Monday, December 29, 2008 - Identifying the Trend |
In its most basic sense, a trend is simply a prolonged market movement in one general direction, either up or down.
 From a traders' perspective, though, that simple definition is so broad as to be relatively meaningless. A more relevant definition of a trend would be one where a trend is defined as a predictable price response at levels of support/resistance that change over time. For example, in an uptrend the defining feature is that prices rebound when they near support levels, ultimately establishing new highs. In a downtrend, the opposite is true-price increases will reverse as they near resistance levels, and new lows will be reached. This definition reveals the first of the tools used to identify whether a trend is in place or not-trendline analysis to establish support and resistance levels.
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 ForexGen has the pleasure to announce the launching of its first monthly Live Accounts contest,
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Sunday, December 28, 2008 - Fundamental Analysis And Technical Analysis In Forex |
Fundamental Analysis refers to the study of the core underlying elements that influence the economy of a particular entity.
As in Forex trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the currency market trends. Fundamental FOREX traders will review a country economy's situation base on these fundamental elements and respond accordingly. To gain max, fundamentalists often apply precise method to convert study's results into accurate entry/exit price indicator.
Technical Analysis, on the other hand, is a completely different story. Instead of reviewing on the fundamental issues, traders from the technical side define market movement according to data purely generated from the market. The term 'Technical' is applied in all trading fields, from commodity stocks exchange to option trading, from Forex to futures.
Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the 'price' data and the 'time' data, which are widely used by FOREX trader.
There are some techniques consider solely on the 'price' factor, while some solely rely on the 'time' factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in Forex market. Also, it would be wise if traders combine both technical and fundamental techniques when trading Forex, as a country currency value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters
[ForexGen Money Manager]
 An individual who is responsible for the entire financial portfolio of another individual or another entity. A money manager receives payment in exchange for choosing and monitoring appropriate investments for the client.
Benefits of being a Money Manager with [ForexGen]:
* Providing three different commission sources.
* Weekly commission plan.
* Easy & fast commission withdrawals.
* Fixed percentage of the profits.
* P = k * D “P=Profit, k=Variable Parameter, D=Deposits”
The money manager gets a fixed percentage of the profit previously agreed upon with the client for managing the client funds as a bonus feature.
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* Leverages up to 1:200 for accounts up to $1 million US.
* Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
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Thursday, December 25, 2008 - Accept Losses |
Since no trading system or method is 100% accurate, losses will happen sooner or later.
Develop the ability to admit to your losses. Sometimes traders will remove their stops and let their losses run in the hope the trade will come back. They do this because they are unwilling to admit that their forecast of market direction or their timing of entry into the forex was incorrect.
Losses can occur primarily for two reasons. The first reason is when the trader fails to follow established tested rules and guidelines of a trading system or proven method. The second reason is when the trading system or method fails to encompass unexpected changes in the market conditions. In either case, by anticipating the reasons for most of the losses you're going to take, you can put precautions into place beforehand to help reduce losses in the future.
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Wednesday, December 24, 2008 - Gold Prices Inch Higher, Energy Futures Tumble |
Gold prices inch higher as investors look past downbeat economic reports NEW YORK (AP) -- Gold prices inched higher Wednesday in a shortened session as investors looked past discouraging economic reports and made small bets on the metal.
Economic concerns have pressured many commodities prices in the past few months, particularly energy, as investors fear a prolonged recession will lead to further declines in demand. But gold prices have been able to attract moderate investment demand in recent weeks, boosted by the prospect of rising inflation. Investors often use commodities, especially gold, as a hedge against a weak dollar.
Price movements have been relatively modest though. The contract has traded within a tight range of about $60 since earlier this month.
"Given how far other things have fallen, gold has held up pretty well," said Stephen Platt, futures strategist, with Archer Financial Services. "You are seeing some shifting of interest from some sectors back into gold."
Gold for February delivery rose $9.90 to settle at $848 an ounce on the New York Mercantile Exchange.
March silver gained 9 cents to $10.35 an ounce, while March copper futures slipped 0.7 cent to $1.2740 a pound.
Many financial markets closed early for Christmas Eve.
 On Wall Street, stocks made a modest advance despite government reports showing an increase in U.S. joblessness and a decline in consumer spending. Investors have largely factored in bad numbers for the fourth quarter, analysts say, so the figures didn't come as a surprise.
The Dow Jones industrial average finished up about 49 points at the 8,468 level.
The dollar was mixed against other major currencies, while the yield on the benchmark 10-year Treasury note rose slightly to 2.19 percent from 2.18 percent late Tuesday.
Energy prices tumbled on the Nymex, still plagued by demand concerns.
Light, sweet crude for February delivery fell $3.63 to settle at $35.35 a barrel.
In other Nymex trading, gasoline futures slipped by 2.5 cents to 83 cents a gallon, while heating oil fell 4.4 cents to $1.2826 a gallon.
Grain prices gained on the Chicago Board of Trade.
March wheat futures rose 7 cents to $5.8225 a bushel, while corn for March delivery rose 3.25 cents to $3.98 a bushel.
March soybeans rose 14 cents to $9.19 a bushel.
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5. Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
6. [ForexGen] offers a free trial Forex [demo account] that allows you to test your skills and practice without risking real money.
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Tuesday, December 23, 2008 - Citizens Bancorp Receives $10.4 Million Investment from the U.S. Treasury's Capital Purchase Program |
NEVADA CITY, Calif.--(BUSINESS WIRE)--Today, Citizens Bancorp (the “Company”) (OTCBB:CZNB - News), the holding company of Citizens Bank of Northern California (the “Bank”), announced that it has received $10.4 million from the U.S. Treasury Department as a part of the Treasury's Capital Purchase Program. This voluntary program is available to strong and healthy financial institutions and will allow the Bank to increase credit availability to qualified businesses and consumers in the communities it serves.
 “Citizens Bancorp is in a strong financial position and is considered “well-capitalized” by FDIC regulatory guidelines. The Company reported a total risk-based capital ratio of 11.96% as of September 30, 2008. We believe it is prudent in these economic times to bolster our already solid capital position,” said Judy Hess, President & CEO. “Being selected to participate in this program is an important indication that the Treasury Department recognizes our stability,” She continued. “Additional capital will enhance our ability to grow and expand on our already successful strategy of making quality, relationship-driven loans within our communities. This ultimately supports local economic activity,” Hess concluded.
This $10.4 million funding marks the Company's successful completion of its sale to the Treasury of 10, 400 shares of preferred stock and a related warrant to purchase 520 shares of a second series of preferred stock. A summary of the Capital Purchase Program, including the terms of the preferred stock and warrant, can be found on the Treasury's web site at www.ustreas.gov/initiatives/eesa for “privately held institutions” or those institutions such as the Company, whose securities are not listed on a national securities exchange. The securities issued to the Treasury will be accounted for as components of regulatory Tier 1 capital. With the addition of this capital, the Bank's risk-based capital will exceed 14.00%.
Founded in February 1995, Citizens Bank, headquartered in Nevada City, became a wholly owned subsidiary of the Company in 2003. In addition to the new Auburn branch in Placer County, the Bank has six other branches in communities throughout Nevada County, including Nevada City, Grass Valley, Penn Valley, Lake of the Pines, and Truckee. The opening of the Auburn branch represents the Bank’s first physical entry into neighboring Placer County. The Bank offers community banking services, including a wide variety of deposit products, commercial, residential and consumer loans, and other traditional banking products and services, designed to meet the needs of small and middle market businesses and individuals.
[ForexGen Academy]
 If you are an experienced ‘FOREX’ Trader or just a beginner looking for the opportunities offered in the ‘FOREX’ market, [Forexgen] has created ForexGen Academy to give you the chance to get a ‘FOREX’ education and improve your trading skills. No hard expressions, no buzz words, and no rocket science language are used throughout these lessons.
How to Get Started?
People are introduced to the exciting world of foreign exchange in many ways: friends, current events, newspapers, television, and many others. For those of you who are new to forex, the following guidelines cover the basics of currency trading.
also do you Know ForexGen Lowest spreads in the market with 0-1 pip spread in 10 pairs, no commissions, no swaps and instant account Activation.
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Monday, December 22, 2008 - Cocoa Products That May Contain Melamine Recalled |
G&J cocoa products recalled after some test positive for melamine
 MADISON, Wis. (AP) -- Three G&J cocoa products packaged for Christmas sale are being recalled because they may contain the industrial chemical melamine.
The Department of Agriculture, Trade and Consumer Protection says the products were sold nationwide at Shopko and Big Lots stores.
They include G&J Hot Cocoa Stuffer, G&J His and Hers Hot Cocoa Set and G&J Cocoa in French vanilla and double chocolate flavors.
DATCP announced the recall Monday. It says no illnesses from consuming the products have been reported so far, but a few samples tested positive for melamine.
The products are being voluntarily recalled by Dorsey Marketing Inc. of Ville St. Laurent, Quebec. DATCP says consumers should return the products to the store where they bought them for a refund.
ForexGen offers three types of business partnerships:
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*White label
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ForexGen Introducing Brokers, White Label and Money Manager holders are recognized as a strategic business partners. The main focus of our service is to satisfy our partner's needs in order to deal with a qualified service and gain a huge income sharing plan.
[ForexGen] provide appropriate services satisfying the needs of all business partner's specified situation and requirements.
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Thursday, December 18, 2008 - Let Emotion Play No Role in Forex Trading |
All market trading is a form of gambling, and as any gambler will tell you the bets most likely to work out badly are ones based on emotion. All traders have gut instincts, but a trade should always be well thought out and based on facts or research. Gut instincts may be right every now and then, but most of the time they are a result of greed or fear and can cost you a lot of money. Before each trade, use a diary to map out a solid plan of entry based on your trading system signals
For example, knowing when to exit a deal is vitally important, so you should know at which point you’re going to pull out, both on the high side (a winner) and on the low side (a loser). When the deal hits this price, follow your plan to exit no matter what your emotions are telling you.
Continual learning might seem obvious, but you’ll be surprise how many beginners read one book and think they know everything. All of the greatest traders are continually learning from their successes and especially their mistakes to get better. There are literally hundreds of strategies you can follow with Forex, and learning more about new ones can fine tune your trading and increase your profits
 ForexGen offers the easiest, simplest and fastest way of Forex funds depositing, withdrawing and transferring provided with Customer Support personnel available 24/7 In order to serve its clients any time all over the world.
ForexGen cares for its clients' funds, so that ForexGen allow funding operations with guarantee of ForexGen itself that your fund operations are executed with high level of security and privacy.
Funds are accepted by wire transfer and e-gold payments.
# Deposit of funds is made easy through our short online form in your account management section.
Account receivable funding could electronically funded by [ForexGen] after one business day, thus the client's account will be funded in the same day of receipt. For our client's security, each wire transfer reference section must contain the client's name and account number.
ForexGen minimum deposit required to start trading is $250. Also we have no limit for depositing fund into your account. You have the absolute right to choose the amount you want to deposit.
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Wednesday, December 17, 2008 - Deflation's Growing Threat To The U.S. Economy |
 Lower prices are probably at the bottom of the list of most Americans' current economic worries. But for a growing number of economists, it's their biggest fear.
A widespread drop in prices is known as deflation. And typically, it's not just the price of consumer goods that fall. Home prices, stock prices and even people's salaries often head lower as well.
The biggest problem with deflation is that when businesses need to continually cut prices to spur sales, they eventually respond by cutting production. That results in growing job losses, and could, in the worst case scenario, even cause a depression.
And several economists say they are far more worried about the threat of deflation now than they have been in the past. The Federal Reserve may also be more concerned about deflation as well.
The central bank cut its key interest rates to near 0% Tuesday. In its statement, the Fed said it expects inflation to "moderate further" but it stopped short of suggesting that inflation would drop "to levels consistent with price stability" as it has in prior statements.
"I think the Fed's statement clearly reflected some alarm that there is a greater risk of not just deflation, but of depression," said Bernard Baumohl, executive director of The Economic Outlook Group, a Princeton, N.J., research firm.
Just a month ago Baumohl put the chance of a deflation at between 10% to 20% sometime in 2009. Now he believes there's a 30% chance of deflation.
Drops in consumer prices
Economists have reason to fear that a deflationary spiral is looming.
On Tuesday, the government reported that its Consumer Price Index -- a key gauge of inflation -- fell a record 1.7% in November. Over the past three months, retail prices have plunged at a 10% annual rate.
While much of that drop was caused by falling gasoline prices, the so-called core CPI, which strips out volatile food and energy prices, declined by 0.1% in November, the first decline in that reading since the severe recession of 1982.
Core consumer prices are now up only 0.4% on an annual basis over the past three months. That is below the 1% to 2% annual range that is generally believed to be the Fed's comfort zone for inflation.
It doesn't take much of a price decline to cause economic pain. During Japan's so-called "lost decade" that started in the 1990s, prices only fell by 1% annually. But those deflationary pressures resulted in a prolonged recession.
So far, few economists believe that a couple of months of price declines is enough evidence to suggest that the U.S. is now going through a period of deflation.
But economists think the Fed should try and nip deflation in the bud and that was probably the reason why the central bank cut interest rates by more than expected.
"They're not dismissing [deflation] the way they did in the past," said David Wyss, chief economist for Standard & Poor's.
Economists debate threat
Wyss said he doesn't believe that deflation is likely to take hold in the next year. But he cautions that if the current recession continues into 2010, "the risk is significant."
Of course, not all economists are voicing increased fears about deflation.
A senior Fed official told reporters on a conference call Tuesday that deflation is not now a major worry, but conceded that the central bank would continue to closely monitor prices to make sure it doesn't become a problem.
Rich Yamarone, director of economic research at Argus Research, said his firm's deflation index is showing less of a deflation threat today than it did in 1998 or 2002-2003, the last time many economists were fearing deflation.
Yamarone said the deflation fears proved overblown in those periods, and he's confident the threat of falling prices won't play out again this time.
"We believe that the market, the Fed and the business press are all going to get it wrong this time around as well," he said. He said the drop in commodity prices, particularly oil, has caused what will prove to be a temporary fall in other prices.
Bernanke's deflation views
Whether or not Yamarone is right may depend on how the Fed continues to respond to this economic crisis.
Fed Chairman Ben Bernanke has spoken frequently in the past about deflation and how he thinks it was a significant factor in the Great Depression, his area of expertise when he was an economics professor at Princeton University.
In November 2002, Bernanke, then a Fed governor, gave a speech about how to combat inflation. That speech may offer some hints as to how the Fed may fight deflation if it becomes more of a threat.
Bernanke became known in some circles as "Helicopter Ben" for his facetious suggestion in that speech that even if the Fed cut interest rates to zero, it could continue to battle deflation by other measures, including dropping large wads of cash from helicopters.
The speech clearly signaled that Bernanke was less scared of cutting rates to zero than he was by the threat of deflation, which he described in terms that appear prescient today.
"Deflation is in almost all cases a side effect of a collapse of aggregate demand -- a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers," he said at that time.
He said deflation would then lead to recession, rising unemployment and financial stress. And he added that while "deflation in the United States is highly unlikely, I would be imprudent to rule out the possibility altogether."
He argued that the Fed and Congress could take steps beyond cutting rates to ward off serious deflation. And he expressed confidence such measures would work, as long as they were taken before deflation took hold.
"Prevention of deflation remains preferable to having to cure it," he said in the speech.
And in his concluding remarks, he added that "the Federal Reserve and other economic policymakers would be far from helpless in the face of deflation, even should the federal funds rate hit...zero."
[ForexGen] dealing desk representatives are available during trading hours - 24/5 from Sunday 6:00pm EST to Friday at 2:00pm EST.
You are encouraged to contact the dealing room by phone in these situations:
- If you are not able to access the internet.
- Failing to receive a confirmation on an online order.
- Failing to connect to ForexGen server.
Whenever the trader asks for trading support, our team checks if the trader has performed the trading factually in order to facilitate the trading process and make it faster. Please pay attention to the following instructions before calling the trader support in the trading call center.
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Tuesday, December 16, 2008 - Business Roundtable Statement on Obamas Secretary of Education |
 WASHINGTON--(BUSINESS WIRE)--“Business Roundtable member CEOs congratulate President-elect Obama on the selection of Arne Duncan as the next Secretary of Education. The selection signals that the Obama administration believes that aggressive efforts are needed to raise U.S. student achievement.
"Mr. Duncan has a strong record of working with the business community to improve schools in Chicago. Business Roundtable has long supported efforts to improve the performance of the education system and raise student achievement in the U.S. and looks forward to working with Secretary-designate Duncan to improve American education,” said John J. Castellani, president of Business Roundtable.
Business Roundtable (www.businessroundtable.org) is an association of chief executive officers of leading U.S. companies with $5 trillion in annual revenues and nearly 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid to the federal government. Collectively, they returned $114 billion in dividends to shareholders and the economy in 2006.
[FOREXGEN Live Accounts Contest]
Trade, Compete, and Win - Begins the 1st of Every Month!
[ForexGen] has the pleasure to announce the launching of its first monthly Live Accounts contest,
This is NOT a demo contest
this is a live trading competition open for all live mini account holders. At the beginning of each month, the slate is wiped clean and traders have a new opportunity to win the monthly prizes.
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Tuesday, September 2, 2008 - Forex Trading Payroll | ForexGen |
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The non-farm payroll report releases by the United States Bureau of Labor Statistics contains information on the current employment situation in the US. It is generally released on the first Friday of each month at 8:30 EST.
Non-farm payroll data creates large market moves in both the stock and currency markets. Average price movement right after the release is about 40-80 pips depending on the significance of the release and the price can move up to 100-130 pips before the end of the day.
High volatility and very rapid price movements which happen within minutes after the release provide huge profit potential. However, due to high volatility and a large number of trades that are being executed in a very short amount of time trading the release can result in gaps and slippage which can lead to large losses. Therefore a good strategy would be not to trade the breakout right after the release, but let the price break out and then depending on chart patterns or technical indicators enter into a trade. For example, the chart below is EUR/USD one minute chart for December release of non-farm payroll . The release came positive for the dollar - we see a spike down at 8:30. However if you entered into a trade in the initial direction of the spike you would most likely end up with a loss since (as seen below) the price started to form a bullish ascending triangle minutes after the release. At 8:47 the price broke the 1.3277 resistance which resulted in a 54 pip rally for the EUR/USD.
A profitable strategy would be to spot the chart formation (bullish ascending triangle), notice that MACD is above zero signifying potential upward move. Once these technical parameters are identified place a buy order at 1.3287 (10 pips above the resistance) with a stop at 1.3272 (15 pips below the entry) and first profit target at 1.3217. Result – 30 pip profit.
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Wednesday, August 27, 2008 - The Forex Currency Pairs with ForexGen |
Foreign Exchange trading is in general the trading of many currencies of the world. It is emerging as the largest and least regulated market providing the greatest liquidity to investors.
This trading is always done in pairs – Currency Pairs, one currency is bought and the other is sold. Together, they make up what is known as the "exchange rate".
For example, you may buy Euros with Dollars, anticipating that the Euro to increase in value relative to the Dollar. If the Euro rises relative to the Dollar, you sell the position and can earn a profit.
Most commonly traded currencies or the “majors” are:
US Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
British Pound (GBP)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)
Most commonly traded currency pairs are:
US Dollar and the Japanese Yen (USD/JPY)
Euro and US Dollar (EUR/USD)
US Dollar and Swiss franc (USD/CHF)
British Pound and US Dollar (GBP/USD)
While quoting currency pairs, the first currency is referred to as the base currency and the second as the counter or quote currency. The base currency is always equal to 1 monetary unit of exchange, for example, 1 Dollar, 1 Pound, 1 Euro.
It is also known as domestic currency or accounting currency and sometimes also referred to as the primary currency of a Forex currency pair. The price represents how much of the quote currency is needed to get one unit of the base currency.
When a currency is quoted against US Dollar, it is known as direct rate. Any currency not against the US Dollar is called a cross rate.
The quote currency is translated into a certain number of units of the base currency. This is also referred to as the foreign currency, secondary currency or counter currency. For example, if you find that a quote of USD/JPY is at 1.30, it says that for every 1 US Dollar, you get 1.30 Japanese Yen. When you quote for AUD/JPY of 67.73, it says that for every 1 Australian Dollar, you get 67.73 Japanese Yen.
Currency pairs are generally traded as 100,000 units of the base currency. For example, if you were buying EUR/USD at 0.95 you would be paying Dollars for Euros as follows:
100,000 x .95 = $95,000 for 100,000 Euros
When you find a quote going up, it means that the value of the base currency is rising or in other words, it is getting stronger. If a quote is going down, it means that the base currency is weakening.
The dominant base currencies are:
Euro - EUR/USD, EUR/GBP, EUR/CHF, EUR/JPY, EUR/CAD
British Pound - GBP/USD, GBP/CHF, GBP/JPY, GBP/CAD
US Dollar - USD/CAD, USD/JPY, USD/CHF
The currency pairs are usually traded and quoted with a ‘bid’ and ‘ask’ price. The ‘bid’ is the price at which you are willing to buy and the ‘ask’ is the price at which price you are willing to sell.
For example, if the USD/EUR currency pair is quoted as - USD/EUR = 1.5 and you purchase the pair, this means that for every 1.5 euros that you sell, you get US$1. If you sold the currency pair, you receive 1.5 euros for every US$1 you sell.
The key to successful trading lies in selecting one or two pairs of currencies that you wish to trade in as a beginner. As you gain confidence, you may wish to add more pairs in your trading portfolio. But for a new trader or investor it is always advised to have limited pair just to ensure simplicity. And that what ForexGen Promises with.
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Sunday, August 24, 2008 - ForexGen | Why Purchasing on The Margin is a Must in The Forex Market ? |
In the beginning, only banks and hedge funds could trade in the forex market. This was due to high amounts of money the banks were trading in. No average investor could afford it. Only lately have investors been able to participate in the forex market. This is due to them purchasing currencies on the margin.
One lot in the forex market is $100,000. There is a high amount of money exchanging hands in the forex market. This is due to the many valuable trait’s the forex market has to offer. For example, the market is open 24 hours a day, 5 days a week; there are many forms to reduce risk in the market (stops); it is fairly easy to come in and out of the market because it is highly liquid. Lastly, the market is very volatile.
Since average investors have only recently taken to trading in the forex market, transactions made through brokers have changed. Original lots were $100,000 each. Now there are mini lots. A mini lot is $10,000. If an investor wanted to trade in the forex market through a broker, they would be required to give the broker a collateral. This would be $1,000 or 1% of the lot. Brokers require the $1,000 if there is a loss of capital. The broker will then put the $1,000 in the investors account just in case there is any loss of capital.
When average investors decided to trade in the forex market, they tend to take out loans from banks. With any loan, there is always interest. Thus, on top of the risk of losing money through the forex market, investors also have to add the payment of interest into the mix. However, as an average investor, it becomes necessary to take out loans when participating in the forex market. This is referred to as leveraged financing. Leveraged financing has allowed to forex market to expand to new heights.
Losses are inevitable in the forex market. Especially since it is so volatile. Brokers shut down their accounts as soon as the margin is consumed. However, it is recommended that stops are used on all orders placed in the forex market. This is to limit the losses incurred by investors. When stops are not place on orders, the investor can lose up to $100,000. In other words, they can lose the size of their lot.
Thus, the importance of stops being placed on orders can not be stressed upon more. It reduces the amount an investor can lose in any of their orders in the forex market. Stops limit loses and continues to benefit the investor by granting them to gain profits at the same time. As well as that, margins are a must for investors in the forex market.
This article has shown the importance of margins and leveraging relating to the forex market for average investors. As well as that, it has explained the importance of placing stops on orders.
Learn More With ForexGen
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Wednesday, August 20, 2008 - ForexGen News |
- Japanese Yen: Holds 110 as flows remain contained
- Euro: Reverses overnight gains as Construction data shows sever contraction
- British Pound: BOE vote holds no hawkish surprises CBI helps drive cable lower
- US Dollar: Equities and lower gold help
Euro Gives Up Gains as US Equity Futures Bid -1.48 or 1.46 Next?
After touching 1.4800 in early Asian trade EURUSD gave up nearly all of it's gains tumbling back to 1.4700 as the dollar rallied across the board helped in part by surging stock index futures and lower gold prices. On a night when economic releases were few and far between, the one piece of news from the EZ that did hit the wires was hardly helpful to the currency as EZ Construction output contracted sharply dropping -1.1% versus 0.2% forecast.
The sharp decline in Construction reflects both the tightness of credit and severe decline in demand in the housing sector especially in the 15 member union. As such, the construction figures are likely to depress Q3 EZ GDP even further and may hasten the onset of rate cuts from the ECB, perhaps even before the year end.
Meanwhile in what looks more like the box scores from the National Hockey League rather than a central bank decision the MPC minutes revealed that once again BoE voted 7-1-1 to keep rate unchanged with Blanchflower once again opting for a rate cut while Besley voted for a hike. Cable's post news bounce however was extremely short lived as the unit was pressured to the downside by the news that CBI Industrial Trends slipped to -13 from -9 the month prior. UK factory output expectations are now at their lowest level since 2001.
Despite BoE's stubborn insistence on controlling inflation, it has becoming increasingly obvious that the UK economy is on the precipice of a recession. With the housing market at a virtual standstill and global capital markets continuing languish, the country's finance based economy is clearly under duress. The question therefore is not if but rather when will the BoE lower rates. With GBPUSD trading within striking distance of 1.8500 the currency market has decided that the answer is relatively soon. Sterling therefore remains vulnerable and if the dollar continues to attract flows for the rest of the day 1.8500 may fall by the way side before the US session is over.
With nothing on the US economic calendar for the rest of the day, FX markets are likely to take their cue from macro drivers as oil and gold will continue to impact flows. Overall however, we remain in a consolidative range partly due to seasonal factors and partly because currency markets are searching for new trading themes. We continue to believe that 1.4500 should serve as support for the EURUSD, but with the pair having failed to hold any of its recent rallies, the price action suggests that Euro selling may not be over.. Unless and until the pair a can conquer and maintain the 1,4800 level the bias in EURUSD remains to the downside.
| Currency |
GMT |
EST |
Release |
Expected |
Prior |
| CAD |
12:30 |
8:30 |
CAD Retail Sales (MoM) (JUN) |
0.50% |
0.40% |
| CAD |
12:30 |
8:30 |
CAD Retail Sales Less Autos (MoM) (JUN) |
0.60% |
0.40% |
| CAD |
12:30 |
8:30 |
CAD Leading Indicators (MoM) (JUL) |
0.10% |
0.00% |
| Currency |
GMT |
Release |
Estimated |
Actual |
Comments |
| AUD |
0:30 |
AUD Westpac Leading Index (MoM) (JUN |
|
0.10% |
Slight bump up |
| AUD |
1:30 |
AUD DEWR Skilled Vacancies (MoM) (AUG) |
|
-1.70% |
Labor market demand contracts |
| JPY |
7:00 |
JPY Convenience Store Sales (YoY) (JUL) |
|
11.70% |
Strong performance as sector does well |
| GBP |
8:30 |
GBP Bank of England Minutes |
7/1/2001 |
7/1/2001 |
Remain split three ways |
| EUR |
9:00 |
EUR Euro-Zone Construction Output s.a. (MoM) (JUN) |
0.20% |
-0.60% |
Output contracts sharply weighing on overall growth |
| EUR |
9:00 |
EUR Euro-Zone Construction Output s.a. (YoY) (JUN) |
-1.1% |
-2.40% |
|
| GBP |
10:00 |
GBP U.K. CBI Industrial Trends (AUG) |
|
-13 |
Fell most since August |
| USD |
11:00 |
USD MBA Mortgage Applications AUG 15 |
|
-1.50% |
Demand declines again |
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Wednesday, August 20, 2008 - Euro Dollar is Likely to Fall Further | ForexGen |
The once resilient Euro zone economy is slowly succumbing to the downward pressures of a strong euro, a slowing global economy and tight credit conditions. Looking ahead, I expect the EUR/USD to fall further and test 1.40 dollars per euro.
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The once resilient Euro zone economy is slowly succumbing to the downward pressures of a strong Euro, a slowing global economy, high oil and food prices and tight credit conditions. In fact, in light of such risks, the IMF expects the world’s largest economy, according to 2007 GDP estimates, to grow at a very poor 1.7% pace in 2008 and 1.2% in 2009, compared to 2.6% in 2007. The main reason why the European Central Bank is not cutting rates already is because inflation is well above a level consistent with price stability and the central bank wants to avoid second-round effects of energy prices in wage and price setting. In fact, July CPI figures grew at a record pace of 4.1% and risks to price stability over the medium term remain on the upside, according to the European Central Bank president Jean-Claude Trichet.
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EUR/USD Could Test 1.40 in 3 months
The euro has been very weak over the past month and I expect this down trend to continue going forward. To some extent the euro dollar up trend has been damaged by a significant shift of interest rate expectations in favor of rate cuts by the ECB and rate hikes by the Fed. In one hand, traders expect the Federal Reserve to increase rates by 75 bps over the next eight FOMC meetings, according to overnight index swaps traders. On the other hand, despit the fact that Jean Claude Trichet said he has no bias going into the next meeting, interest rate traders expect the ECB to cut rates by 50 bps in 2009. Looking ahead, I expect the EUR/USD to test 1.40 dollars per euro in 3 months.
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Wednesday, August 20, 2008 - Daily technical outlook | ForexGen |
Daily technical outlook − Wednesday 08.20.2008
EURUSD
The Euro recovered on yesterday, breaking the intraday resistance at 1.4700 then testing offers at 1.4800. Interim support has been set at 1.4750 which is backed by 1.4700 and 1.4630/40. Resistance emerges at 1.4800/15 followed by 1.4850 and 1.4950. Intraday studies are slightly bearish but current Euro recovery may extend towards resistance into the mid 1.48 zone and probably higher if 1.4800 breaks. On the downside, below the 1.4700 support barrier should resume downtrend and bring the 1.4630 zone back on focus. Current quote is 1.4755 @06:35 GMT
Support levels: 1.4720, 1.4700, 1.4630/40, 1.4530/40 and 1.4500.
Resistance levels: 1.4790/00, 1.4815, 1.4850 and 1.4950.
Market sentiment: long-term : bullish, mid-term : bearish, short-term : bearish
AUDUSD
Resistance into the .8750 zone is back on focus and the short term bearish momentum is losing strength due to current consolidation into the .8605/20-.8750 range. A potential break of .8750 on the upside may signal the start of a correction which could extend towards resistance into the .9070 within the next days but that seem pretty high while two important barriers are intact at .8750 and .8800. Support is seen at .8700 backed by .8635. Intraday studies are neutral at the time of this writing. Current quote is .8719 @06:35 GMT
Support levels: .8700, .8635, .8605, .8550 and .8510.
Resistance levels: .8750, .8795/00, .8840/50 and .8950.
Market sentiment: long-term : bullish, mid-term : bearish , short-term : bearish
EURCHF
Resistance at 1.6140/50 still holds and a potential break should extend gains towards key resistance into the 1.6170 region. Short term studies are bearish while intradays are neutral at the time of this writing. Support is seen at 1.6125 backed by 1.6105/12 and 1.6095. Current quote is 1.6135 @06:35 GMT
Support levels: 1.6125, 1.6105/12, 1.6095, 1.6030 and 1.5960.
Resistance levels: 1.6140/50, 1.6170/75 and 1.6235.
Market sentiment: long-term : bullish, mid-term : neutral, short-term : bearish
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Wednesday, August 20, 2008 - Latest News | ForexGen |
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The greenback experienced a trading session of mixed results yesterday. Soon after the trading day began, the USD reached a 6 month record against the EUR as the pair fell to a rate of 1.4630. However, it was a straight or shall we say “strait” downfall for the USD ever since, as the cross rose to breach the 1.4800 level.
The USD made its record high against the EUR as a result of a much better than expected Producer Price Index figure. The indicator rose by 1.2%, beating expectations for only a 0.6% rise. The surprising surge reflects an increasing inflation pace, that might only be stopped by interest rates hikes, and the market promptly reacted to continue the USD’s rally. However, 3 elements have joined together to provide traders with an excellent opportunity to gain profits on their short USD positions. The first one was the Building Permits indictor which fell beyond expectations to its lowest growing rate since 1991, as only 0.94M new residential building permits were issued during July, showing that the housing market in the U.S is in the midst of a crisis and not over it. The second reason for the falling Dollar was the second day of bearish American stock markets. After a positive month for the equity markets that had largely contributed to the bullish trend the USD had gone through, two consecutive days of falling stocks prices managed to generate some wariness for the investors, and have them partially close their long positions on the USD. The third reason was the recuperation of oil prices, which rose by over $3 a barrel yesterday, to be traded around $115, giving extra support to the weakening USD.
As the sole indicator that will be published from the U.S. economy today is the Crude Oil Inventories, traders are well advised to follow Crude Oil prices, and refer to them as one of the most influencing information that might affect the USD. In case that no dramatic changes will occur, the USD is widely expected to resume its general trend of bullish behavior against its major currency rivals.
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