Sunday, October 11, 2009
What is Forex ?
The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.
What is Forex Trading????????
The investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.
Retail forex
In financial markets, the retail forex (retail off-exchange currency trading or retail FX) market is a subset of the larger foreign exchange market. This "market has long been plagued by swindlers preying on the gullible," according to The New York Times1. Whilst there may be a number of fully regulated, reputable international companies that provide a highly transparent and honest service, it's commonly thought that about 90% of all retail FX traders lose money.
It is now possible to trade cash FX, or forex (short for Foreign Exchange (FX)) or currencies around the clock with hundreds of foreign exchange brokers through trading platforms. The reason that the business is so profitable is because in many cases brokers are taking the opposite side of the trade, and therefore turning client capital directly into broker profit as the average account loses money. Some brokers provide a matching service, charging a commission instead of taking the opposite site of the trade and "netting the spread", as it is referred to within the forex "industry."
Recently forex brokers have become increasingly regulated. Minimum capital requirements of US$20m now apply in the US, as well as stringent requirements now in Germany and the United Kingdom. Switzlerand now requires forex brokers to become a bank before conducting fx brokerage business from Switzerland
Algorythmic or machine based formula trading has become increasingly popular in the FX market,with a number of popular packages allowing the customer to program his own studies.
The most traded of the "major" currencies is the pair known as the EUR/USD, due to its size, median volatility and relatively low "spread", referring to the difference between the bid and the ask price. This is usually measured in "pips", normally 1/100 of a full point
According to the October 2008 issue of e-Forex Magazine, the retail FX market is seeing continued explosive growth despite, and perhaps because of, losses in other markets like global equities in 2008.
It is now possible to trade cash FX, or forex (short for Foreign Exchange (FX)) or currencies around the clock with hundreds of foreign exchange brokers through trading platforms. The reason that the business is so profitable is because in many cases brokers are taking the opposite side of the trade, and therefore turning client capital directly into broker profit as the average account loses money. Some brokers provide a matching service, charging a commission instead of taking the opposite site of the trade and "netting the spread", as it is referred to within the forex "industry."
Recently forex brokers have become increasingly regulated. Minimum capital requirements of US$20m now apply in the US, as well as stringent requirements now in Germany and the United Kingdom. Switzlerand now requires forex brokers to become a bank before conducting fx brokerage business from Switzerland
Algorythmic or machine based formula trading has become increasingly popular in the FX market,with a number of popular packages allowing the customer to program his own studies.
The most traded of the "major" currencies is the pair known as the EUR/USD, due to its size, median volatility and relatively low "spread", referring to the difference between the bid and the ask price. This is usually measured in "pips", normally 1/100 of a full point
According to the October 2008 issue of e-Forex Magazine, the retail FX market is seeing continued explosive growth despite, and perhaps because of, losses in other markets like global equities in 2008.
Automated Forex Trading
Are you a disciplined individual? According to expert Forex traders, the only ones who succeed in the Forex market are those people who stay disciplined despite their success or failure. Automated Forex trading has changed the way traders make their transactions. If you’re a savvy Forex trader, you can definitely benefit from using these automated systems.
For beginners in the Forex trade, be warned that most of the trading systems sold or offered online are considered junk and useless. Oftentimes, these systems provide tested simulations and cleverly hyped marketing strategies that do not work. By using ‘junk’ trading systems, you can lose your investment.
There are simple trading systems offered online which can yield higher returns when used properly and consistently. The simpler the automated trading system, the easier it is to use; you see, complicated systems do not guarantee success at all times so be very careful when choosing the appropriate Forex system.
For example, if you think that a certain currency is going to maintain four weeks high standing, buy it. If you have a low-standing currency, you can sell it before the price goes down further. This system is also called breakout wherein all your moves within the Forex market is based on the highs and lows. Soon, you will be able to penetrate the market’s big trends.
Big trends usually last for several weeks, months, or even years. Take a look at the Forex chart and study it. The whole system is automatic and the rules are quite objective. This system is also known as a Forex robot and it can operate fifteen minutes everyday. The creator of this Forex robot was Richard Donchian, a Forex trader.
If you want a simple system, the Forex robot may work for you. Traders who prefer complex trading systems often expect more from this system and so they would rather opt for another system which can meet their expectations. The Forex robot is not fussy and it can help you in identifying the top picks and the bottom picks.
Successful Forex traders spend enough time and effort to make informed trading decisions. As a wise trader, you should not rush things. Allow the system to work. Don’t believe in the myth that complex and expensive systems are more efficient. If you’re serious in Forex trading, you can earn lots of profits with minimal effort.
Observe today’s market trends. If you think that the Forex robot will work for you, considering the existing trends in the Forex market, you can use it because it is logical, very simple, and continuously works. the automated trading system can be obtained for free online just case you want to see how it works. If you think that the Forex robot is another junk like all other systems, check its background. Try to review ratings and testimonials to find out more about this excellent and efficient system.
The modern world is very different from that of long ago. Many of today’s basic tasks are now handled automatically. If you want an automated Forex system, you can make use of the Forex robot. Hurry and look for this system online; if you want, you can also check Richard Donchian to find more info about it. You will greatly benefit from this system over the long run. Don’t overexert yourself in studying the Forex market because with the aid of the automated system, you can go a long way.
For beginners in the Forex trade, be warned that most of the trading systems sold or offered online are considered junk and useless. Oftentimes, these systems provide tested simulations and cleverly hyped marketing strategies that do not work. By using ‘junk’ trading systems, you can lose your investment.
There are simple trading systems offered online which can yield higher returns when used properly and consistently. The simpler the automated trading system, the easier it is to use; you see, complicated systems do not guarantee success at all times so be very careful when choosing the appropriate Forex system.
For example, if you think that a certain currency is going to maintain four weeks high standing, buy it. If you have a low-standing currency, you can sell it before the price goes down further. This system is also called breakout wherein all your moves within the Forex market is based on the highs and lows. Soon, you will be able to penetrate the market’s big trends.
Big trends usually last for several weeks, months, or even years. Take a look at the Forex chart and study it. The whole system is automatic and the rules are quite objective. This system is also known as a Forex robot and it can operate fifteen minutes everyday. The creator of this Forex robot was Richard Donchian, a Forex trader.
If you want a simple system, the Forex robot may work for you. Traders who prefer complex trading systems often expect more from this system and so they would rather opt for another system which can meet their expectations. The Forex robot is not fussy and it can help you in identifying the top picks and the bottom picks.
Successful Forex traders spend enough time and effort to make informed trading decisions. As a wise trader, you should not rush things. Allow the system to work. Don’t believe in the myth that complex and expensive systems are more efficient. If you’re serious in Forex trading, you can earn lots of profits with minimal effort.
Observe today’s market trends. If you think that the Forex robot will work for you, considering the existing trends in the Forex market, you can use it because it is logical, very simple, and continuously works. the automated trading system can be obtained for free online just case you want to see how it works. If you think that the Forex robot is another junk like all other systems, check its background. Try to review ratings and testimonials to find out more about this excellent and efficient system.
The modern world is very different from that of long ago. Many of today’s basic tasks are now handled automatically. If you want an automated Forex system, you can make use of the Forex robot. Hurry and look for this system online; if you want, you can also check Richard Donchian to find more info about it. You will greatly benefit from this system over the long run. Don’t overexert yourself in studying the Forex market because with the aid of the automated system, you can go a long way.
Introduction to Currency Trading
The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.
Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders. Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will. The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements. The goal of this forex tutorial is to provide a foundation for investors or traders who are new to the foreign currency markets. We'll cover the basics of exchange rates, the market's history and the key concepts you need to understand in order to be able to participate in this market. We'll also venture into how to start trading foreign currencies and the different types of strategies that can be employed.
Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders. Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will. The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements. The goal of this forex tutorial is to provide a foundation for investors or traders who are new to the foreign currency markets. We'll cover the basics of exchange rates, the market's history and the key concepts you need to understand in order to be able to participate in this market. We'll also venture into how to start trading foreign currencies and the different types of strategies that can be employed.
Foreign exchange market
The slick orange fox jumped over the half asleep dog.
The foreign exchange market (Currency, Forex, or FX) market is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.
Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.
The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies.
The foreign exchange market (Currency, Forex, or FX) market is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. FX transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.
Today, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.
The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies.
The rise of risk appetite evident during Asians ho...
The rise of risk appetite evident during Asians hours last night was maintained, albeit in a more half-heartened manner during the London session. European stock indices are trading modestly higher and while EUR/USD is still holding above last night’s NY close, EUR/USD has failed to extend much beyond 1.4060 and is trading choppily within a 1.4015 to 1.4065 range with few fresh incentives coming to light. Sterling again has stolen the limelight, with cable surging to a high of 1.64995 in early London hours before GBP sellers chased it back down to 1.6440. The fall in EUR/GBP was contained in the 0.8515 area.
There have been no UK data releases this morning. Investors continue to trade the range in cable (GBP/USD1.6185 – 1.6600 range). EUR/GBP remains in its downtrend but there are signs of the sterling rally vs the EUR losing momentum. This week’s disappointing OECD forecast for the UK economy (GDP at -4.3% in 2009) combined with yesterday’s weak retail sector outlook from the CBI and this week’s weak BoE lending data have raised doubts on previous forecasts that the UK economy will return to growth during the final quarter of this year. This morning key data releases have been confined to soft import price data for Germany (flat m/m in May) and confirmation that the French economy contracted by -1.2% q/q in Q1. German lander CPI data are mostly still awaited. Overnight, the NZD was hit by weaker than expected Q1 GDP. The -1.0% q/q contraction prompted NZD/USD to fall back to the 0.6420 level and pushed AUD/NZD higher as the market took on board the greater prospect of another rate cut from the RBNZ.
USD/JPY is little changed from the NY close, the JPY unable to hold on to overnight gains as risk appetite rose. Japanese CPI data overnight weakened further (-1.1% y/y) highlighting the difficulties for the BOJ when faced with rates already close to zero (0.1%) and a relatively strong exchange rate. Some brighter news came with the better than expected all industry activity index which rose to 2.6% m/m in April. There is no consensus in the market with respect to Japanese workers’ summer bonuses. Speculation that these will weaken the yen due to increased purchases of overseas assets are being balanced by talk that lessened bonuses this year are more likely to be spent on necessities.
EUR/CHF is mostly holding above the 1.5300. Intervention by the SNB earlier this week has been taken as a signal that the SNB are serious about offsetting CHF strength. There is still uncertainty whether the SNB can protect the 1.500/1.5100 level indefinitely. To some degree this will depend on the strength of the global recovery which should bring a decline in demand for the CHF. Today’s release of the June KOF leading indicator fell to -01.65 highlights the weakness of the Swiss economy.
This afternoon US May personal income and expenditure data and the final Michigan confidence data are due.
There have been no UK data releases this morning. Investors continue to trade the range in cable (GBP/USD1.6185 – 1.6600 range). EUR/GBP remains in its downtrend but there are signs of the sterling rally vs the EUR losing momentum. This week’s disappointing OECD forecast for the UK economy (GDP at -4.3% in 2009) combined with yesterday’s weak retail sector outlook from the CBI and this week’s weak BoE lending data have raised doubts on previous forecasts that the UK economy will return to growth during the final quarter of this year. This morning key data releases have been confined to soft import price data for Germany (flat m/m in May) and confirmation that the French economy contracted by -1.2% q/q in Q1. German lander CPI data are mostly still awaited. Overnight, the NZD was hit by weaker than expected Q1 GDP. The -1.0% q/q contraction prompted NZD/USD to fall back to the 0.6420 level and pushed AUD/NZD higher as the market took on board the greater prospect of another rate cut from the RBNZ.
USD/JPY is little changed from the NY close, the JPY unable to hold on to overnight gains as risk appetite rose. Japanese CPI data overnight weakened further (-1.1% y/y) highlighting the difficulties for the BOJ when faced with rates already close to zero (0.1%) and a relatively strong exchange rate. Some brighter news came with the better than expected all industry activity index which rose to 2.6% m/m in April. There is no consensus in the market with respect to Japanese workers’ summer bonuses. Speculation that these will weaken the yen due to increased purchases of overseas assets are being balanced by talk that lessened bonuses this year are more likely to be spent on necessities.
EUR/CHF is mostly holding above the 1.5300. Intervention by the SNB earlier this week has been taken as a signal that the SNB are serious about offsetting CHF strength. There is still uncertainty whether the SNB can protect the 1.500/1.5100 level indefinitely. To some degree this will depend on the strength of the global recovery which should bring a decline in demand for the CHF. Today’s release of the June KOF leading indicator fell to -01.65 highlights the weakness of the Swiss economy.
This afternoon US May personal income and expenditure data and the final Michigan confidence data are due.
London Session
The speedy orange fox bounded over the old dog.
Sterling, the AUD and the NZD have all made huge gain vs the USD this morning; the EUR has also seen a sizeable rally. The weakness of the USD can be linked to the US treasury market and fears over the ballooning size of the US budget deficit.
The rise in long term US interest rates and weaker USD are consistent with the view that the market has reduced its ‘safe-haven’ long positions which were built during the height of the financial crisis. Even though it is possible that there could be further bad news ahead, demand for safe haven assets is presently out of favour. For now focus is on how the US will reduce its deficit and fund its debt going forward, and crucially who will buy the debt. Treasury Secretary is visiting China. He reassured his hosts overnight that he wants to shrink the budget deficit to around 3% of GDP. These reassurances are necessary given the huge proportion of US debt that is owned by the Chinese and other overseas investors. However, it will be a huge effort for the US government to reduce its budget deficit. In the meantime it seem reasonable that overseas investors will demand higher yields to compensate them for holding Treasuries given the increased risk associated with higher supply and given the longer-term inflationary threat implied by QE. The Fed, however, are trying to keep long-term interest rates down through QE to re-inflate the economy. There is a risk therefore that QE could put overseas buyers off. However, if the Fed does not announce more QE there may be risk that the economic recovery could falter. US policy makers will have to tread carefully in the months ahead with respect to the amounts of QE. In the meantime, the market is playing safe by selling the dollar.
The weakness of the USD is feeding the rally in commodities and giving significant support to gold. The AUD and the NZD have surged, and further upside to ‘risky’ currencies is likely if the Fed does increase its QE plan. Sterling is also benefitting from the rally in risk, with cable bursting through the USD1.6250 area in early London trading before meeting some resistance ahead of USD1.6400. News overnight from the UK Hometrack survey showing house stable prices in May also helped sterling as did the better than expected manufacturing PMI data which rose to 45.4 in May from an upwardly revised 43.1 in April. EUR/GBP has pushed down towards the EUR/GBP0. 8670 level before running into support. PMI data from Italy and Spain and final PMIs from Germany and France all showed improvement lending support to the EUR’s rally vs the USD. EUR/USD surged higher in early European hours but ran into sellers at EUR/USD1.4240
This afternoon, US personal spending and ISM data is due. Canadian Q1 GDP will be released.
Sterling, the AUD and the NZD have all made huge gain vs the USD this morning; the EUR has also seen a sizeable rally. The weakness of the USD can be linked to the US treasury market and fears over the ballooning size of the US budget deficit.
The rise in long term US interest rates and weaker USD are consistent with the view that the market has reduced its ‘safe-haven’ long positions which were built during the height of the financial crisis. Even though it is possible that there could be further bad news ahead, demand for safe haven assets is presently out of favour. For now focus is on how the US will reduce its deficit and fund its debt going forward, and crucially who will buy the debt. Treasury Secretary is visiting China. He reassured his hosts overnight that he wants to shrink the budget deficit to around 3% of GDP. These reassurances are necessary given the huge proportion of US debt that is owned by the Chinese and other overseas investors. However, it will be a huge effort for the US government to reduce its budget deficit. In the meantime it seem reasonable that overseas investors will demand higher yields to compensate them for holding Treasuries given the increased risk associated with higher supply and given the longer-term inflationary threat implied by QE. The Fed, however, are trying to keep long-term interest rates down through QE to re-inflate the economy. There is a risk therefore that QE could put overseas buyers off. However, if the Fed does not announce more QE there may be risk that the economic recovery could falter. US policy makers will have to tread carefully in the months ahead with respect to the amounts of QE. In the meantime, the market is playing safe by selling the dollar.
The weakness of the USD is feeding the rally in commodities and giving significant support to gold. The AUD and the NZD have surged, and further upside to ‘risky’ currencies is likely if the Fed does increase its QE plan. Sterling is also benefitting from the rally in risk, with cable bursting through the USD1.6250 area in early London trading before meeting some resistance ahead of USD1.6400. News overnight from the UK Hometrack survey showing house stable prices in May also helped sterling as did the better than expected manufacturing PMI data which rose to 45.4 in May from an upwardly revised 43.1 in April. EUR/GBP has pushed down towards the EUR/GBP0. 8670 level before running into support. PMI data from Italy and Spain and final PMIs from Germany and France all showed improvement lending support to the EUR’s rally vs the USD. EUR/USD surged higher in early European hours but ran into sellers at EUR/USD1.4240
This afternoon, US personal spending and ISM data is due. Canadian Q1 GDP will be released.
New York Session
The speedy grey fox leaped over the sluggish dog.
The NY session saw a perfect storm develop against the US dollar as risk taking and lower US yields weighed on the buck. Better earnings in the retail space helped buoy shares and the S&P climbed comfortably back above the 900 mark, adding a nice 2.1% on the day. Commodities were better bid and the CRB index rallied more than 1.4%. Oil was a main driver of the gains as crude jumped nearly $2 to back above the $70/bbl mark. Gold, for its part, added $8 on the day towards 939/940 as the precious metal continues to get bought ahead of 900 support.
If this wasn’t enough, yields in the US also pushed lower on the back of another excellent Treasury auction. The 7-year saw a 2.82 bid/cover with more than 67% of the offer going to indirect bidders (foreign central banks). The results were well above recent trends and suggest US funding concerns are way overdone at this point. Bonds were bought hand-over-fist and the 10-year yield dropped -15 basis points to 3.54%. This impacts the US rate differential (making US assets relatively less attractive from a rate of return standpoint) and could weigh on the dollar if sustained.
EUR/USD was ultimately higher on the back of the dollar-negative developments and the pair popped from a session low 1.3989 to a high of roughly 1.4010/15. The air above 1.40 remains thin and we would expect good resistance into that area. GBP/USD recovered from a collapse into 1.6235 to sit near 1.6370 at the NY close.
The only economic data of note was US initial jobless claims and they jumped to a higher than anticipated 627K from 612K the prior week. This was the biggest change in claims in about one month and puts a damper on expectations for a speedy job market recovery.
Upcoming Economic Data Releases (Asia Session) prior expected
6/25 22:45
GMT
NZ
GDP
QoQ 1Q
-0.90% -0.70%
6/25
23:01
GMT
UK Bank of England Releases
Financial Stability Report
25-Jun
6/25 23:30
GMT
JN
Tokyo CPI YoY
JUN
-0.80% -1.30%
6/25 23:30
GMT
JN
Tokyo CPI Ex-Fresh Food YoY
JUN
-0.70% -1.00%
6/25
23:50
GMT
JN
All Industry Activity Index (MoM)
APR
-2.40% 2.30%
The NY session saw a perfect storm develop against the US dollar as risk taking and lower US yields weighed on the buck. Better earnings in the retail space helped buoy shares and the S&P climbed comfortably back above the 900 mark, adding a nice 2.1% on the day. Commodities were better bid and the CRB index rallied more than 1.4%. Oil was a main driver of the gains as crude jumped nearly $2 to back above the $70/bbl mark. Gold, for its part, added $8 on the day towards 939/940 as the precious metal continues to get bought ahead of 900 support.
If this wasn’t enough, yields in the US also pushed lower on the back of another excellent Treasury auction. The 7-year saw a 2.82 bid/cover with more than 67% of the offer going to indirect bidders (foreign central banks). The results were well above recent trends and suggest US funding concerns are way overdone at this point. Bonds were bought hand-over-fist and the 10-year yield dropped -15 basis points to 3.54%. This impacts the US rate differential (making US assets relatively less attractive from a rate of return standpoint) and could weigh on the dollar if sustained.
EUR/USD was ultimately higher on the back of the dollar-negative developments and the pair popped from a session low 1.3989 to a high of roughly 1.4010/15. The air above 1.40 remains thin and we would expect good resistance into that area. GBP/USD recovered from a collapse into 1.6235 to sit near 1.6370 at the NY close.
The only economic data of note was US initial jobless claims and they jumped to a higher than anticipated 627K from 612K the prior week. This was the biggest change in claims in about one month and puts a damper on expectations for a speedy job market recovery.
Upcoming Economic Data Releases (Asia Session) prior expected
6/25 22:45
GMT
NZ
GDP
QoQ 1Q
-0.90% -0.70%
6/25
23:01
GMT
UK Bank of England Releases
Financial Stability Report
25-Jun
6/25 23:30
GMT
JN
Tokyo CPI YoY
JUN
-0.80% -1.30%
6/25 23:30
GMT
JN
Tokyo CPI Ex-Fresh Food YoY
JUN
-0.70% -1.00%
6/25
23:50
GMT
JN
All Industry Activity Index (MoM)
APR
-2.40% 2.30%
Asia Session
The speedy grey fox jumped over the old dog.
The choke hold that has been on the US Dollar as of late was temporality loosened prior to the open in Asia after the Greenback spent its time in New York recording some new lows for 2009. The action was choppy in NY with a high near 1.4297, EUR/USD fell closer to the 1.4140 level and began the day in Asia near 1.4160 and as well, exited the session near the same 1.4160 level, with about 50 pips of moves in between. Most pairs were relatively stable in Asian trading, ending the day close to where they began, with minor moves in between. GBP/USD began the session near 1.64400 and after moves in a less than 60 pip range looked to enter the London stage at the same opening levels. The Yen made small gains in Asia after aggressive selling in NY was used to help fund the reemerging carry trade. USD/JPY playing in a 65 pip range lost 20 pips on the day to close out near 96.40. EUR/JPY dropped about 20 pips for the day to end out near 136.45 after a late day surge in NY pushed the pair over 137.00 for the first time since early April. The 112.00 levels we witnessed early in the year seem far removed indeed. Overall, the climate in the currency markets is dominated currently by data, more precisely, the remaining central bank rate decisions that are on the docket for the week. With the RBA leaving rates unchanged today as expected at 3.0%, we still have Canadian, Euro Zone and British rates on the path ahead, and as could be expected, traders are tentative with these type of announcements on the table.
par Upcoming Economic Data Releases (London Session) prior expected
6/2/2009
5:45
SZ
GDP (QoQ)
1Q
-0.30%
-1.50%
6/2/2009
5:45
SZ
GDP (YoY)
1Q
-0.60%
-1.70%
6/2/2009
6:45
FR
Producer Prices (MoM)
APR
-0.40%
-0.20%
6/2/2009
6:45
FR
Producer Prices (YoY)
APR
-5.50%
-6.40%
6/2/2009
7:30
SZ
SVME-Purchasing Managers Index
MAY
34.7
36.5
6/2/2009
8:30
UK
Net Consumer Credit
APR
0.1B
0.1B
6/2/2009
8:30
UK
Net Lending Sec. on Dwellings
APR
0.8B
1.0B
6/2/2009
8:30
UK
Mortgage Approvals
APR
39K
41K
6/2/2009
8:30
UK
M4 Money Supply (MoM)
APR F
0.10%
- -
6/2/2009
8:30
UK
M4 Money Supply (YoY)
APR F
17.40%
- -
6/2/2009
8:30
UK
PMI Construction
MAY
38.1
39.5
6/2/2009
9:00
EC
Euro-Zone Unemployment Rate
APR
8.90%
9.10%
The choke hold that has been on the US Dollar as of late was temporality loosened prior to the open in Asia after the Greenback spent its time in New York recording some new lows for 2009. The action was choppy in NY with a high near 1.4297, EUR/USD fell closer to the 1.4140 level and began the day in Asia near 1.4160 and as well, exited the session near the same 1.4160 level, with about 50 pips of moves in between. Most pairs were relatively stable in Asian trading, ending the day close to where they began, with minor moves in between. GBP/USD began the session near 1.64400 and after moves in a less than 60 pip range looked to enter the London stage at the same opening levels. The Yen made small gains in Asia after aggressive selling in NY was used to help fund the reemerging carry trade. USD/JPY playing in a 65 pip range lost 20 pips on the day to close out near 96.40. EUR/JPY dropped about 20 pips for the day to end out near 136.45 after a late day surge in NY pushed the pair over 137.00 for the first time since early April. The 112.00 levels we witnessed early in the year seem far removed indeed. Overall, the climate in the currency markets is dominated currently by data, more precisely, the remaining central bank rate decisions that are on the docket for the week. With the RBA leaving rates unchanged today as expected at 3.0%, we still have Canadian, Euro Zone and British rates on the path ahead, and as could be expected, traders are tentative with these type of announcements on the table.
par Upcoming Economic Data Releases (London Session) prior expected
6/2/2009
5:45
SZ
GDP (QoQ)
1Q
-0.30%
-1.50%
6/2/2009
5:45
SZ
GDP (YoY)
1Q
-0.60%
-1.70%
6/2/2009
6:45
FR
Producer Prices (MoM)
APR
-0.40%
-0.20%
6/2/2009
6:45
FR
Producer Prices (YoY)
APR
-5.50%
-6.40%
6/2/2009
7:30
SZ
SVME-Purchasing Managers Index
MAY
34.7
36.5
6/2/2009
8:30
UK
Net Consumer Credit
APR
0.1B
0.1B
6/2/2009
8:30
UK
Net Lending Sec. on Dwellings
APR
0.8B
1.0B
6/2/2009
8:30
UK
Mortgage Approvals
APR
39K
41K
6/2/2009
8:30
UK
M4 Money Supply (MoM)
APR F
0.10%
- -
6/2/2009
8:30
UK
M4 Money Supply (YoY)
APR F
17.40%
- -
6/2/2009
8:30
UK
PMI Construction
MAY
38.1
39.5
6/2/2009
9:00
EC
Euro-Zone Unemployment Rate
APR
8.90%
9.10%
Asia Session 2
The quick brown fox bounded over the half asleep dog.
Today’s market open looked promising for the US Dollar, with the Greenback making gains right out of the gate, however the move was short lived as it slipped right back to multi-month lows as traders looked to profit from higher yielding currencies. EUR/USD opened near 1.4140 and initially slipped below 1.4100 before punching back to session highs near 1.4166, just short of Friday’s six month high of 1.4170. The pattern was similar in GBP/USD as the pair slipped on the open and eventually made an almost seven month high of 1.62440, and this was repeated with the AUD/USD and NZD/USD as well. It would seem that the selling of the Dollar and the purchase of risk continues as investors are emboldened with more signs that the worst of the economic crisis is over. USD/JPY dropped lower to 94.66 after hitting initial highs of 95.45 as the Yen buying continued across the board, pushing all the yen based crosses lower. As the session creeps into London, it would seem that the yen crosses are almost complete in paring their losses. Good PMI data out of China help push the commodity currencies higher, as AUD/USD and NZD/USD continued their dynamic moves higher. This week will begin with market moving data and end with it as well, as we start the week in a precarious fashion in NY tomorrow with the supposed bankruptcy of General Motors, and from there we will see rate decisions from Australia, Canada and Great Britain, and finish the week with the US Employment data…..It should be quite a week.
par par Upcoming Economic Data Releases (London Session) prior expected
par 6/1/2009
7:50
FR
PMI Manufacturing
MAY F
43.1
43.1
6/1/2009
7:55
GE
PMI Manufacturing
MAY F
39.1
39.1
6/1/2009
8:00
EC
PMI Manufacturing
MAY F
40.5
40.5
6/1/2009
8:30
UK
PMI Manufacturing
MAY
42.9
44
01-02 JUN
JUN
US
Geithner to Give Speech, Hold Talks With Officials in Beijing
2-Jun
Today’s market open looked promising for the US Dollar, with the Greenback making gains right out of the gate, however the move was short lived as it slipped right back to multi-month lows as traders looked to profit from higher yielding currencies. EUR/USD opened near 1.4140 and initially slipped below 1.4100 before punching back to session highs near 1.4166, just short of Friday’s six month high of 1.4170. The pattern was similar in GBP/USD as the pair slipped on the open and eventually made an almost seven month high of 1.62440, and this was repeated with the AUD/USD and NZD/USD as well. It would seem that the selling of the Dollar and the purchase of risk continues as investors are emboldened with more signs that the worst of the economic crisis is over. USD/JPY dropped lower to 94.66 after hitting initial highs of 95.45 as the Yen buying continued across the board, pushing all the yen based crosses lower. As the session creeps into London, it would seem that the yen crosses are almost complete in paring their losses. Good PMI data out of China help push the commodity currencies higher, as AUD/USD and NZD/USD continued their dynamic moves higher. This week will begin with market moving data and end with it as well, as we start the week in a precarious fashion in NY tomorrow with the supposed bankruptcy of General Motors, and from there we will see rate decisions from Australia, Canada and Great Britain, and finish the week with the US Employment data…..It should be quite a week.
par par Upcoming Economic Data Releases (London Session) prior expected
par 6/1/2009
7:50
FR
PMI Manufacturing
MAY F
43.1
43.1
6/1/2009
7:55
GE
PMI Manufacturing
MAY F
39.1
39.1
6/1/2009
8:00
EC
PMI Manufacturing
MAY F
40.5
40.5
6/1/2009
8:30
UK
PMI Manufacturing
MAY
42.9
44
01-02 JUN
JUN
US
Geithner to Give Speech, Hold Talks With Officials in Beijing
2-Jun
Asia Session 3
The speedy brown fox jumped over the half asleep dog.
The end of the trade week in Asia saw the US Dollar extend losses across the board as traders continued to seek out riskier higher yielding assets on the back of the Federal Reserve seeming to continue on course with low rates. Stocks were higher in the US and that momentum carried over to Asia as stocks looked to post gains for a third straight day. With the dollar being dumped once again, the buck was helped in posting its biggest weekly loss in a month against the single European currency. EUR/USD surged higher today, taking off from 1.3983 and not stopping until it breeched the 1.4060 level. With commodity prices higher, the so called commodity currencies made some ample gains. AUD/USD made a 50 pip move higher to post a high just over 0.8070 and the Canadian Dollar strengthened as well, pulling the USD/CAD pair from 1.1560 to just over the 1.1500 figure. In New Zealand, the picture was not as bright as GDP was released showing a -1.1% decline as opposed to the -0.7% expected. The reaction was swift, as NZD/USD collapsed from 0.6468 to just over 0.6005 in mere minutes. AUD/NZD popped on the data, shooting from near 1.2400 to highs over 1.2535.
Although USD/JPY stayed in a 40 or so pip range between 96.04 and 95.62 with no net move on the session, the EUR/JPY and AUD/JPY pairs both made moves higher, by about 70 and 50 pips respectfully. NZD/JPY suffered the same fate as the other Kiwi anchored pairs, dropping an easy 60 pips in one quick swoop. Traders abandoned the Kiwi Dollar today as they feared that this fifth consecutive negative quarter would force the hand of the RBNZ to lower rates once again.
Have a nice weekend…
Upcoming Economic Data Releases (London Session) prior expected
6/26/2009
6:00
GE
Import Price Index (MoM)
MAY
-0.80%
0.30%
6/26/2009
6:00
GE
Import Price Index (YoY)
MAY
-8.60%
-10.30%
6/26/2009
6:50
FR
Consumer Confidence Indicator
JUN
-40
-39
6/26/2009
9:30
SZ
KOF Swiss Leading Indicator
JUN
-1.86
-1.75
The end of the trade week in Asia saw the US Dollar extend losses across the board as traders continued to seek out riskier higher yielding assets on the back of the Federal Reserve seeming to continue on course with low rates. Stocks were higher in the US and that momentum carried over to Asia as stocks looked to post gains for a third straight day. With the dollar being dumped once again, the buck was helped in posting its biggest weekly loss in a month against the single European currency. EUR/USD surged higher today, taking off from 1.3983 and not stopping until it breeched the 1.4060 level. With commodity prices higher, the so called commodity currencies made some ample gains. AUD/USD made a 50 pip move higher to post a high just over 0.8070 and the Canadian Dollar strengthened as well, pulling the USD/CAD pair from 1.1560 to just over the 1.1500 figure. In New Zealand, the picture was not as bright as GDP was released showing a -1.1% decline as opposed to the -0.7% expected. The reaction was swift, as NZD/USD collapsed from 0.6468 to just over 0.6005 in mere minutes. AUD/NZD popped on the data, shooting from near 1.2400 to highs over 1.2535.
Although USD/JPY stayed in a 40 or so pip range between 96.04 and 95.62 with no net move on the session, the EUR/JPY and AUD/JPY pairs both made moves higher, by about 70 and 50 pips respectfully. NZD/JPY suffered the same fate as the other Kiwi anchored pairs, dropping an easy 60 pips in one quick swoop. Traders abandoned the Kiwi Dollar today as they feared that this fifth consecutive negative quarter would force the hand of the RBNZ to lower rates once again.
Have a nice weekend…
Upcoming Economic Data Releases (London Session) prior expected
6/26/2009
6:00
GE
Import Price Index (MoM)
MAY
-0.80%
0.30%
6/26/2009
6:00
GE
Import Price Index (YoY)
MAY
-8.60%
-10.30%
6/26/2009
6:50
FR
Consumer Confidence Indicator
JUN
-40
-39
6/26/2009
9:30
SZ
KOF Swiss Leading Indicator
JUN
-1.86
-1.75
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