The US dollar fell for another week as the panic seen early in the money continues to unwind. Will this weakness come to an end? The EU economic summit, rate decisions in Canada, Japan and New Zealand and US housing and employment figures are the major events this week. Here is an outlook on the main market-movers awaiting us.
Last week The Philly Fed Manufacturing Index scored +8.7 points unlike predictions for a negative reading of-9, a good sign of recovery after the serious 30.7 drop in September. Nevertheless, all eyes are turned to Europe and the EU Summit this Sunday and a follow up later on.
Important decisions are about to take place concerning the huge debt crisis affecting worldwide financial markets. Options are becoming limited.
Let’s Start
EU Economic Summit: Sunday. The leaders of the Euro-zone will try to reach an agreement about the usage of the EFSF bailout fund, recapitalization of the banks and the size of the Greek haircut. Negotiations are stuck and a second summit on Wednesday has a better chance of reaching an agreement on something.
Canadian rate decision: Tuesday, 14:00. The BOC decided to maintain rates at 1.25% for the seventh time however hinted strongly about a possible rate hike in the next rate decision meeting. The bank also announced that monetary stimulus will be stopped in case the growth continues in order to achieve a 2.0% inflation rate. No change is forecasted.
US CB Consumer Confidence: Tuesday, 14:00. The Conference Board Consumer Confidence Index increased in September, less than predicted, to 45.4 from45.2 in August while a rise to 46.2 was predicted. Consumers are worried about current conditions which weakens consumer spending. A rise to 46.3 is predicted.
US Core Durable Goods Orders: Wednesday, 12:30. U.S. companies’ orders of durable goods, excluding transportation products, dropped by 0.1% in August contrary to predictions of 0.1% gain. This important spending indicator reflects the weakness in theUS economy. An increase of 0.6% is predicted now.
US New Home Sales: Wednesday, 14:00.US new home sales dropped by 2.3% in August in line with predictions reaching 295,000 units after302,000 in the previous month. New home prices are still considerably higher than existing home prices taking into account the foreclosure deals tempting the US home buyer. This situation is expected to weigh on future new home sales. A rise to 303,000 units is expected now.
NZ rate decision, Wednesday, 20:00.New Zealand’s central bank decided to keep rates at 2.50% in light of increasing global economic risks despite a positive recovery process in NZ domestic economy fearing tough conditions abroad will jeopardize exports. Rate are expected to be maintained at 2.50%.
Japanese rate decision: Thursday. The Bank of Japan maintained its overnight call rate between 0 to 0.1% by a unanimous vote and continues its monetary easing to achieve price stability. No change in rates is forecasted.
US Advance GDP: Thursday, 12:30. The earliest indicator of US economic growth showed a 1.3% climb in the second quarter of 2011 from 0.4% expansion in the previous quarter. This reading was somewhat below the 1.7% increase predicted. This rise is credited to the increase in exports and foreign investments. A growth of 2.3% is expected now.
US Unemployment Claims: Thursday, 12:30. The number of Americans filing initial claims for unemployment benefits dropped last week to 403,000 indicating improvement in the job market conditions following409,000 in the preceding week. Nevertheless economists predicted claims will drop to401,000. A small rise to 405,000 is predicted.
US Pending Home Sales: Thursday, 14:00. Pending sales of existing U.S.homes dropped 1.2% in August due to Hurricane Irene, stopping sales in the Northeast. Before the Hurricane, economists predicted 1.8% rise. An increase of 0.2% is expected now.
*All times are GMT. That’s it for the major events this week. Stay tuned for coverage on specific currencies.
The scenario of an orderly yet non-elegant Greek default in the first week of November is getting closer and becoming more real.
If you are interested in an alternative way of trading currencies, check out the weekly binary options setups, including EUR/USD, GBP/JPY and more.
Saturday, October 22, 2011
Friday, October 21, 2011
EUR/USD Oct. 21 – Stays in Channel as Summit Headlines Remain Confusing
Euro dollar continues to trade choppily in a smaller range within the channel. Discussions about the crisis strategy aren’t fruitful yet, and the leaders are still scrambling to get something done, perhaps for a second summit afterwards. The calendar is relatively light, but will some news about a comprehensive solution break before the week ends?
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
Here’s a quick update on technicals, fundamentals and what’s going on in the markets.
EUR/USD Technicals
Asian Quiet trading under the 1.38 line..
Current range: 1.3725 to 1.38.
Further levels in both directions: Below 1.3725, 1.3650, 1.3550, 1.35, 1.34, 1.3360, 1.3285.
Above: 1.38, 1.3838, 1.39, 1.3950, 1.4030, 1.4160, 1.4282.
Note the downtrend channel which accompanies the pair. It’s getting narrower.
1.3650 is an important cushion for the current range and its role strengthened.
1.38 is only a minor line before 1.3838, which is also becoming weaker.
Euro/Dollar trades in channel - click on the graph to enlarge.
EUR/USD Fundamentals
8:00 German Ifo Business Climate. Exp. 106.3. Actual 106.4. No big surprises here, but still a deterioration.
17:00 US FOMC member Narayana Kocherlakota talks.
17:20 US FOMC member Richard Fisher talks.
19:00 US FOMC member Janet Yellen talks.
* All times are GMT.
For more events later in the week, see the Euro to dollar forecast
EUR/USD Sentiment
EFSF Scrambling: The leaders of Germany and France are trying to come up with something towards the summit on Sunday, October 23rd, before the bigger G-20 summit which begins on November 3rd. According to denied reports, there is a significant gap. One of the ideas on the table is to postpone the summit or have a second one on Wednesday, October 26th. They know that time is running out before the G-20 summit, when The Plan of a Greek default at the beginning of November is set to happen. Currently the long list of confusing reports just adds to the choppiness.
Greek parliament approves austerity again: A two-day general strike, and massive protests of which some turned violent didn’t stop the parliament from approving more austerity. Also in Greece, a report that 200 billion euros had fled the country adds pressure on the banking system, which has a shortage in cash and is exposed to Greek sovereign debt.
France’s rating in danger: After Moody’s slashed Spain’s credit rating to A1, more than expected and Slovakia was downgraded, S&P talks about downgrading France as aid to its leveraged banks looms over Europe’s second largest country.
Trouble in Portugal: Spain’s neighbor has a significant hole in its budget which it is now trying to fix. This sounds too familiar to Greece.
US Situation Improving: The huge leap in the Philly Fed Index was great news, but with the current focus on the debt crisis, it was ignored. This joined the excellent retail sales report from the US convinced many that the US will avoid recession, at least in Q3. QE3 is away from the table, and we’ll probably hear more about that from the 3 Fed officials that will speak late in the day.
Monday, October 17, 2011
EURUSD on the weekly chart
After a downside sharp move that we have seen in the past few weeks, the pair has found a support and has rebounded significantly since then.
As such, we now suspect that wave D is almost complete and that the EURUSD is now trading in the final stages of wave B) running triangle, which we may see completed later this year.
Keep in mind that this B) wave is only a second leg of the corrective move lower started with the the 2008's recession So, once wave B) is done, a sharp sell-off will most probably follow in C) move, below the black wave B!
As such, we now suspect that wave D is almost complete and that the EURUSD is now trading in the final stages of wave B) running triangle, which we may see completed later this year.
Keep in mind that this B) wave is only a second leg of the corrective move lower started with the the 2008's recession So, once wave B) is done, a sharp sell-off will most probably follow in C) move, below the black wave B!
Saturday, October 15, 2011
Forex Most Important Events of the Week – October 17-21
Ben Bernanke's speech, German ZEW Economic Sentiment and U.S. employment claims market moves are some of the market movers awaiting us this week. Here is an outlook on the main events.
Last week the mood towards the euro worsened as the European Central Bank released its monthly bulletin accounting for its recent policy meeting and stressing the high uncertainty regarding Europe’s economic outlook. Although the rate was unchanged, there were many speculations for at least a 25 basis points cut. This release sent the EUR/USD down amost 70-pips.
Let’s dive right in.
UK inflation data: Tuesday, 8:30. UK inflation climbed to 4.5% in August from 4.4% in the previous month due to higher transport costs, and clothing. In light of this reading BOE £200bn quantitative easing program is likely to increase. A further increase to 4.9% is predicted now.
Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. Germany’s economic sentiment continued to decline in September reaching -43.3 from -37.6 in the previous month. Analysts expected the reading to drop to -45. This slide reflects the reoccurring crisis in Europe. Another decrease to -44.7 is expected.
US PPI: Tuesday, 12:30. Producer prices were flat in August despite the rise in food prices and following 0.2% gain in July. Economists predicted PPI to decline by 0.1%. Meanwhile core PPI excluding food and energy gained 0.1% from 0.4% increase in July indicating inflation is slowing down. PPI is expected to increase by 0.2% as well as core PPI.
US TIC Long-Term Purchases: Tuesday, 13:00. U.S. TIC long term purchases increased below expectations in July reaching 9.5 billion from 3.4 billion in the previous month. Economists forecasted an increase of 27.3 billion. A rise to 27.8 billion is forecasted.
Ben Bernanke speaks: Tuesday, 17:15. Ben Bernanke head of the Federal Reserve is scheduled to speak at the Federal Reserve Bank’s 56th Economic Conference, in Boston. His speeches cause high volatility in the market.
US Building Permits: Wednesday, 12:30. The number of building permits increased to 630.000 in August from the 597.000 registered in July, according to data released by the US Census Bureau. The result is higher than market consensus of 600.000. A small decline to 620,000 is predicted now.
US inflation data: Wednesday, 12:30.US inflation rate Continued to climb rising by 0.4% in August after 0.5% jump nut the Core CPI excluding food and energy increased by 0.2% in line with predictions and the same as in the previous month indicating a healthy inflation rate with will make it hard for the FOMC members to plead for another round of QE. Core CPI is expected to increase by 0.2% while CPI is predicted to grow by 0.4%.
US Unemployment Claims: Thursday, 12:30. Initial claims for unemployment in the US dropped by a mere 1000 claims to 404,000 after seasonal adjustment. Economists expected a higher figure of 406,000 pointing to a possible improvement in the employment market. A small increase to 408,000 is predicted.
US Existing Home Sales: Thursday, 14:00. A nice climb in sales of second hand homes despite tight credit and appraisal problems sales reached 5.03 million units in August from 4.67 million in the previous month. Economists predicted a much lower figure of 4.75 million units. existing home sales are at their highest level since March and are up 18.6 percent compared to August of 2010. A decline to 4.95 million is expected now.
US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the mid-Atlantic region dropped further but slower in September reaching -17.5 from-30.7 in the previous month. This reading was lower than the -14.7 predicted. However employment got stronger in September moderating decline. Another more moderate decline of 8.7 is forecasted.
Euro-Zone German Ifo Business Climate: Friday, 9:00. German business confidence dropped less than expected in September reaching 107.5 after108.7 in the previous month offering hope for Europe’s largest economy in resisting the European debt crisis. A drop to 106.3 is predicted.
Canadian inflation data: Friday, 11:00. Core consumer price inflation inCanada excluding volatile components, increased more-than-expected in August gaining 0.4% after 0.2% increase in the previous month. This increase was well above predictions of 0.1% climb. Core CPI is expected to grow by 0.3% while CPI is predicted to increase by 0.1%.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Last week the mood towards the euro worsened as the European Central Bank released its monthly bulletin accounting for its recent policy meeting and stressing the high uncertainty regarding Europe’s economic outlook. Although the rate was unchanged, there were many speculations for at least a 25 basis points cut. This release sent the EUR/USD down amost 70-pips.
Let’s dive right in.
UK inflation data: Tuesday, 8:30. UK inflation climbed to 4.5% in August from 4.4% in the previous month due to higher transport costs, and clothing. In light of this reading BOE £200bn quantitative easing program is likely to increase. A further increase to 4.9% is predicted now.
Euro-Zone German ZEW Economic Sentiment: Tuesday, 9:00. Germany’s economic sentiment continued to decline in September reaching -43.3 from -37.6 in the previous month. Analysts expected the reading to drop to -45. This slide reflects the reoccurring crisis in Europe. Another decrease to -44.7 is expected.
US PPI: Tuesday, 12:30. Producer prices were flat in August despite the rise in food prices and following 0.2% gain in July. Economists predicted PPI to decline by 0.1%. Meanwhile core PPI excluding food and energy gained 0.1% from 0.4% increase in July indicating inflation is slowing down. PPI is expected to increase by 0.2% as well as core PPI.
US TIC Long-Term Purchases: Tuesday, 13:00. U.S. TIC long term purchases increased below expectations in July reaching 9.5 billion from 3.4 billion in the previous month. Economists forecasted an increase of 27.3 billion. A rise to 27.8 billion is forecasted.
Ben Bernanke speaks: Tuesday, 17:15. Ben Bernanke head of the Federal Reserve is scheduled to speak at the Federal Reserve Bank’s 56th Economic Conference, in Boston. His speeches cause high volatility in the market.
US Building Permits: Wednesday, 12:30. The number of building permits increased to 630.000 in August from the 597.000 registered in July, according to data released by the US Census Bureau. The result is higher than market consensus of 600.000. A small decline to 620,000 is predicted now.
US inflation data: Wednesday, 12:30.US inflation rate Continued to climb rising by 0.4% in August after 0.5% jump nut the Core CPI excluding food and energy increased by 0.2% in line with predictions and the same as in the previous month indicating a healthy inflation rate with will make it hard for the FOMC members to plead for another round of QE. Core CPI is expected to increase by 0.2% while CPI is predicted to grow by 0.4%.
US Unemployment Claims: Thursday, 12:30. Initial claims for unemployment in the US dropped by a mere 1000 claims to 404,000 after seasonal adjustment. Economists expected a higher figure of 406,000 pointing to a possible improvement in the employment market. A small increase to 408,000 is predicted.
US Existing Home Sales: Thursday, 14:00. A nice climb in sales of second hand homes despite tight credit and appraisal problems sales reached 5.03 million units in August from 4.67 million in the previous month. Economists predicted a much lower figure of 4.75 million units. existing home sales are at their highest level since March and are up 18.6 percent compared to August of 2010. A decline to 4.95 million is expected now.
US Philly Fed Manufacturing Index: Thursday, 14:00. Manufacturing activity in the mid-Atlantic region dropped further but slower in September reaching -17.5 from-30.7 in the previous month. This reading was lower than the -14.7 predicted. However employment got stronger in September moderating decline. Another more moderate decline of 8.7 is forecasted.
Euro-Zone German Ifo Business Climate: Friday, 9:00. German business confidence dropped less than expected in September reaching 107.5 after108.7 in the previous month offering hope for Europe’s largest economy in resisting the European debt crisis. A drop to 106.3 is predicted.
Canadian inflation data: Friday, 11:00. Core consumer price inflation inCanada excluding volatile components, increased more-than-expected in August gaining 0.4% after 0.2% increase in the previous month. This increase was well above predictions of 0.1% climb. Core CPI is expected to grow by 0.3% while CPI is predicted to increase by 0.1%.
That’s it for the major events this week. Stay tuned for coverage on specific currencies
*All times are GMT.
Saturday, October 8, 2011
Questions a forex trader should ask himself during the weekend
Did you trade like a drunk monkey this Friday?
As the weekend comes and I often think, "How the hell did I get here" You wake up in a daze and there, lying in bed next to you is a naked USD/JPY trade?. It looked so much better when they were drunk on the morning of Friday, during the NFP. Now you're stuck with it until Sunday afternoon. You can not call her a taxi. It seems that you will be spending another night with a trade. Maybe I did not even use protection (stop loss). Perhaps it's even pregnant...
Well, that's enough with the analogy.
Did I make money on Monday and Tuesday, and lose all of it during the rest of the week?
A lot of traders are determined to sabotage their own success. Have you ever hurt a good start of week, trading for the week? One of my friends traded profitably on Monday. He made 166 pips. His goal for the week was 250. You know what he did next? He stopped trading. He did not place any more orders during the week.
It's as if his employer gave him a check early and put him on leave for the rest of the week. Good job pal!
Did you start your week badly, but end up profitable on Friday?
This is rare. If you have done so, please answer the following questions:
Did you change the size of your trades later into the week to get your money back?
Did you focus more on your plan?
What plan did you use to get the money back? Could you do this again?
What is my plan for next week?
Are you burned? You need a few days off? What is your goal for next week? What do you want to accomplish? What have you done well in the last 3 or 4 trading weeks? How can you repeat that?
Was I lucky?
Were you lucky last week? If your trades have been considerably more losers rather than winners, how much you lost? How long would it take to earn that back? What is the trade size? You're risking too much on trade? Remember that huge commercial size feels great when things go wrong, but when things (and things always fall apart at some point), the goal is to lose as little as possible.
What would happen if I ...
Cut in half my size trade next week?
Trading stopped and rested my head for a few days?
Took 10 losses in a row on my next 10 trades? Could I survive?
Found a new interesting strategy? Would I use it to trade, or stay with what I have?
Have a great weekend.
As the weekend comes and I often think, "How the hell did I get here" You wake up in a daze and there, lying in bed next to you is a naked USD/JPY trade?. It looked so much better when they were drunk on the morning of Friday, during the NFP. Now you're stuck with it until Sunday afternoon. You can not call her a taxi. It seems that you will be spending another night with a trade. Maybe I did not even use protection (stop loss). Perhaps it's even pregnant...
Well, that's enough with the analogy.
Did I make money on Monday and Tuesday, and lose all of it during the rest of the week?
A lot of traders are determined to sabotage their own success. Have you ever hurt a good start of week, trading for the week? One of my friends traded profitably on Monday. He made 166 pips. His goal for the week was 250. You know what he did next? He stopped trading. He did not place any more orders during the week.
It's as if his employer gave him a check early and put him on leave for the rest of the week. Good job pal!
Did you start your week badly, but end up profitable on Friday?
This is rare. If you have done so, please answer the following questions:
Did you change the size of your trades later into the week to get your money back?
Did you focus more on your plan?
What plan did you use to get the money back? Could you do this again?
What is my plan for next week?
Are you burned? You need a few days off? What is your goal for next week? What do you want to accomplish? What have you done well in the last 3 or 4 trading weeks? How can you repeat that?
Was I lucky?
Were you lucky last week? If your trades have been considerably more losers rather than winners, how much you lost? How long would it take to earn that back? What is the trade size? You're risking too much on trade? Remember that huge commercial size feels great when things go wrong, but when things (and things always fall apart at some point), the goal is to lose as little as possible.
What would happen if I ...
Cut in half my size trade next week?
Trading stopped and rested my head for a few days?
Took 10 losses in a row on my next 10 trades? Could I survive?
Found a new interesting strategy? Would I use it to trade, or stay with what I have?
Have a great weekend.
Friday, October 7, 2011
Too many strategies, too many systems, too many indicators...
We all did it. We are all guilty.
Oh, I was just trying this new thing in my trading.
I wanted to see what would happen if the price bounced off the trendline.
I decided today I want to change only with the trend.
GBP / JPY has a greater range of everyday, so I wanted to trade today.
One day support and resistance. The next day follow trading signals from some random website. The second day is a new book from Amazon you about Fib retracements. The day after that is Jim Cramer, and then trading Forex news, and then an exotic currency pair that you heard that "works best for trend trading," and then you are extremely confused and end up in front of your computer that looks like this:
At some point we reach too many trading systems. Too many ideas. No confidence. No defined directions. Something different every day. An endless loop of learning new things, but makes no money. A road with no destination. Traders Hell.
It's pure evil.
Oh, I was just trying this new thing in my trading.
I wanted to see what would happen if the price bounced off the trendline.
I decided today I want to change only with the trend.
GBP / JPY has a greater range of everyday, so I wanted to trade today.
One day support and resistance. The next day follow trading signals from some random website. The second day is a new book from Amazon you about Fib retracements. The day after that is Jim Cramer, and then trading Forex news, and then an exotic currency pair that you heard that "works best for trend trading," and then you are extremely confused and end up in front of your computer that looks like this:
At some point we reach too many trading systems. Too many ideas. No confidence. No defined directions. Something different every day. An endless loop of learning new things, but makes no money. A road with no destination. Traders Hell.
It's pure evil.
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