Most people trading futures use futures trading strategies based on technical analysis, with particular focus on the support and resistance levels. Most of them are trading this way without even considering what is going on in the other markets, such as the currency or bond market. Examining each market though is what separates the beginners from the professionals.
If for instance you are trading gold or crude oil and you notice a significant support or resistance line on your chart, you would expect the price to stop and bounce once it reaches that level. Nevertheless, what you forget is that the chart you see is strongly correlated with the currency ones. Therefore, if the US Dollar Index depreciates by just a quarter of a percent, either one of the assets mentioned above will have their prices inflated accordingly, by a quarter of a percent as well. Therefore, the right way to trade in this case is to move your support or resistance levels up by this specific amount. While this is just a basic example, you should know that any good future or Forex trading strategy should also be dependable on other assets, other than the one being traded.
If you are trading USD denominated liquid assets on a regular basis, such as crude oil or gold, you should know that the biggest risk and the most unpredictable thing that can happen in these markets is the inflation or deflation of the dollar. This is where you can correlate a Forex trading strategy with a futures one. The most natural hedge trade for a crude oil or gold long position would be another long position, but placed on the US Dollar. You can place these trades when the support or resistance levels suggest so, based on Fibonacci trading, or according to whatever currency trading system you prefer to use. Another important thing that you must keep in mind is that the currency used to counter a position should also depend on its current or even anticipated yields.
Even if you are not a fundamental trader and you only utilize technical trading strategies in your approach, you should still know that the currency markets always leave some foot prints that subtly show the intentions of the biggest traders out there. It is not a secret anymore that the big guys in the trading industry have entire departments set up for the sole purpose of hedging, since they want to have some protection at all times. No large futures or currency trading firm will place any big orders without a hedge position prepared at the same time.
In conclusion, next time you find yourself running to your platform to have a look at the USD Index chart, try to remember to check for some correlation between the USD Index and commodities. If you manage to open a position without forgetting about the counter one, in the end you will call it even in the worst case. This is how all the professionals make their living by trading and this is how you should do it too.
Saturday, April 7, 2012
Thursday, November 3, 2011
Forex Demo Accounts - The Disadvantages
A forex demo account is a very crucial tool for assessing a broker’s platform, testing your fundamental and technical analysis skills and lots more. Using a demo account is highly recommended.
Yet it doesn’t fully prepare you for the real thing. Here are 4 downsides for demo accounts, and solutions for part of them.
Demo trading doesn’t include execution problems: Even the best brokers with a strong reputation and many liquidity providers cannot avoid a failed execution of your orders. This is reality, especially in extremely volatile market conditions. Execution in demo accounts doesn’t fully mimic real accounts. Unfortunately there’s no solution for this issue, and this doesn’t mean you should skip demo trading. Just be aware of this.
Amount: The amount of money that you’ll see in your demo account will usually be much larger than you’ll deposit. This will make every loss you encounter in the demo account as less meaningful and may enhance the feeling of “monopoly money”. So, you’ll be less prepared for the real thing. In addition, you”ll get used to big position sizes, and wehn you’ll reach the real thing, a few losing trades could burn your real money. Solution: Ask the broker to adjust the amount of demo money to the number you really think of depositing.
Broker may add demo money: This practice isn’t too common, but you should still be aware of it and refuse to accept it. Refilling the account when it’s close to depletion may help you continue practicing and will also prepare you for more real deposits in the future, something the broker always wants you to do. But on the other hand, it may also give you the false feeling that it’s just another computer game when you can always click “New Game” and also hinder your performance with a real trade. Solution: Ask the broker to “withdraw” the demo money from your account.
Once you’re in, you’re in: If you test only one broker’s account, you’ll most likely proceed with depositing real money. Why? Because you’re already familiar with the platform and the salesperson encourages you to dip into the real waters. The goal of demo trading for you and for the broker is that you’ll get familiar and open a real account. So that’s good. But wait: being familiar with one broker doesn’t mean it is the best one for you. For the sake of comparison, at least test one more broker. The second test will likely be faster.
I would like to repeat that demo accounts are still of high importance and that also seasoned forex traders should test a new broker with a demo account before making a deposit. It’s just that like anything else in life, a simulation cannot fully prepare you for the real thing.
What do you think? Are there any other pitfalls that you can think of?
Yet it doesn’t fully prepare you for the real thing. Here are 4 downsides for demo accounts, and solutions for part of them.
Demo trading doesn’t include execution problems: Even the best brokers with a strong reputation and many liquidity providers cannot avoid a failed execution of your orders. This is reality, especially in extremely volatile market conditions. Execution in demo accounts doesn’t fully mimic real accounts. Unfortunately there’s no solution for this issue, and this doesn’t mean you should skip demo trading. Just be aware of this.
Amount: The amount of money that you’ll see in your demo account will usually be much larger than you’ll deposit. This will make every loss you encounter in the demo account as less meaningful and may enhance the feeling of “monopoly money”. So, you’ll be less prepared for the real thing. In addition, you”ll get used to big position sizes, and wehn you’ll reach the real thing, a few losing trades could burn your real money. Solution: Ask the broker to adjust the amount of demo money to the number you really think of depositing.
Broker may add demo money: This practice isn’t too common, but you should still be aware of it and refuse to accept it. Refilling the account when it’s close to depletion may help you continue practicing and will also prepare you for more real deposits in the future, something the broker always wants you to do. But on the other hand, it may also give you the false feeling that it’s just another computer game when you can always click “New Game” and also hinder your performance with a real trade. Solution: Ask the broker to “withdraw” the demo money from your account.
Once you’re in, you’re in: If you test only one broker’s account, you’ll most likely proceed with depositing real money. Why? Because you’re already familiar with the platform and the salesperson encourages you to dip into the real waters. The goal of demo trading for you and for the broker is that you’ll get familiar and open a real account. So that’s good. But wait: being familiar with one broker doesn’t mean it is the best one for you. For the sake of comparison, at least test one more broker. The second test will likely be faster.
I would like to repeat that demo accounts are still of high importance and that also seasoned forex traders should test a new broker with a demo account before making a deposit. It’s just that like anything else in life, a simulation cannot fully prepare you for the real thing.
What do you think? Are there any other pitfalls that you can think of?
Tuesday, November 1, 2011
EUR/USD Nov. 1 – Falls on Greek Referendum
EURUSD is free falling. The hangover from the EU Summit has intensified as the Greek Prime Minister announced a referendum to approve the recent EU deal. This gamble, alongside more signs of global slowdown, weigh heavily on the common currency, which already returned to the levels last seen before the previous summit.
Here’s a short update on fundamentals and what’s going on in the markets.
EUR/USD Fundamentals
14:00 US ISM Manufacturing PMI. Exp. 52.1 points. First hint towards the Non-Farm Payrolls. See how to trade this event with USD/JPY.
14:00 US Construction Spending. Exp. +0.4%.
14:00 US ISM Manufacturing Prices. Exp. 55.1 points.
* All times are GMT.
EUR/USD Sentiment
Greek Referendum: In a move that came as a shocker (although hinted in the past) Greece’s Prime Minister Papandeou announced that the recent EU Summit deal will be brought to the Greek public. This can delay implementation in the better scenario, and receive a NO in the more realistic scenario.
Partial Holiday: It’s “All Saints” Day in many European countries, hence no economic indicators and a slightly lower volume.
Global Slowdown: Chinese PMIs weren’t so convincing, and the sharp drop in British PMI. These join weak euro-zone figures published recently. The Australian rate cut, by itself a downwards sign, was accompanied with a weak sentiment.
EU Summit Doubts: After a very cheerful reception for the EU Summit results, the doubts begin to rise. This begins with no demand for a specific participation in the Greek haircut, continues with doubts about the willingness of China to really help, and the open question of CDS triggering.
Yen intervention fading: The Japanese authorities had enough after USD/JPY fell to 75.31 and made a sharp move in the pair, sending it as much as 400 pips higher before dropping a bit. This wild action sent EUR/USD down, and started the downfall. In the meantime, USD/JPY calmed down and EUR/USD continues on its own.
Italian bonds yields soaring: One of the stronger signs of disbelief comes from Italy. Berlusconi was forced to accept concessions, but they aren’t really huge. Until the leveraged EFSF comes into action, Italy suffers in its bond auctions and was forced to pay a dear price. The ECB, headed by Italian from Tuesday, still finds itself acting and buying bonds to lower their yields. This is a worrying sign. 10 year yields are currently 6.20% – as if the ECB never intervened…
US Situation Improving: The first read of GDP for the third quarter of 2011 came out at 2.5%. This was within expectations but much better than the previous quarters. While it triggered a strong risk rally, there’s still uncertainty about how the Federal Reserve will digest this. They might raise forecasts, but some expect them to act in the meeting this Wednesday.
Here’s a short update on fundamentals and what’s going on in the markets.
EUR/USD Fundamentals
14:00 US ISM Manufacturing PMI. Exp. 52.1 points. First hint towards the Non-Farm Payrolls. See how to trade this event with USD/JPY.
14:00 US Construction Spending. Exp. +0.4%.
14:00 US ISM Manufacturing Prices. Exp. 55.1 points.
* All times are GMT.
EUR/USD Sentiment
Greek Referendum: In a move that came as a shocker (although hinted in the past) Greece’s Prime Minister Papandeou announced that the recent EU Summit deal will be brought to the Greek public. This can delay implementation in the better scenario, and receive a NO in the more realistic scenario.
Partial Holiday: It’s “All Saints” Day in many European countries, hence no economic indicators and a slightly lower volume.
Global Slowdown: Chinese PMIs weren’t so convincing, and the sharp drop in British PMI. These join weak euro-zone figures published recently. The Australian rate cut, by itself a downwards sign, was accompanied with a weak sentiment.
EU Summit Doubts: After a very cheerful reception for the EU Summit results, the doubts begin to rise. This begins with no demand for a specific participation in the Greek haircut, continues with doubts about the willingness of China to really help, and the open question of CDS triggering.
Yen intervention fading: The Japanese authorities had enough after USD/JPY fell to 75.31 and made a sharp move in the pair, sending it as much as 400 pips higher before dropping a bit. This wild action sent EUR/USD down, and started the downfall. In the meantime, USD/JPY calmed down and EUR/USD continues on its own.
Italian bonds yields soaring: One of the stronger signs of disbelief comes from Italy. Berlusconi was forced to accept concessions, but they aren’t really huge. Until the leveraged EFSF comes into action, Italy suffers in its bond auctions and was forced to pay a dear price. The ECB, headed by Italian from Tuesday, still finds itself acting and buying bonds to lower their yields. This is a worrying sign. 10 year yields are currently 6.20% – as if the ECB never intervened…
US Situation Improving: The first read of GDP for the third quarter of 2011 came out at 2.5%. This was within expectations but much better than the previous quarters. While it triggered a strong risk rally, there’s still uncertainty about how the Federal Reserve will digest this. They might raise forecasts, but some expect them to act in the meeting this Wednesday.
Saturday, October 22, 2011
Forex Most Important Events of the Week – October 24-28
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.
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.
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.
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