help teach you how to profit and protect yourself through currency trading!

Tags: account, AUD, Aussie, bank, blog, cad, canada, carry trade, course, currenc, currencies, currency, currency trading, dollar, dow, economic, economy, EUR, Euro, Europe, forex, forex market, free, fx, fxedu, gold, Il, interest, interest rate, interest rates, Japan, jpy, Kiwi, market, Mike Conlon, money, new zealand, news, nzd, oil, pound, practice, practice account, short, ssi, stock, stocks, time, trade, trader, trades, unemployment, USD, Yen

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