Markets make modest gains on mixed inflation and retail data:
Although the S&P 500 posted a 0.5% gain and the Dow closed up 0.3%, the price action in the equity, Forex, and commodity markets were fairly muted as each market moved in tighter ranges with overall sloppy and choppy price action. The earnings news from Goldman Sachs did little to excite the markets as it became apparent that participants bought the rumor yesterday and sold the fact today.
As I mentioned in last night's update, the markets would want to see higher inflation numbers and better retail sales in order to move up today. The PPI, Retail Sales, and Business Inventories data were quite mixed from an inflation perspective... although the headline numbers gave the appearance of price pressures and some recovery in the consumer sector, once the curtains were pulled back there were obvious signs of lingering deflation. So, because there was no clear view that inflation or the consumer was back in full force, equities, commodities, and the higher-yielding currencies were only able to make minimal gains.
Signs of lingering deflation--
The headline numbers on today's PPI and Retail Sales were inflationary enough to give the S&P 500 and Dow a boost and the dollar and yen a kick lower, but after dissecting the data, the inflation components hidden within the reports were nothing to write home about. When it comes to interpreting fundamental and economic data, the headline numbers get most of the attention but big players who move the markets with their money flows always look beyond the headlines to find the real "truth", if you can call it truth.
If there were true inflationary components within the data, Wall St. would have rallied and made bigger gains on Tuesday along with crude, gold, and higher-yielders like the EUR/USD and GBP/USD, but the gains were very muted. Lets take a look at made today's fundamentals less exciting than they looked on the surface...
PPI and Core PPI: the headline numbers on those reports printed hotter than the market was forecasting but it was all due to energy. The crude price component to PPI was up by 6.6% and that was purely based on the fact crude oil hit $72 in June. The food price component was up by 1.1%, but once you look past that, with all other price components factored in, PPI is actually down -4.6% year-over-year and that number screams deflation.
It would be a totally different story if consumer demand was forcing producers to raise prices at the wholesale level but this is not the case at all, the slight month-over-month increase is all connected back to energy and not rising consumer demand. With PPI at -4.6%, it's hard to see any true price inflation within the data.
Retail sales: the headline numbers seemed decent but once you look under the hood it's plain as day the consumer is dead from a discretionary spending standpoint. The main reason the retail data looked not-so-bad was thanks to gasoline prices rising by 18.5%, home heating oil jumping 15.4% and propane going up by 14.6%.
Consumers were forced to pay more for non-discretionary retail products, they weren't out running up their credit cards at the shopping malls. In fact, retail sales are down a hefty -9.0% year-over-year. And once you back out what the consumer spent on energy and autos, retail sales were actually down -0.2% from just the prior month. The news gets even better... department stores reported a -1.3% drop on their retail sales.
Business Inventories: this report probably gets neglected by the larger segment of the market, but once again, the big players who move the markets break this report down too because it offers a great view on inflation/deflation. Unfortunately, these fundamentals were more deflationary than inflationary. According to the Commerce Department, Business Inventories dropped by -1.0% month-over-month.
Why would a drop in inventories be deflationary? It's simple, less demand forces the reduction of on-hand goods and that is purely deflationary. The report also showed that business sales were lower by -0.1%, and manufacturing sales were -0.9%. Going back to the retail sector, retailers decreased their inventories by -1.6%. Manufacturing inventories fell by -0.6% and wholesaler inventories were -0.8%. And when you break it all down, the report showed business inventories have contracted for 9-months straight and are down -8.0% year-over-year while business sales are down -17.8% year-over-year.
Price inflation may be here sometime in the future but at this point I don't see it around the corner or on the horizon, not with those kinds of numbers. Wall St., crude, gold, and the higher-yielding currencies flat out need inflation to make sustainable upside moves and at this point it just doesn't exist.
Wall St. earnings data will continue moving equity and Forex markets:
As I sat down to write this update Intel released their earnings, which came in much better than expected, and within a matter of seconds the S&P 500 and Dow futures surged to their highest levels all week, pulling the EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY up with them.
Whether or not traders believe news moves markets, it doesn't matter, the human reaction to the news is what moves markets and I don't see any end in sight to that trend. I'm not suggesting traders use the earnings reports as actual trade indicators for their favorite currency pair but what is important is to be consciously aware of when this data will hit the markets so you do not find yourself caught off guard or potentially on the wrong side of an extended market move.
The markets remain highly emotional and will continue reacting emotionally whenever the opportunity presents itself. For now, the earnings data will be one of the main catalysts which cause these emotional reactions. Earnings season will last for the next few weeks after getting their start last Wednesday. Since earnings season started the news has been surprisingly good, and in turn, the S&P 500 has posted a 3.0% gain and the Dow has moved up by 2.3%.
There is another benefit to paying attention to the earnings data... looking over the numbers can give good insight into the state of the economy. For example, JB Hunt, which is a huge trucking line in the US, underperformed on its earnings expectations. It should be easy to put 2 and 2 together on this one... JB Hunt is a major player in terms of shipping consumer and retail goods across the country in addition to having connection to the manufacturing and business sector. If JB Hunt's revenues are down, they're not hauling, and if they're not hauling, there is less demand from those various growth-related sectors.
While it might be all well and good that a pseudo hedge fund like Goldman Sachs can turn a $3 billion profit, keep in mind until just a few weeks ago they had $10 billion in taxpayer equity to work with, and they borrowed $28 billion from the FDIC at near zero interest rates, and they got $5 billion from Warren Buffet in order to make their moves in the market. Goldman was levered up by 17:1 (equity/assets) and had the full faith and confidence of the Fed, Treasury, and FDIC backing their trades. If making money in the markets were only that easy...
A company like JB Hunt doesn't have those luxuries but they are the real bellwethers of the economy, not Goldman Sachs. So as were in the midst of earnings season, do yourself a favor and look at the performance of companies who haven't been bailed out by taxpayers and who conduct business in the consumer, retail, housing, manufacturing, and transportation sectors. They will give much better insights into the state of the economy.
My favorite resource to keep up with the earnings data is here.
Wednesday trading:
Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.
Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.
Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes. The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.
There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets. For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...
During last week's trading we all saw what kind of impact the earnings reports and the moves on the S&P and Dow Jones had on the currency, commodity, and bond markets... for the week ahead I expect to see the same exact themes play out as news, data, and fundamentals remain the witch's brew of choice for the big money market movers.
Last week approximately 25% of earnings were released but over the next two weeks we get the other 75%, so do not expect any change in how those events act as the catalyst in the Forex market and Forex's correlated markets. Over-the-top earnings from the likes of Goldman Sachs, Intel, IBM, JP Morgan, and Bank of America led to a 7% gain on the S&P 500 and the Dow surging up 7.3%. The strong upside gains on the US and European equity markets sent crude oil up 6%, gold up over 2%, and Treasuries to their first decline in 6-weeks.
Market participants sent their money-flows out of Treasuries and back into equities with measured conviction as we saw the yield on the 10-year note rocket up 34bps. In this weekly outlook I'm going a little more in-depth about Treasury yield curves, specifically between 2-year and 10-year notes, because the spread and yield curve between those two key debt issuances can often times reveal quite a bit about the overall risk appetite of market participants and how they gauge the potential for future growth of the US economy.
Last Thursday world famous market bear, Nouriel Roubini, gave participants yet another incentive to buy up equities and to sell the dollar and yen as he said the worst of the financial turmoil is behind us and he expects recovery by the end of the year. Although he did say another stimulus package would be required to combat the seemingly unstoppable rise in unemployment.
So, is any of this real? Are the global financial markets really recovering and is everything really fixed? I personally do not think so, I believe another tsunami wave could hit the equity, commodity, and Forex markets later this quarter or in Q4, but it doesn't matter because in this game perception is the reality... the recovery is as real as the markets want it to be and make it out to be. The thing I have to constantly remind myself is, the markets can stay irrationally exuberant for an indeterminable amount of time.
Fundamental events moving the Forex and equity markets this week:
This week's fundamental and economic calendar is a little lighter than usual for US data but for European data there are a number of critical fundamental events that center on inflation, the consumer, production, and manufacturing.
Bernanke testimony--
For the US dollar the bigger fundamental events take place on Tuesday and Wednesday as Fed Bernanke testifies before the House Financial Services Committee and Senate Banking Committee in DC. Bernanke's testimony will be on past, current, and future Fed monetary policy (interest rates), the state of the US economy, inflation/deflation, the housing and employment sectors, the deficit, sovereign debt monetization, future stimulus measures and the prospects of a sustainable recovery on Wall St.
All markets and all participants will be watching the Bernanke testimony and reacting accordingly. Remember, back in mid-March it was Bernanke who was one of the main catalysts that stopped the plunge in the equity markets, turned the S&P 500 higher and sent the dollar falling back off the throne it temporarily inhabited. Bernanke coined the stupid phrase, "green shoots", and the markets ran euphorically with it. Recent Fed rhetoric has been positive, upbeat, and the FOMC has upwardly revised their growth and inflation expectations.
Not all the members on those congressional committees are buying into the idea of an instantaneous recovery, especially Ron Paul and Jim Bunning. What traders need to be watching is whether the overall sentiment of these testimonies is more on the positive side or on the negative side in terms of the future prospects of the US economy because the money-movers in the equity, commodity, and Forex markets will take their cue from Bernanke's messages to congress and how those congressional committees react.
Key EUR/USD fundamentals--
German PPI (Monday 0200 EST)
Fed Lockhart speech (Monday 1330 EST)
Fed Bernanke testimony (Tuesday 1000 EST)
Eurozone Industrial New Orders (Wednesday 0500 EST)
Fed Bernanke testimony (Wednesday 1000 EST)
House Price Index (Wednesday 1000 EST)
Crude Inventories (Wednesday 1030 EST)
Initial Claims (Thursday 0830 EST)
Fed Tarullo speech (Thursday 0930 EST)
Existing Home Sales (Thursday 1030 EST)
German Manufacturing and Services PMI (Friday 0330 EST)
Eurozone Manufacturing and Services PMI (Friday 0400 EST)
German IFO (Friday 0400 EST)
Michigan Sentiment (Friday 0955 EST)
Last week approximately 25% of earnings were released but over the next two weeks we get the other 75%, so do not expect any change in how those events act as the catalyst in the Forex market and Forex's correlated markets. Over-the-top earnings from the likes of Goldman Sachs, Intel, IBM, JP Morgan, and Bank of America led to a 7% gain on the S&P 500 and the Dow surging up 7.3%. The strong upside gains on the US and European equity markets sent crude oil up 6%, gold up over 2%, and Treasuries to their first decline in 6-weeks.
Market participants sent their money-flows out of Treasuries and back into equities with measured conviction as we saw the yield on the 10-year note rocket up 34bps. In this weekly outlook I'm going a little more in-depth about Treasury yield curves, specifically between 2-year and 10-year notes, because the spread and yield curve between those two key debt issuances can often times reveal quite a bit about the overall risk appetite of market participants and how they gauge the potential for future growth of the US economy.
Last Thursday world famous market bear, Nouriel Roubini, gave participants yet another incentive to buy up equities and to sell the dollar and yen as he said the worst of the financial turmoil is behind us and he expects recovery by the end of the year. Although he did say another stimulus package would be required to combat the seemingly unstoppable rise in unemployment.
So, is any of this real? Are the global financial markets really recovering and is everything really fixed? I personally do not think so, I believe another tsunami wave could hit the equity, commodity, and Forex markets later this quarter or in Q4, but it doesn't matter because in this game perception is the reality... the recovery is as real as the markets want it to be and make it out to be. The thing I have to constantly remind myself is, the markets can stay irrationally exuberant for an indeterminable amount of time.
Fundamental events moving the Forex and equity markets this week:
This week's fundamental and economic calendar is a little lighter than usual for US data but for European data there are a number of critical fundamental events that center on inflation, the consumer, production, and manufacturing.
Bernanke testimony--
For the US dollar the bigger fundamental events take place on Tuesday and Wednesday as Fed Bernanke testifies before the House Financial Services Committee and Senate Banking Committee in DC. Bernanke's testimony will be on past, current, and future Fed monetary policy (interest rates), the state of the US economy, inflation/deflation, the housing and employment sectors, the deficit, sovereign debt monetization, future stimulus measures and the prospects of a sustainable recovery on Wall St.
All markets and all participants will be watching the Bernanke testimony and reacting accordingly. Remember, back in mid-March it was Bernanke who was one of the main catalysts that stopped the plunge in the equity markets, turned the S&P 500 higher and sent the dollar falling back off the throne it temporarily inhabited. Bernanke coined the stupid phrase, "green shoots", and the markets ran euphorically with it. Recent Fed rhetoric has been positive, upbeat, and the FOMC has upwardly revised their growth and inflation expectations.
Not all the members on those congressional committees are buying into the idea of an instantaneous recovery, especially Ron Paul and Jim Bunning. What traders need to be watching is whether the overall sentiment of these testimonies is more on the positive side or on the negative side in terms of the future prospects of the US economy because the money-movers in the equity, commodity, and Forex markets will take their cue from Bernanke's messages to congress and how those congressional committees react.
Key EUR/USD fundamentals--
German PPI (Monday 0200 EST)
Fed Lockhart speech (Monday 1330 EST)
Fed Bernanke testimony (Tuesday 1000 EST)
Eurozone Industrial New Orders (Wednesday 0500 EST)
Fed Bernanke testimony (Wednesday 1000 EST)
House Price Index (Wednesday 1000 EST)
Crude Inventories (Wednesday 1030 EST)
Initial Claims (Thursday 0830 EST)
Fed Tarullo speech (Thursday 0930 EST)
Existing Home Sales (Thursday 1030 EST)
German Manufacturing and Services PMI (Friday 0330 EST)
Eurozone Manufacturing and Services PMI (Friday 0400 EST)
German IFO (Friday 0400 EST)
Michigan Sentiment (Friday 0955 EST)
Foreign exchange currency trading is a risky business with much to lose and much to gain. As a professional forex broker and personal trader, I have realized the fast profits this market can reap, while witnessing the dog-eat-dog nature of the beast, in which buyers lose their shirts every minute.
Whether you are a forex trader or just curious about forex currency trading, you owe it to yourself to separate the wheat from the chafe. The Internet is awash in foreign exchange currency trading websites whose sole existences are dependent upon ignorant forex investors. From get-rich-quick forex software schemes to free forex training, forex educational seminars, free forex signals, forex forums, and more, the fraudulence that surrounds the fx trading market is frightening.
Forex trading is very different from the U.S. stock market. The major differences include:
Forex has no central exchange
Forex trading can be done around the clock
Forex has no overseeing regulatory commission, such as the SEC
The forex market is a wild, open arena without rules, laws, or a governing body. No one cares if your money is taken. No one will lose any sleep if you’ve been lied to. There are no repercussions if you’re treated unfairly. Investors trade at their own risk and have no legal recourse to enforce justice.
I know. I’ve been there. The scammers have burned me more than once. In an attempt to further my own knowledge, I fell for the magical software sales pitches and followed the crooked paths to the stolen treasures, only to be let down ad nauseam.
I served my time as a forex broker, which was an eye-opening experience. I heard and saw the manipulation of client profits that was business as usual. It quickly shifted my interest in trading and brokering forex to that of protecting forex traders. I redirected my efforts from studying daily forex signals to researching forex websites. I was determined to devise a resource on which forex investors could rely for honest, fair information exchange.
Whether you are a forex trader or just curious about forex currency trading, you owe it to yourself to separate the wheat from the chafe. The Internet is awash in foreign exchange currency trading websites whose sole existences are dependent upon ignorant forex investors. From get-rich-quick forex software schemes to free forex training, forex educational seminars, free forex signals, forex forums, and more, the fraudulence that surrounds the fx trading market is frightening.
Forex trading is very different from the U.S. stock market. The major differences include:
Forex has no central exchange
Forex trading can be done around the clock
Forex has no overseeing regulatory commission, such as the SEC
The forex market is a wild, open arena without rules, laws, or a governing body. No one cares if your money is taken. No one will lose any sleep if you’ve been lied to. There are no repercussions if you’re treated unfairly. Investors trade at their own risk and have no legal recourse to enforce justice.
I know. I’ve been there. The scammers have burned me more than once. In an attempt to further my own knowledge, I fell for the magical software sales pitches and followed the crooked paths to the stolen treasures, only to be let down ad nauseam.
I served my time as a forex broker, which was an eye-opening experience. I heard and saw the manipulation of client profits that was business as usual. It quickly shifted my interest in trading and brokering forex to that of protecting forex traders. I redirected my efforts from studying daily forex signals to researching forex websites. I was determined to devise a resource on which forex investors could rely for honest, fair information exchange.
Although the S&P 500 posted a 0.5% gain and the Dow closed up 0.3%, the price action in the equity, Forex, and commodity markets were fairly muted as each market moved in tighter ranges with overall sloppy and choppy price action. The earnings news from Goldman Sachs did little to excite the markets as it became apparent that participants bought the rumor yesterday and sold the fact today.
As I mentioned in last night's update, the markets would want to see higher inflation numbers and better retail sales in order to move up today. The PPI, Retail Sales, and Business Inventories data were quite mixed from an inflation perspective... although the headline numbers gave the appearance of price pressures and some recovery in the consumer sector, once the curtains were pulled back there were obvious signs of lingering deflation. So, because there was no clear view that inflation or the consumer was back in full force, equities, commodities, and the higher-yielding currencies were only able to make minimal gains.
Signs of lingering deflation--
The headline numbers on today's PPI and Retail Sales were inflationary enough to give the S&P 500 and Dow a boost and the dollar and yen a kick lower, but after dissecting the data, the inflation components hidden within the reports were nothing to write home about. When it comes to interpreting fundamental and economic data, the headline numbers get most of the attention but big players who move the markets with their money flows always look beyond the headlines to find the real "truth", if you can call it truth.
If there were true inflationary components within the data, Wall St. would have rallied and made bigger gains on Tuesday along with crude, gold, and higher-yielders like the EUR/USD and GBP/USD, but the gains were very muted. Lets take a look at made today's fundamentals less exciting than they looked on the surface...
PPI and Core PPI: the headline numbers on those reports printed hotter than the market was forecasting but it was all due to energy. The crude price component to PPI was up by 6.6% and that was purely based on the fact crude oil hit $72 in June. The food price component was up by 1.1%, but once you look past that, with all other price components factored in, PPI is actually down -4.6% year-over-year and that number screams deflation.
It would be a totally different story if consumer demand was forcing producers to raise prices at the wholesale level but this is not the case at all, the slight month-over-month increase is all connected back to energy and not rising consumer demand. With PPI at -4.6%, it's hard to see any true price inflation within the data.
Retail sales: the headline numbers seemed decent but once you look under the hood it's plain as day the consumer is dead from a discretionary spending standpoint. The main reason the retail data looked not-so-bad was thanks to gasoline prices rising by 18.5%, home heating oil jumping 15.4% and propane going up by 14.6%.
Consumers were forced to pay more for non-discretionary retail products, they weren't out running up their credit cards at the shopping malls. In fact, retail sales are down a hefty -9.0% year-over-year. And once you back out what the consumer spent on energy and autos, retail sales were actually down -0.2% from just the prior month. The news gets even better... department stores reported a -1.3% drop on their retail sales.
Business Inventories: this report probably gets neglected by the larger segment of the market, but once again, the big players who move the markets break this report down too because it offers a great view on inflation/deflation. Unfortunately, these fundamentals were more deflationary than inflationary. According to the Commerce Department, Business Inventories dropped by -1.0% month-over-month.
Why would a drop in inventories be deflationary? It's simple, less demand forces the reduction of on-hand goods and that is purely deflationary. The report also showed that business sales were lower by -0.1%, and manufacturing sales were -0.9%. Going back to the retail sector, retailers decreased their inventories by -1.6%. Manufacturing inventories fell by -0.6% and wholesaler inventories were -0.8%. And when you break it all down, the report showed business inventories have contracted for 9-months straight and are down -8.0% year-over-year while business sales are down -17.8% year-over-year.
Price inflation may be here sometime in the future but at this point I don't see it around the corner or on the horizon, not with those kinds of numbers. Wall St., crude, gold, and the higher-yielding currencies flat out need inflation to make sustainable upside moves and at this point it just doesn't exist.
Wall St. earnings data will continue moving equity and Forex markets:
As I sat down to write this update Intel released their earnings, which came in much better than expected, and within a matter of seconds the S&P 500 and Dow futures surged to their highest levels all week, pulling the EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY up with them.
Whether or not traders believe news moves markets, it doesn't matter, the human reaction to the news is what moves markets and I don't see any end in sight to that trend. I'm not suggesting traders use the earnings reports as actual trade indicators for their favorite currency pair but what is important is to be consciously aware of when this data will hit the markets so you do not find yourself caught off guard or potentially on the wrong side of an extended market move.
The markets remain highly emotional and will continue reacting emotionally whenever the opportunity presents itself. For now, the earnings data will be one of the main catalysts which cause these emotional reactions. Earnings season will last for the next few weeks after getting their start last Wednesday. Since earnings season started the news has been surprisingly good, and in turn, the S&P 500 has posted a 3.0% gain and the Dow has moved up by 2.3%.
There is another benefit to paying attention to the earnings data... looking over the numbers can give good insight into the state of the economy. For example, JB Hunt, which is a huge trucking line in the US, underperformed on its earnings expectations. It should be easy to put 2 and 2 together on this one... JB Hunt is a major player in terms of shipping consumer and retail goods across the country in addition to having connection to the manufacturing and business sector. If JB Hunt's revenues are down, they're not hauling, and if they're not hauling, there is less demand from those various growth-related sectors.
While it might be all well and good that a pseudo hedge fund like Goldman Sachs can turn a $3 billion profit, keep in mind until just a few weeks ago they had $10 billion in taxpayer equity to work with, and they borrowed $28 billion from the FDIC at near zero interest rates, and they got $5 billion from Warren Buffet in order to make their moves in the market. Goldman was levered up by 17:1 (equity/assets) and had the full faith and confidence of the Fed, Treasury, and FDIC backing their trades. If making money in the markets were only that easy...
A company like JB Hunt doesn't have those luxuries but they are the real bellwethers of the economy, not Goldman Sachs. So as were in the midst of earnings season, do yourself a favor and look at the performance of companies who haven't been bailed out by taxpayers and who conduct business in the consumer, retail, housing, manufacturing, and transportation sectors. They will give much better insights into the state of the economy.
My favorite resource to keep up with the earnings data is here.
Wednesday trading:
Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.
Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.
Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes. The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.
There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets. For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...
As I mentioned in last night's update, the markets would want to see higher inflation numbers and better retail sales in order to move up today. The PPI, Retail Sales, and Business Inventories data were quite mixed from an inflation perspective... although the headline numbers gave the appearance of price pressures and some recovery in the consumer sector, once the curtains were pulled back there were obvious signs of lingering deflation. So, because there was no clear view that inflation or the consumer was back in full force, equities, commodities, and the higher-yielding currencies were only able to make minimal gains.
Signs of lingering deflation--
The headline numbers on today's PPI and Retail Sales were inflationary enough to give the S&P 500 and Dow a boost and the dollar and yen a kick lower, but after dissecting the data, the inflation components hidden within the reports were nothing to write home about. When it comes to interpreting fundamental and economic data, the headline numbers get most of the attention but big players who move the markets with their money flows always look beyond the headlines to find the real "truth", if you can call it truth.
If there were true inflationary components within the data, Wall St. would have rallied and made bigger gains on Tuesday along with crude, gold, and higher-yielders like the EUR/USD and GBP/USD, but the gains were very muted. Lets take a look at made today's fundamentals less exciting than they looked on the surface...
PPI and Core PPI: the headline numbers on those reports printed hotter than the market was forecasting but it was all due to energy. The crude price component to PPI was up by 6.6% and that was purely based on the fact crude oil hit $72 in June. The food price component was up by 1.1%, but once you look past that, with all other price components factored in, PPI is actually down -4.6% year-over-year and that number screams deflation.
It would be a totally different story if consumer demand was forcing producers to raise prices at the wholesale level but this is not the case at all, the slight month-over-month increase is all connected back to energy and not rising consumer demand. With PPI at -4.6%, it's hard to see any true price inflation within the data.
Retail sales: the headline numbers seemed decent but once you look under the hood it's plain as day the consumer is dead from a discretionary spending standpoint. The main reason the retail data looked not-so-bad was thanks to gasoline prices rising by 18.5%, home heating oil jumping 15.4% and propane going up by 14.6%.
Consumers were forced to pay more for non-discretionary retail products, they weren't out running up their credit cards at the shopping malls. In fact, retail sales are down a hefty -9.0% year-over-year. And once you back out what the consumer spent on energy and autos, retail sales were actually down -0.2% from just the prior month. The news gets even better... department stores reported a -1.3% drop on their retail sales.
Business Inventories: this report probably gets neglected by the larger segment of the market, but once again, the big players who move the markets break this report down too because it offers a great view on inflation/deflation. Unfortunately, these fundamentals were more deflationary than inflationary. According to the Commerce Department, Business Inventories dropped by -1.0% month-over-month.
Why would a drop in inventories be deflationary? It's simple, less demand forces the reduction of on-hand goods and that is purely deflationary. The report also showed that business sales were lower by -0.1%, and manufacturing sales were -0.9%. Going back to the retail sector, retailers decreased their inventories by -1.6%. Manufacturing inventories fell by -0.6% and wholesaler inventories were -0.8%. And when you break it all down, the report showed business inventories have contracted for 9-months straight and are down -8.0% year-over-year while business sales are down -17.8% year-over-year.
Price inflation may be here sometime in the future but at this point I don't see it around the corner or on the horizon, not with those kinds of numbers. Wall St., crude, gold, and the higher-yielding currencies flat out need inflation to make sustainable upside moves and at this point it just doesn't exist.
Wall St. earnings data will continue moving equity and Forex markets:
As I sat down to write this update Intel released their earnings, which came in much better than expected, and within a matter of seconds the S&P 500 and Dow futures surged to their highest levels all week, pulling the EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY up with them.
Whether or not traders believe news moves markets, it doesn't matter, the human reaction to the news is what moves markets and I don't see any end in sight to that trend. I'm not suggesting traders use the earnings reports as actual trade indicators for their favorite currency pair but what is important is to be consciously aware of when this data will hit the markets so you do not find yourself caught off guard or potentially on the wrong side of an extended market move.
The markets remain highly emotional and will continue reacting emotionally whenever the opportunity presents itself. For now, the earnings data will be one of the main catalysts which cause these emotional reactions. Earnings season will last for the next few weeks after getting their start last Wednesday. Since earnings season started the news has been surprisingly good, and in turn, the S&P 500 has posted a 3.0% gain and the Dow has moved up by 2.3%.
There is another benefit to paying attention to the earnings data... looking over the numbers can give good insight into the state of the economy. For example, JB Hunt, which is a huge trucking line in the US, underperformed on its earnings expectations. It should be easy to put 2 and 2 together on this one... JB Hunt is a major player in terms of shipping consumer and retail goods across the country in addition to having connection to the manufacturing and business sector. If JB Hunt's revenues are down, they're not hauling, and if they're not hauling, there is less demand from those various growth-related sectors.
While it might be all well and good that a pseudo hedge fund like Goldman Sachs can turn a $3 billion profit, keep in mind until just a few weeks ago they had $10 billion in taxpayer equity to work with, and they borrowed $28 billion from the FDIC at near zero interest rates, and they got $5 billion from Warren Buffet in order to make their moves in the market. Goldman was levered up by 17:1 (equity/assets) and had the full faith and confidence of the Fed, Treasury, and FDIC backing their trades. If making money in the markets were only that easy...
A company like JB Hunt doesn't have those luxuries but they are the real bellwethers of the economy, not Goldman Sachs. So as were in the midst of earnings season, do yourself a favor and look at the performance of companies who haven't been bailed out by taxpayers and who conduct business in the consumer, retail, housing, manufacturing, and transportation sectors. They will give much better insights into the state of the economy.
My favorite resource to keep up with the earnings data is here.
Wednesday trading:
Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.
Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.
Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes. The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.
There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets. For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...
by Jeff Cartridge
The Descending triangle is a very well known chart pattern that is usually traded short, but can also be traded if it breaks out to the upside. A descending triangle is formed when the price action is contained within two lines. The bottom line is close to horizontal while the top line slopes down towards the bottom line.
Descending Triangles, Ok To Trade
Descending triangles are one of the most predictable patterns that are available to trade short, but also can perform on the upside. Just 43% of the patterns break upwards and can deliver good returns when they do. The average gain is 0.87% in 8 days with half of the breakouts (41%) being profitable. There are better patterns to trade on the long side, but selecting the right conditions can make trading descending triangles attractive.
Specific Setups to Improve Profitability
A long breakout from a descending triangle works better in a rising market and sector environment. Ensure both the market and sector, are in a consolidation phase or an up trend prior to the breakout. The stock will usually be falling as it forms the pattern. Essentially you are trading the descending triangle when it forms during a pull back in a bullish environment.
Descending triangles that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets 30% of the way to the point of the pattern. Shallow patterns are also best avoided, where the pattern height is less than 2% when compared to the stock price.
Illiquid stock can sometimes be identified by two identical closes or highs and if this is the case you are better to avoid these trades. If volume supports a descending triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be greater than volume when the stock is going down.
Trading Descending Triangles Can Be Profitable
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of descending triangles delivers an average profit of 1.45% in 10 days and is profitable on 51% of the trades. Overall this makes descending triangles attractive to trade.
Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 – 2008.
About the Author:
Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com Trading Chart Patterns – All The Insider Tricks
Other Related Posts:
Trading Strategy – Ascending Triangles Upside Breakout
Finding Simple Forex Trading Systems
Forex Trading Strategies for the Best Trading Results
Forex Trading Strategies – Sound Strategies Remain Useful for Decades
Valuable Forex Trading Tips
The Descending triangle is a very well known chart pattern that is usually traded short, but can also be traded if it breaks out to the upside. A descending triangle is formed when the price action is contained within two lines. The bottom line is close to horizontal while the top line slopes down towards the bottom line.
Descending Triangles, Ok To Trade
Descending triangles are one of the most predictable patterns that are available to trade short, but also can perform on the upside. Just 43% of the patterns break upwards and can deliver good returns when they do. The average gain is 0.87% in 8 days with half of the breakouts (41%) being profitable. There are better patterns to trade on the long side, but selecting the right conditions can make trading descending triangles attractive.
Specific Setups to Improve Profitability
A long breakout from a descending triangle works better in a rising market and sector environment. Ensure both the market and sector, are in a consolidation phase or an up trend prior to the breakout. The stock will usually be falling as it forms the pattern. Essentially you are trading the descending triangle when it forms during a pull back in a bullish environment.
Descending triangles that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets 30% of the way to the point of the pattern. Shallow patterns are also best avoided, where the pattern height is less than 2% when compared to the stock price.
Illiquid stock can sometimes be identified by two identical closes or highs and if this is the case you are better to avoid these trades. If volume supports a descending triangle breakout then the profitability of the trades improves. For volume to support the breakout, volume when the stock is going up should be greater than volume when the stock is going down.
Trading Descending Triangles Can Be Profitable
You can improve your trading results by using a series of simple filters that have been outlined here. This select group of descending triangles delivers an average profit of 1.45% in 10 days and is profitable on 51% of the trades. Overall this makes descending triangles attractive to trade.
Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 – 2008.
About the Author:
Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com Trading Chart Patterns – All The Insider Tricks
Other Related Posts:
Trading Strategy – Ascending Triangles Upside Breakout
Finding Simple Forex Trading Systems
Forex Trading Strategies for the Best Trading Results
Forex Trading Strategies – Sound Strategies Remain Useful for Decades
Valuable Forex Trading Tips
by Paul Bryan
Easy Forex is a new Forex trading platform which can be utilized well by both novice as well as experienced traders. While the novice ones can know the techniques related to managing of Forex transactions, the expert traders can utilize it to excel in their trading business.
Apart from making the Forex trading easy to the traders this platform, helps the beginners in the Forex trade achieve success. This Easy Forex is the result of several years of elaborate research and experience in trading and finance with the outcome of various products like limit orders, day trading, optional and forward.
This Easy Forex platform is simple and involves trade management tools which are made easy through a quick registration process, all through the internet. Financial tools such as charts, graphs and analysis help, along with live real-time quotes and data feeds are made available to the clients directly from the Reuters. These tools, depicting the market trends in real-time, and which also checks profit scenarios, make them available to the clients through the cell phone in the form of SMS.
Easy Forex is exceptionally customer friendly, offering training sessions as and when necessary. Furthermore people who are new to Easy Forex are enabled with a service manager to deal with individual clients personal account. There is a glossary of terms, a trading e-book and several training videos which are made available by Easy Forex to its clients through their websites online.
Easy Forex is a new Forex trading platform which can be utilized well by both novice as well as experienced traders. While the novice ones can know the techniques related to managing of Forex transactions, the expert traders can utilize it to excel in their trading business.
Apart from making the Forex trading easy to the traders this platform, helps the beginners in the Forex trade achieve success. This Easy Forex is the result of several years of elaborate research and experience in trading and finance with the outcome of various products like limit orders, day trading, optional and forward.
This Easy Forex platform is simple and involves trade management tools which are made easy through a quick registration process, all through the internet. Financial tools such as charts, graphs and analysis help, along with live real-time quotes and data feeds are made available to the clients directly from the Reuters. These tools, depicting the market trends in real-time, and which also checks profit scenarios, make them available to the clients through the cell phone in the form of SMS.
Easy Forex is exceptionally customer friendly, offering training sessions as and when necessary. Furthermore people who are new to Easy Forex are enabled with a service manager to deal with individual clients personal account. There is a glossary of terms, a trading e-book and several training videos which are made available by Easy Forex to its clients through their websites online.
y Reginald ShiverIf you are like majority of the people who have shown their face in the currency markets, you are there for one reason only and that is to create a lot of income. If you want to have a successful business market and wish your savings to be important, then you require a top rated Forex trading software system accessibleIt’s hard to determine whether or not this Forex trading system will still uphold its high rank next year, next month, or even next week. If something better come
Widely known as FX or Forex, foreign exchange is a currency market where buying and selling of currencies is done. Forex is the world’s biggest trade market and has large number of trader and brokers involved in it. Apart from being a 24/7 market, Forex has a large number of benefits that makes it a home for traders across the world.
Forex or foreign exchanges is different and much more advantageous from other trade markets like stock market or any other exchange market.
What make Forex unique are its benefits and the amount of money that is being traded on daily bases. With more 2-3 trillions of dollars on trade, Forex includes trading with currency all over the world divided into ‘Majors’ and ‘Minors’. EURO, Japanese yen, US dollar and British pound are few of the examples of ‘Majors’. These ‘Majors’ and ‘Minors’ are dealt in pairs when trading in Forex. Thus, the most common pairs are GBP/USD (British pound/ US dollar), USD/JPY (US dollar/Japanese Yen) and EURUSD (Euro/ US Dollar).
Unlike any other exchange market, Forex is an Interbank/Interdealer market where the trading is via a broker or a bank. Forex is also known as over the counter (OTC) market, as it has no central building or land based office and all the trading is done on phone or internet.
In Forex, rise and fall of currencies or pair directly dependent on the political, economical or social changes of particular country, also such fluctuation can occur due to change in quotes or policies of banks. This instability of currencies makes Forex a serious matter and that is many Forex education or Forex trading courses are found on net or provided by Forex companies.
Thus, with so much on line it is important to deal every Forex buying and selling process with a complete knowledge and idea about the current situation of market, the trend of ups and downs and so on.
Some of the most common terms used in Forex are pips, spread and bid. While Forex may sound serious and risky it also has many risk management tools that makes it easy and comfortable zone for any new comer. Tools like stop loss or demo account are every new comer’s road to learning safe and secure trading, while demo account is a fake account which allows a new trader to trade real but with unreal account and investment. The purpose of such account is to trade while learning stop loss helps to put a stop on a trader’s investment when in loss, similarly there are many technical tools which can offer great assistance in Forex dealings.
When beginning with Forex it is important to keep in mind that key to successful trading is patience and discipline. Forex is a not a place for overconfident or confused people who fid it difficult to handle a win or a loss. With the immense leverage and liquidity factor making bid and ask flexible Forex can make people with no strategy and plans lose big time.
Forex or foreign exchanges is different and much more advantageous from other trade markets like stock market or any other exchange market.
What make Forex unique are its benefits and the amount of money that is being traded on daily bases. With more 2-3 trillions of dollars on trade, Forex includes trading with currency all over the world divided into ‘Majors’ and ‘Minors’. EURO, Japanese yen, US dollar and British pound are few of the examples of ‘Majors’. These ‘Majors’ and ‘Minors’ are dealt in pairs when trading in Forex. Thus, the most common pairs are GBP/USD (British pound/ US dollar), USD/JPY (US dollar/Japanese Yen) and EURUSD (Euro/ US Dollar).
Unlike any other exchange market, Forex is an Interbank/Interdealer market where the trading is via a broker or a bank. Forex is also known as over the counter (OTC) market, as it has no central building or land based office and all the trading is done on phone or internet.
In Forex, rise and fall of currencies or pair directly dependent on the political, economical or social changes of particular country, also such fluctuation can occur due to change in quotes or policies of banks. This instability of currencies makes Forex a serious matter and that is many Forex education or Forex trading courses are found on net or provided by Forex companies.
Thus, with so much on line it is important to deal every Forex buying and selling process with a complete knowledge and idea about the current situation of market, the trend of ups and downs and so on.
Some of the most common terms used in Forex are pips, spread and bid. While Forex may sound serious and risky it also has many risk management tools that makes it easy and comfortable zone for any new comer. Tools like stop loss or demo account are every new comer’s road to learning safe and secure trading, while demo account is a fake account which allows a new trader to trade real but with unreal account and investment. The purpose of such account is to trade while learning stop loss helps to put a stop on a trader’s investment when in loss, similarly there are many technical tools which can offer great assistance in Forex dealings.
When beginning with Forex it is important to keep in mind that key to successful trading is patience and discipline. Forex is a not a place for overconfident or confused people who fid it difficult to handle a win or a loss. With the immense leverage and liquidity factor making bid and ask flexible Forex can make people with no strategy and plans lose big time.
Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.
Traditionally, retail investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the FOREX market to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.
MG Financial, now operating in over 100 countries, serves all manner of clients, comprising speculators and strategic traders. Whether it’s day-traders looking for short-term gains, or fund managers wanting to hedge their non-US assets, MG's DealStation™ allows them to participate in FOREX trading by providing a combination of live quotes, Real-Time charts, and news and analysis that attracts traders with an orientation towards fundamental and/or technical analysis.
Traditionally, retail investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the FOREX market to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.
MG Financial, now operating in over 100 countries, serves all manner of clients, comprising speculators and strategic traders. Whether it’s day-traders looking for short-term gains, or fund managers wanting to hedge their non-US assets, MG's DealStation™ allows them to participate in FOREX trading by providing a combination of live quotes, Real-Time charts, and news and analysis that attracts traders with an orientation towards fundamental and/or technical analysis.
Markets make modest gains on mixed inflation and retail data:
Although the S&P 500 posted a 0.5% gain and the Dow closed up 0.3%, the price action in the equity, Forex, and commodity markets were fairly muted as each market moved in tighter ranges with overall sloppy and choppy price action. The earnings news from Goldman Sachs did little to excite the markets as it became apparent that participants bought the rumor yesterday and sold the fact today.
As I mentioned in last night's update, the markets would want to see higher inflation numbers and better retail sales in order to move up today. The PPI, Retail Sales, and Business Inventories data were quite mixed from an inflation perspective... although the headline numbers gave the appearance of price pressures and some recovery in the consumer sector, once the curtains were pulled back there were obvious signs of lingering deflation. So, because there was no clear view that inflation or the consumer was back in full force, equities, commodities, and the higher-yielding currencies were only able to make minimal gains.
Signs of lingering deflation--
The headline numbers on today's PPI and Retail Sales were inflationary enough to give the S&P 500 and Dow a boost and the dollar and yen a kick lower, but after dissecting the data, the inflation components hidden within the reports were nothing to write home about. When it comes to interpreting fundamental and economic data, the headline numbers get most of the attention but big players who move the markets with their money flows always look beyond the headlines to find the real "truth", if you can call it truth.
If there were true inflationary components within the data, Wall St. would have rallied and made bigger gains on Tuesday along with crude, gold, and higher-yielders like the EUR/USD and GBP/USD, but the gains were very muted. Lets take a look at made today's fundamentals less exciting than they looked on the surface...
PPI and Core PPI: the headline numbers on those reports printed hotter than the market was forecasting but it was all due to energy. The crude price component to PPI was up by 6.6% and that was purely based on the fact crude oil hit $72 in June. The food price component was up by 1.1%, but once you look past that, with all other price components factored in, PPI is actually down -4.6% year-over-year and that number screams deflation.
It would be a totally different story if consumer demand was forcing producers to raise prices at the wholesale level but this is not the case at all, the slight month-over-month increase is all connected back to energy and not rising consumer demand. With PPI at -4.6%, it's hard to see any true price inflation within the data.
Retail sales: the headline numbers seemed decent but once you look under the hood it's plain as day the consumer is dead from a discretionary spending standpoint. The main reason the retail data looked not-so-bad was thanks to gasoline prices rising by 18.5%, home heating oil jumping 15.4% and propane going up by 14.6%.
Consumers were forced to pay more for non-discretionary retail products, they weren't out running up their credit cards at the shopping malls. In fact, retail sales are down a hefty -9.0% year-over-year. And once you back out what the consumer spent on energy and autos, retail sales were actually down -0.2% from just the prior month. The news gets even better... department stores reported a -1.3% drop on their retail sales.
Business Inventories: this report probably gets neglected by the larger segment of the market, but once again, the big players who move the markets break this report down too because it offers a great view on inflation/deflation. Unfortunately, these fundamentals were more deflationary than inflationary. According to the Commerce Department, Business Inventories dropped by -1.0% month-over-month.
Why would a drop in inventories be deflationary? It's simple, less demand forces the reduction of on-hand goods and that is purely deflationary. The report also showed that business sales were lower by -0.1%, and manufacturing sales were -0.9%. Going back to the retail sector, retailers decreased their inventories by -1.6%. Manufacturing inventories fell by -0.6% and wholesaler inventories were -0.8%. And when you break it all down, the report showed business inventories have contracted for 9-months straight and are down -8.0% year-over-year while business sales are down -17.8% year-over-year.
Price inflation may be here sometime in the future but at this point I don't see it around the corner or on the horizon, not with those kinds of numbers. Wall St., crude, gold, and the higher-yielding currencies flat out need inflation to make sustainable upside moves and at this point it just doesn't exist.
Wall St. earnings data will continue moving equity and Forex markets:
As I sat down to write this update Intel released their earnings, which came in much better than expected, and within a matter of seconds the S&P 500 and Dow futures surged to their highest levels all week, pulling the EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY up with them.
Whether or not traders believe news moves markets, it doesn't matter, the human reaction to the news is what moves markets and I don't see any end in sight to that trend. I'm not suggesting traders use the earnings reports as actual trade indicators for their favorite currency pair but what is important is to be consciously aware of when this data will hit the markets so you do not find yourself caught off guard or potentially on the wrong side of an extended market move.
The markets remain highly emotional and will continue reacting emotionally whenever the opportunity presents itself. For now, the earnings data will be one of the main catalysts which cause these emotional reactions. Earnings season will last for the next few weeks after getting their start last Wednesday. Since earnings season started the news has been surprisingly good, and in turn, the S&P 500 has posted a 3.0% gain and the Dow has moved up by 2.3%.
There is another benefit to paying attention to the earnings data... looking over the numbers can give good insight into the state of the economy. For example, JB Hunt, which is a huge trucking line in the US, underperformed on its earnings expectations. It should be easy to put 2 and 2 together on this one... JB Hunt is a major player in terms of shipping consumer and retail goods across the country in addition to having connection to the manufacturing and business sector. If JB Hunt's revenues are down, they're not hauling, and if they're not hauling, there is less demand from those various growth-related sectors.
While it might be all well and good that a pseudo hedge fund like Goldman Sachs can turn a $3 billion profit, keep in mind until just a few weeks ago they had $10 billion in taxpayer equity to work with, and they borrowed $28 billion from the FDIC at near zero interest rates, and they got $5 billion from Warren Buffet in order to make their moves in the market. Goldman was levered up by 17:1 (equity/assets) and had the full faith and confidence of the Fed, Treasury, and FDIC backing their trades. If making money in the markets were only that easy...
A company like JB Hunt doesn't have those luxuries but they are the real bellwethers of the economy, not Goldman Sachs. So as were in the midst of earnings season, do yourself a favor and look at the performance of companies who haven't been bailed out by taxpayers and who conduct business in the consumer, retail, housing, manufacturing, and transportation sectors. They will give much better insights into the state of the economy.
My favorite resource to keep up with the earnings data is here.
Wednesday trading:
Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.
Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.
Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes. The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.
There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets. For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...
Although the S&P 500 posted a 0.5% gain and the Dow closed up 0.3%, the price action in the equity, Forex, and commodity markets were fairly muted as each market moved in tighter ranges with overall sloppy and choppy price action. The earnings news from Goldman Sachs did little to excite the markets as it became apparent that participants bought the rumor yesterday and sold the fact today.
As I mentioned in last night's update, the markets would want to see higher inflation numbers and better retail sales in order to move up today. The PPI, Retail Sales, and Business Inventories data were quite mixed from an inflation perspective... although the headline numbers gave the appearance of price pressures and some recovery in the consumer sector, once the curtains were pulled back there were obvious signs of lingering deflation. So, because there was no clear view that inflation or the consumer was back in full force, equities, commodities, and the higher-yielding currencies were only able to make minimal gains.
Signs of lingering deflation--
The headline numbers on today's PPI and Retail Sales were inflationary enough to give the S&P 500 and Dow a boost and the dollar and yen a kick lower, but after dissecting the data, the inflation components hidden within the reports were nothing to write home about. When it comes to interpreting fundamental and economic data, the headline numbers get most of the attention but big players who move the markets with their money flows always look beyond the headlines to find the real "truth", if you can call it truth.
If there were true inflationary components within the data, Wall St. would have rallied and made bigger gains on Tuesday along with crude, gold, and higher-yielders like the EUR/USD and GBP/USD, but the gains were very muted. Lets take a look at made today's fundamentals less exciting than they looked on the surface...
PPI and Core PPI: the headline numbers on those reports printed hotter than the market was forecasting but it was all due to energy. The crude price component to PPI was up by 6.6% and that was purely based on the fact crude oil hit $72 in June. The food price component was up by 1.1%, but once you look past that, with all other price components factored in, PPI is actually down -4.6% year-over-year and that number screams deflation.
It would be a totally different story if consumer demand was forcing producers to raise prices at the wholesale level but this is not the case at all, the slight month-over-month increase is all connected back to energy and not rising consumer demand. With PPI at -4.6%, it's hard to see any true price inflation within the data.
Retail sales: the headline numbers seemed decent but once you look under the hood it's plain as day the consumer is dead from a discretionary spending standpoint. The main reason the retail data looked not-so-bad was thanks to gasoline prices rising by 18.5%, home heating oil jumping 15.4% and propane going up by 14.6%.
Consumers were forced to pay more for non-discretionary retail products, they weren't out running up their credit cards at the shopping malls. In fact, retail sales are down a hefty -9.0% year-over-year. And once you back out what the consumer spent on energy and autos, retail sales were actually down -0.2% from just the prior month. The news gets even better... department stores reported a -1.3% drop on their retail sales.
Business Inventories: this report probably gets neglected by the larger segment of the market, but once again, the big players who move the markets break this report down too because it offers a great view on inflation/deflation. Unfortunately, these fundamentals were more deflationary than inflationary. According to the Commerce Department, Business Inventories dropped by -1.0% month-over-month.
Why would a drop in inventories be deflationary? It's simple, less demand forces the reduction of on-hand goods and that is purely deflationary. The report also showed that business sales were lower by -0.1%, and manufacturing sales were -0.9%. Going back to the retail sector, retailers decreased their inventories by -1.6%. Manufacturing inventories fell by -0.6% and wholesaler inventories were -0.8%. And when you break it all down, the report showed business inventories have contracted for 9-months straight and are down -8.0% year-over-year while business sales are down -17.8% year-over-year.
Price inflation may be here sometime in the future but at this point I don't see it around the corner or on the horizon, not with those kinds of numbers. Wall St., crude, gold, and the higher-yielding currencies flat out need inflation to make sustainable upside moves and at this point it just doesn't exist.
Wall St. earnings data will continue moving equity and Forex markets:
As I sat down to write this update Intel released their earnings, which came in much better than expected, and within a matter of seconds the S&P 500 and Dow futures surged to their highest levels all week, pulling the EUR/USD, GBP/USD, EUR/JPY, and GBP/JPY up with them.
Whether or not traders believe news moves markets, it doesn't matter, the human reaction to the news is what moves markets and I don't see any end in sight to that trend. I'm not suggesting traders use the earnings reports as actual trade indicators for their favorite currency pair but what is important is to be consciously aware of when this data will hit the markets so you do not find yourself caught off guard or potentially on the wrong side of an extended market move.
The markets remain highly emotional and will continue reacting emotionally whenever the opportunity presents itself. For now, the earnings data will be one of the main catalysts which cause these emotional reactions. Earnings season will last for the next few weeks after getting their start last Wednesday. Since earnings season started the news has been surprisingly good, and in turn, the S&P 500 has posted a 3.0% gain and the Dow has moved up by 2.3%.
There is another benefit to paying attention to the earnings data... looking over the numbers can give good insight into the state of the economy. For example, JB Hunt, which is a huge trucking line in the US, underperformed on its earnings expectations. It should be easy to put 2 and 2 together on this one... JB Hunt is a major player in terms of shipping consumer and retail goods across the country in addition to having connection to the manufacturing and business sector. If JB Hunt's revenues are down, they're not hauling, and if they're not hauling, there is less demand from those various growth-related sectors.
While it might be all well and good that a pseudo hedge fund like Goldman Sachs can turn a $3 billion profit, keep in mind until just a few weeks ago they had $10 billion in taxpayer equity to work with, and they borrowed $28 billion from the FDIC at near zero interest rates, and they got $5 billion from Warren Buffet in order to make their moves in the market. Goldman was levered up by 17:1 (equity/assets) and had the full faith and confidence of the Fed, Treasury, and FDIC backing their trades. If making money in the markets were only that easy...
A company like JB Hunt doesn't have those luxuries but they are the real bellwethers of the economy, not Goldman Sachs. So as were in the midst of earnings season, do yourself a favor and look at the performance of companies who haven't been bailed out by taxpayers and who conduct business in the consumer, retail, housing, manufacturing, and transportation sectors. They will give much better insights into the state of the economy.
My favorite resource to keep up with the earnings data is here.
Wednesday trading:
Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.
Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.
Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes. The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.
There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets. For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...
The return of euphoria:
Good earnings, hot consumer price inflation, and a textbook short-squeeze scenario skyrocketed the S&P 500, Dow, crude oil, and gold while sending the US dollar Index sliding below its support, droppingdown to the 79.50 level and closing for a 1% loss.
The good news for equities, commodities and higher-yielding currencies... CPI made its biggest jump in 7-months while the key Core CPI showed a 1.7% gain year-over-year. CPI and Core CPI showed stronger upside price pressures in contrast to the latest PPI report released yesterday.
I don't have time to cover everything, but in general the news from all sides was positive and upbeat today... everyone from Intel, to the credit card issuers, to the Fed all hitting the markets with happy and optimistic rhetoric. In the FOMC minutes the Fed said the end of the recession is in sight and they raised their forecast for inflation which the market reacted to positively.
The short-squeeze factor is fairly cut and dry... when you take the rise in points and percentages of the S&P 500 and Dow and compare them to the trade volumes, it's clear today's strong gains were made on historically low volumes which is a signal the bears were forced to cover their shorts and actual buying conviction was somewhat lacking.
I'm not crediting all of today's gains on Wall St. to a short-squeeze but consider just a few days ago the masses were screaming about a so-called "head and shoulders" pattern that was supposed to mean equities were going to nosedive but ever since then they have gone up. It's the same exact scenario from a few weeks back when the masses were going on about equities breaking above their 200-day moving average and then they tanked, causing the bulls to cover their trades.
The EUR/USD held a very strong positive correlation to equities, crude oil, and especially gold. At 0130 EST Wednesday morning both the S&P 500 futures and spot gold reached a bottom and moved up strongly and that was the point the EUR/USD turned up and never looked back. Commodity currencies like the USD/CAD and AUD/USD also benefited mightily from strong gains in crude, gold, and equities, moving a few hundred points to the upside.
From the looks of things, as long as the news stays good, the numbers beat expectations, and the fundamentals do not shock to the downside, the euphoria will continue. I'm not about to predict when it will end and I'm not exactly sold on the idea of an almost instantaneous recovery of the global economy that took five years to destroy, but no matter what, the markets are always right... tomorrow is a new day and anything can happen.
Rome is still burning:
Apparently the Fed and FDIC are still operating in the "too big to fail" realm... CIT, one of the biggest commercial and consumer lenders in the US, is about two steps away from a total collapse. Unless the government saves the sinking ship, CIT will lose its own access to credit and funding, will default on its debts and will be unable to operate. Somehow the market's attention has been mostly diverted away from this situation but when you consider how big and how important a player CIT is, the situation looks dire and could have far-reaching affects.
CIT lends and offers funding to a base of over 1-million commercial and consumer customers. They have a big retail customer base of over 300,000. Just through the Small Business Administration, CIT made almost $767 million in loans last year, and as of March CIT had $1.5 billion in available credit lines for its customers. Back in December the Fed gave CIT a $2.33 billion bailout. In the past 2-years CIT has lost well over $3 billion. So, where's all the money at and why are they on the brink of bankruptcy?
CIT has been around for about 100-years and they used to be the #1 independent commercial lender in the US and the root of the problem lies within their ability to service their own debt and creditors. In exactly one month CIT has a $1 billion debt obligation to meet and they can't do it, they will default unless the Fed and FDIC bail them out yet again.
If CIT does fail, the impact on the already battered retail, manufacturing and small business sectors could be brutal. We're talking about more job cuts and more bankruptcies in those sectors. CIT cannot get credit because their credit ratings have been slashed but they need credit to meet their debt obligations... that is the net bottomline issue for CIT.
I am expecting CIT to get another bailout and we should probably hear a resolution within the next 24 to 48-hours. Once again the US taxpayer will have to cover this one. At this it seems like the market could careless, they are too busy riding the earnings euphoria wave but should CIT's bailout fall through for some reason, it's very possible the markets react negatively to this situation.
Thursday trading:
Once again, Wall St. will remain the center of the universe tomorrow as both the Forex and commodity markets take their cues from how the S&P 500 and Dow indices are moving. There are a ton of earnings reports being released before the bell on Thursday morning, including JP Morgan. After the bell there are two monster reports from IBM and Google.
Tomorrow's big fundamentals are mostly out of the US and include Initial Claims, TIC, and the Philly Fed. If the data is bad it will likely be ignored as long as the earnings look good and there are no big downside surprises. These markets are all about confidence and fear... the news and data is giving the confidence and those that were looking for equities to roll over based on a technical pattern are trading on fear, so they have to keep covering their shorts and that will push prices higher.
For Thursday, the fate of the yen and dollar and their higher-yielding counterparts will be squarely on how the S&P 500, crude oil and gold move. Back between 2-June and 11-June the S&P 500 futures run after run at the 950 level and each time it failed to sustain above there and move higher. For what it's worth, unless the emotions of the markets suddenly change based on some bad news or fundamentals, I believe we are headed back to test that resistance zone. A sustained break of the 950-970 levels would put the S&P 500 in somewhat unchartered territories and then things would get very interesting.
I've been doing a lot of watching and waiting so far this week, I don't like to trade or put much risk into markets that are running on pure emotion as the downside reversals can come just as quickly and violently as the upside gains. If in doubt, sit it out... there will always be another opportunity to trade in the future.
One event I will be closely monitoring and which could impact the markets is former Treasury Paulson's testimony before congress. Paulson is a flatout liar and crook and was one of the chief architects of not only the economic meltdown but most of the major bailouts courtesy of the taxpayer. I believe his testimony is set to begin at 0900 EST or sometime there after. Paulson will stick with his lying ways and nothing will get resolved but at least it will be fun to watch him get emotional when congress grills him.
Finally, as I've mentioned a few times in the prior updates, it's important to keep up with the bigger Chinese fundamentals as a lot of focus and attention is on China and China's ability to help end the global economic recession. At 2000 EST this evening we get Chinese GDP, Industrial Production, CPI, and PPI. Somehow the Chinese data will almost always magically meet or beat their forecasts, so if we get some hot numbers out of China we could easily see the equity futures rise, the Nikkei jump and more downside pressure get put on the dollar and yen.
Good earnings, hot consumer price inflation, and a textbook short-squeeze scenario skyrocketed the S&P 500, Dow, crude oil, and gold while sending the US dollar Index sliding below its support, droppingdown to the 79.50 level and closing for a 1% loss.
The good news for equities, commodities and higher-yielding currencies... CPI made its biggest jump in 7-months while the key Core CPI showed a 1.7% gain year-over-year. CPI and Core CPI showed stronger upside price pressures in contrast to the latest PPI report released yesterday.
I don't have time to cover everything, but in general the news from all sides was positive and upbeat today... everyone from Intel, to the credit card issuers, to the Fed all hitting the markets with happy and optimistic rhetoric. In the FOMC minutes the Fed said the end of the recession is in sight and they raised their forecast for inflation which the market reacted to positively.
The short-squeeze factor is fairly cut and dry... when you take the rise in points and percentages of the S&P 500 and Dow and compare them to the trade volumes, it's clear today's strong gains were made on historically low volumes which is a signal the bears were forced to cover their shorts and actual buying conviction was somewhat lacking.
I'm not crediting all of today's gains on Wall St. to a short-squeeze but consider just a few days ago the masses were screaming about a so-called "head and shoulders" pattern that was supposed to mean equities were going to nosedive but ever since then they have gone up. It's the same exact scenario from a few weeks back when the masses were going on about equities breaking above their 200-day moving average and then they tanked, causing the bulls to cover their trades.
The EUR/USD held a very strong positive correlation to equities, crude oil, and especially gold. At 0130 EST Wednesday morning both the S&P 500 futures and spot gold reached a bottom and moved up strongly and that was the point the EUR/USD turned up and never looked back. Commodity currencies like the USD/CAD and AUD/USD also benefited mightily from strong gains in crude, gold, and equities, moving a few hundred points to the upside.
From the looks of things, as long as the news stays good, the numbers beat expectations, and the fundamentals do not shock to the downside, the euphoria will continue. I'm not about to predict when it will end and I'm not exactly sold on the idea of an almost instantaneous recovery of the global economy that took five years to destroy, but no matter what, the markets are always right... tomorrow is a new day and anything can happen.
Rome is still burning:
Apparently the Fed and FDIC are still operating in the "too big to fail" realm... CIT, one of the biggest commercial and consumer lenders in the US, is about two steps away from a total collapse. Unless the government saves the sinking ship, CIT will lose its own access to credit and funding, will default on its debts and will be unable to operate. Somehow the market's attention has been mostly diverted away from this situation but when you consider how big and how important a player CIT is, the situation looks dire and could have far-reaching affects.
CIT lends and offers funding to a base of over 1-million commercial and consumer customers. They have a big retail customer base of over 300,000. Just through the Small Business Administration, CIT made almost $767 million in loans last year, and as of March CIT had $1.5 billion in available credit lines for its customers. Back in December the Fed gave CIT a $2.33 billion bailout. In the past 2-years CIT has lost well over $3 billion. So, where's all the money at and why are they on the brink of bankruptcy?
CIT has been around for about 100-years and they used to be the #1 independent commercial lender in the US and the root of the problem lies within their ability to service their own debt and creditors. In exactly one month CIT has a $1 billion debt obligation to meet and they can't do it, they will default unless the Fed and FDIC bail them out yet again.
If CIT does fail, the impact on the already battered retail, manufacturing and small business sectors could be brutal. We're talking about more job cuts and more bankruptcies in those sectors. CIT cannot get credit because their credit ratings have been slashed but they need credit to meet their debt obligations... that is the net bottomline issue for CIT.
I am expecting CIT to get another bailout and we should probably hear a resolution within the next 24 to 48-hours. Once again the US taxpayer will have to cover this one. At this it seems like the market could careless, they are too busy riding the earnings euphoria wave but should CIT's bailout fall through for some reason, it's very possible the markets react negatively to this situation.
Thursday trading:
Once again, Wall St. will remain the center of the universe tomorrow as both the Forex and commodity markets take their cues from how the S&P 500 and Dow indices are moving. There are a ton of earnings reports being released before the bell on Thursday morning, including JP Morgan. After the bell there are two monster reports from IBM and Google.
Tomorrow's big fundamentals are mostly out of the US and include Initial Claims, TIC, and the Philly Fed. If the data is bad it will likely be ignored as long as the earnings look good and there are no big downside surprises. These markets are all about confidence and fear... the news and data is giving the confidence and those that were looking for equities to roll over based on a technical pattern are trading on fear, so they have to keep covering their shorts and that will push prices higher.
For Thursday, the fate of the yen and dollar and their higher-yielding counterparts will be squarely on how the S&P 500, crude oil and gold move. Back between 2-June and 11-June the S&P 500 futures run after run at the 950 level and each time it failed to sustain above there and move higher. For what it's worth, unless the emotions of the markets suddenly change based on some bad news or fundamentals, I believe we are headed back to test that resistance zone. A sustained break of the 950-970 levels would put the S&P 500 in somewhat unchartered territories and then things would get very interesting.
I've been doing a lot of watching and waiting so far this week, I don't like to trade or put much risk into markets that are running on pure emotion as the downside reversals can come just as quickly and violently as the upside gains. If in doubt, sit it out... there will always be another opportunity to trade in the future.
One event I will be closely monitoring and which could impact the markets is former Treasury Paulson's testimony before congress. Paulson is a flatout liar and crook and was one of the chief architects of not only the economic meltdown but most of the major bailouts courtesy of the taxpayer. I believe his testimony is set to begin at 0900 EST or sometime there after. Paulson will stick with his lying ways and nothing will get resolved but at least it will be fun to watch him get emotional when congress grills him.
Finally, as I've mentioned a few times in the prior updates, it's important to keep up with the bigger Chinese fundamentals as a lot of focus and attention is on China and China's ability to help end the global economic recession. At 2000 EST this evening we get Chinese GDP, Industrial Production, CPI, and PPI. Somehow the Chinese data will almost always magically meet or beat their forecasts, so if we get some hot numbers out of China we could easily see the equity futures rise, the Nikkei jump and more downside pressure get put on the dollar and yen.
During last week's trading we all saw what kind of impact the earnings reports and the moves on the S&P and Dow Jones had on the currency, commodity, and bond markets... for the week ahead I expect to see the same exact themes play out as news, data, and fundamentals remain the witch's brew of choice for the big money market movers.
Last week approximately 25% of earnings were released but over the next two weeks we get the other 75%, so do not expect any change in how those events act as the catalyst in the Forex market and Forex's correlated markets. Over-the-top earnings from the likes of Goldman Sachs, Intel, IBM, JP Morgan, and Bank of America led to a 7% gain on the S&P 500 and the Dow surging up 7.3%. The strong upside gains on the US and European equity markets sent crude oil up 6%, gold up over 2%, and Treasuries to their first decline in 6-weeks.
Market participants sent their money-flows out of Treasuries and back into equities with measured conviction as we saw the yield on the 10-year note rocket up 34bps. In this weekly outlook I'm going a little more in-depth about Treasury yield curves, specifically between 2-year and 10-year notes, because the spread and yield curve between those two key debt issuances can often times reveal quite a bit about the overall risk appetite of market participants and how they gauge the potential for future growth of the US economy.
Last Thursday world famous market bear, Nouriel Roubini, gave participants yet another incentive to buy up equities and to sell the dollar and yen as he said the worst of the financial turmoil is behind us and he expects recovery by the end of the year. Although he did say another stimulus package would be required to combat the seemingly unstoppable rise in unemployment.
So, is any of this real? Are the global financial markets really recovering and is everything really fixed? I personally do not think so, I believe another tsunami wave could hit the equity, commodity, and Forex markets later this quarter or in Q4, but it doesn't matter because in this game perception is the reality... the recovery is as real as the markets want it to be and make it out to be. The thing I have to constantly remind myself is, the markets can stay irrationally exuberant for an indeterminable amount of time.
Fundamental events moving the Forex and equity markets this week:
This week's fundamental and economic calendar is a little lighter than usual for US data but for European data there are a number of critical fundamental events that center on inflation, the consumer, production, and manufacturing.
Bernanke testimony--
For the US dollar the bigger fundamental events take place on Tuesday and Wednesday as Fed Bernanke testifies before the House Financial Services Committee and Senate Banking Committee in DC. Bernanke's testimony will be on past, current, and future Fed monetary policy (interest rates), the state of the US economy, inflation/deflation, the housing and employment sectors, the deficit, sovereign debt monetization, future stimulus measures and the prospects of a sustainable recovery on Wall St.
All markets and all participants will be watching the Bernanke testimony and reacting accordingly. Remember, back in mid-March it was Bernanke who was one of the main catalysts that stopped the plunge in the equity markets, turned the S&P 500 higher and sent the dollar falling back off the throne it temporarily inhabited. Bernanke coined the stupid phrase, "green shoots", and the markets ran euphorically with it. Recent Fed rhetoric has been positive, upbeat, and the FOMC has upwardly revised their growth and inflation expectations.
Not all the members on those congressional committees are buying into the idea of an instantaneous recovery, especially Ron Paul and Jim Bunning. What traders need to be watching is whether the overall sentiment of these testimonies is more on the positive side or on the negative side in terms of the future prospects of the US economy because the money-movers in the equity, commodity, and Forex markets will take their cue from Bernanke's messages to congress and how those congressional committees react.
Key EUR/USD fundamentals--
German PPI (Monday 0200 EST)
Fed Lockhart speech (Monday 1330 EST)
Fed Bernanke testimony (Tuesday 1000 EST)
Eurozone Industrial New Orders (Wednesday 0500 EST)
Fed Bernanke testimony (Wednesday 1000 EST)
House Price Index (Wednesday 1000 EST)
Crude Inventories (Wednesday 1030 EST)
Initial Claims (Thursday 0830 EST)
Fed Tarullo speech (Thursday 0930 EST)
Existing Home Sales (Thursday 1030 EST)
German Manufacturing and Services PMI (Friday 0330 EST)
Eurozone Manufacturing and Services PMI (Friday 0400 EST)
German IFO (Friday 0400 EST)
Michigan Sentiment (Friday 0955 EST)
Pound sterling fundamentals--
I don't usually talk about the GBP much but after looking at the UK fundamentals I see there are a few events that carry a lot of market-moving potential. If you trade the pound sterling you'll want to be aware of the following fundamental events:
M4 (Monday 0430 EST)
BOE/MPC Meeting Minutes (Wednesday 0430 EST)
Retail Sales (Thursday 0430 EST)
BBA Mortgage Approvals (Thursday 0430 EST)
Preliminary GDP (Friday 0430 EST)
Also, both the BOJ and RBA release their monetary policy meeting minutes on Monday. On Tuesday the BOC has an interest rate event and monetary policy statement and traders will want to watch out for any rhetoric from the BOC to cool the CAD down. It can't really be possible to slow the CAD's appreciation as long as the S&P 500 and crude oil continue gaining but the BOC probably isn't too happy with the sharp reversal of the USD/CAD, so there is always a potential the BOC could do some verbal intervention this week.
Equity earnings reports--
Unless you've been on holiday or hiding in a cave I'm sure you're well aware of how the various earnings reports on Wall St. are moving the markets. We got just a taste of that last week and the response from market participants was resoundingly positive. Of course it's possible there's no real conviction behind the strong upside gains as volumes have been lighter overall. Plus, the potential always exists that the smart money is just waiting for higher prices to grab short positions to ride the next down move, but either way, as long as earnings meet or exceed expectations, the S&P 500, Dow, crude, and gold should continue higher while the dollar and yen remain pressured.
All week long, both before and after the bell, there are a massive amount of earnings reports scheduled for release and from big household names like Texas Instruments, Caterpillar, Coca-Cola, DuPont, Apple, Morgan Stanley, Wells Fargo... too many to even list. You can check the schedule here.
What this will likely translate to is a good deal of choppy and erratic price action on the S&P 500 futures and S&P 500 cash market, the Dow/Dow futures and then of course back into the currency market. The Japanese yen has shown extreme sensitivity to the moves made on the US and Japanese equity markets and I expect that trend to continue this week. The EUR/JPY is the benchmark currency pair that's most correlated to the S&P 500 futures and S&P 500 cash market while the GBP/JPY is moving in tight correlation with the Dow, Dow futures and USD/JPY. So, if you trade the majors and yen crosses this week be mindful of what's happening on Wall St. and with crude oil.
The yield curve and interest rate spreads -- future predictors:
The business of predicting the future of any tradeable market is mostly an exercise in futility, especially under the current environment where there is zero established trend and where the vast majority of participants alter their money-flows based on news, data, and emotional impulses.
A few weeks ago the upside break of a big moving average failed equity bulls and then a downside technical pattern failed equity bears, leaving many on Wall St. scratching their heads and hopefully a few figured out that stuff has zero to do with what moves markets. Participants who are purely fundamental have done a little better but even the strictly fundamental folks like Nouriel Roubini and Marc Faber are now changing their tune and I think they are doing so based on the trend of better headline economic numbers. But that's also a very dangerous game to play...
As fundamental as I am, I don't exactly trust any data that comes from a central bank or government agency. The way the data is compiled is a joke, it's unreliable, and beside all that, who can trust a politician or a central banker?
In my evolution as a trader and during my quest for education on how to better understand the global financial markets and what they may do in the future, I'm learning to lean more on the bond market. Specifically, on how to use the relationship between the 2-year and 10-year Treasury note... how to gauge the future of the markets by monitoring the yield curve between 2's and 10's and what's happening with the spread between interest rates.
Yield curve--
Before I go any further I want to be clear that I am no expert on this stuff, I'm still learning and trying to gain knowledge in this regard, but I'm excited enough about this market correlation that I wanted to share it so other traders who want to learn the underlying fundamentals of what really moves markets can begin learning too. I'm a simple person so this will be a very simple explanation...
The yield curve is just a basic graph with a line that represents the difference in yields and the time in which the particular debt issuance matures. The benchmark yield curve for the financial markets is between Treasury debt that matures in 2-years and 10-years. 2-year notes are considered a shorter dated maturity and the 10-year note is considered on the longer end of maturity in addition to being most closely correlated to the US housing and mortgage market. In general, the longer the date of maturity, the higher the interest rate yield should be.
When analyzing the yield curve, market participants look at the slope of the curve, whether it shows a pattern of more of an upward or downward slope. Under most markets conditions the slope or shape of the yield curve should always be up or positively sloped. A down slope or inverted slope is an extraordinary situation, but we'll get to that in a bit.
How the yield curve and spread between the interest rates of 2's and 10's can be used in a predictive manner is based purely on the actual factor that determines the yield curve -- future expectations. Interest rates are the #1 key driver of all markets and the prospect of future interest rates are the #1 key driver of money-flows in and out of the Forex, equity, commodity, and bond markets.
Yield curve and economic growth--
When it comes to interest rates, market participants always put a risk premium on the future of rates. When the yield curve positively and upwardly steepens that is a sign that a greater majority of market participants have future expectations of better and rising growth. As the sentiment of market participants becomes more euphoric, more hopeful, and more positive, the yield curve steepens to the upside. This means interest rates are expected to rise because growth and economic expansion is expected.
But, with better growth and economic expansion comes the prospect for rising price pressures and greater price-related inflation. Because longer dated maturities like the 10-year devalue under an inflationary environment, market participants will force the Treasury to pay a better yield in order to take on the risk of holding a debt instrument that may devalue due to inflation. With growth comes higher rates, higher inflation, and therefore higher yields must be returned.
Yield curve and Forex--
If you see an upwardly steepening yield curve between 2's and 10's what you can glean from this is the market telling you the prospects for better future growth are rising. And what happens when prices go higher and inflationary price pressure tick up? Simple, higher prices equate to higher equity prices, higher commodity prices, lower bond prices and higher bond yields and all that translates into a weaker US dollar and Japanese yen.
Whether Wall St. admits or not, they absolutely, positively need price inflation and higher prices, and whether or not Forex traders realize it, higher equities = higher crude and higher crude + higher equities = lower dollar. Very simple.
Just last week the interest rate spread between 2's and 10's rose by a healthy 25bps. That means the yield curve between 2's and 10's upwardly steepened and maintained a positive upward slope and look what US equities did... they all gained 7% or more and the US dollar fell. If the trend of steepening yield curve between 2's and 10's remains intact I would expect to see the S&P 500 and Dow continue making gains while the dollar and yen stay pressured lower.
Last week approximately 25% of earnings were released but over the next two weeks we get the other 75%, so do not expect any change in how those events act as the catalyst in the Forex market and Forex's correlated markets. Over-the-top earnings from the likes of Goldman Sachs, Intel, IBM, JP Morgan, and Bank of America led to a 7% gain on the S&P 500 and the Dow surging up 7.3%. The strong upside gains on the US and European equity markets sent crude oil up 6%, gold up over 2%, and Treasuries to their first decline in 6-weeks.
Market participants sent their money-flows out of Treasuries and back into equities with measured conviction as we saw the yield on the 10-year note rocket up 34bps. In this weekly outlook I'm going a little more in-depth about Treasury yield curves, specifically between 2-year and 10-year notes, because the spread and yield curve between those two key debt issuances can often times reveal quite a bit about the overall risk appetite of market participants and how they gauge the potential for future growth of the US economy.
Last Thursday world famous market bear, Nouriel Roubini, gave participants yet another incentive to buy up equities and to sell the dollar and yen as he said the worst of the financial turmoil is behind us and he expects recovery by the end of the year. Although he did say another stimulus package would be required to combat the seemingly unstoppable rise in unemployment.
So, is any of this real? Are the global financial markets really recovering and is everything really fixed? I personally do not think so, I believe another tsunami wave could hit the equity, commodity, and Forex markets later this quarter or in Q4, but it doesn't matter because in this game perception is the reality... the recovery is as real as the markets want it to be and make it out to be. The thing I have to constantly remind myself is, the markets can stay irrationally exuberant for an indeterminable amount of time.
Fundamental events moving the Forex and equity markets this week:
This week's fundamental and economic calendar is a little lighter than usual for US data but for European data there are a number of critical fundamental events that center on inflation, the consumer, production, and manufacturing.
Bernanke testimony--
For the US dollar the bigger fundamental events take place on Tuesday and Wednesday as Fed Bernanke testifies before the House Financial Services Committee and Senate Banking Committee in DC. Bernanke's testimony will be on past, current, and future Fed monetary policy (interest rates), the state of the US economy, inflation/deflation, the housing and employment sectors, the deficit, sovereign debt monetization, future stimulus measures and the prospects of a sustainable recovery on Wall St.
All markets and all participants will be watching the Bernanke testimony and reacting accordingly. Remember, back in mid-March it was Bernanke who was one of the main catalysts that stopped the plunge in the equity markets, turned the S&P 500 higher and sent the dollar falling back off the throne it temporarily inhabited. Bernanke coined the stupid phrase, "green shoots", and the markets ran euphorically with it. Recent Fed rhetoric has been positive, upbeat, and the FOMC has upwardly revised their growth and inflation expectations.
Not all the members on those congressional committees are buying into the idea of an instantaneous recovery, especially Ron Paul and Jim Bunning. What traders need to be watching is whether the overall sentiment of these testimonies is more on the positive side or on the negative side in terms of the future prospects of the US economy because the money-movers in the equity, commodity, and Forex markets will take their cue from Bernanke's messages to congress and how those congressional committees react.
Key EUR/USD fundamentals--
German PPI (Monday 0200 EST)
Fed Lockhart speech (Monday 1330 EST)
Fed Bernanke testimony (Tuesday 1000 EST)
Eurozone Industrial New Orders (Wednesday 0500 EST)
Fed Bernanke testimony (Wednesday 1000 EST)
House Price Index (Wednesday 1000 EST)
Crude Inventories (Wednesday 1030 EST)
Initial Claims (Thursday 0830 EST)
Fed Tarullo speech (Thursday 0930 EST)
Existing Home Sales (Thursday 1030 EST)
German Manufacturing and Services PMI (Friday 0330 EST)
Eurozone Manufacturing and Services PMI (Friday 0400 EST)
German IFO (Friday 0400 EST)
Michigan Sentiment (Friday 0955 EST)
Pound sterling fundamentals--
I don't usually talk about the GBP much but after looking at the UK fundamentals I see there are a few events that carry a lot of market-moving potential. If you trade the pound sterling you'll want to be aware of the following fundamental events:
M4 (Monday 0430 EST)
BOE/MPC Meeting Minutes (Wednesday 0430 EST)
Retail Sales (Thursday 0430 EST)
BBA Mortgage Approvals (Thursday 0430 EST)
Preliminary GDP (Friday 0430 EST)
Also, both the BOJ and RBA release their monetary policy meeting minutes on Monday. On Tuesday the BOC has an interest rate event and monetary policy statement and traders will want to watch out for any rhetoric from the BOC to cool the CAD down. It can't really be possible to slow the CAD's appreciation as long as the S&P 500 and crude oil continue gaining but the BOC probably isn't too happy with the sharp reversal of the USD/CAD, so there is always a potential the BOC could do some verbal intervention this week.
Equity earnings reports--
Unless you've been on holiday or hiding in a cave I'm sure you're well aware of how the various earnings reports on Wall St. are moving the markets. We got just a taste of that last week and the response from market participants was resoundingly positive. Of course it's possible there's no real conviction behind the strong upside gains as volumes have been lighter overall. Plus, the potential always exists that the smart money is just waiting for higher prices to grab short positions to ride the next down move, but either way, as long as earnings meet or exceed expectations, the S&P 500, Dow, crude, and gold should continue higher while the dollar and yen remain pressured.
All week long, both before and after the bell, there are a massive amount of earnings reports scheduled for release and from big household names like Texas Instruments, Caterpillar, Coca-Cola, DuPont, Apple, Morgan Stanley, Wells Fargo... too many to even list. You can check the schedule here.
What this will likely translate to is a good deal of choppy and erratic price action on the S&P 500 futures and S&P 500 cash market, the Dow/Dow futures and then of course back into the currency market. The Japanese yen has shown extreme sensitivity to the moves made on the US and Japanese equity markets and I expect that trend to continue this week. The EUR/JPY is the benchmark currency pair that's most correlated to the S&P 500 futures and S&P 500 cash market while the GBP/JPY is moving in tight correlation with the Dow, Dow futures and USD/JPY. So, if you trade the majors and yen crosses this week be mindful of what's happening on Wall St. and with crude oil.
The yield curve and interest rate spreads -- future predictors:
The business of predicting the future of any tradeable market is mostly an exercise in futility, especially under the current environment where there is zero established trend and where the vast majority of participants alter their money-flows based on news, data, and emotional impulses.
A few weeks ago the upside break of a big moving average failed equity bulls and then a downside technical pattern failed equity bears, leaving many on Wall St. scratching their heads and hopefully a few figured out that stuff has zero to do with what moves markets. Participants who are purely fundamental have done a little better but even the strictly fundamental folks like Nouriel Roubini and Marc Faber are now changing their tune and I think they are doing so based on the trend of better headline economic numbers. But that's also a very dangerous game to play...
As fundamental as I am, I don't exactly trust any data that comes from a central bank or government agency. The way the data is compiled is a joke, it's unreliable, and beside all that, who can trust a politician or a central banker?
In my evolution as a trader and during my quest for education on how to better understand the global financial markets and what they may do in the future, I'm learning to lean more on the bond market. Specifically, on how to use the relationship between the 2-year and 10-year Treasury note... how to gauge the future of the markets by monitoring the yield curve between 2's and 10's and what's happening with the spread between interest rates.
Yield curve--
Before I go any further I want to be clear that I am no expert on this stuff, I'm still learning and trying to gain knowledge in this regard, but I'm excited enough about this market correlation that I wanted to share it so other traders who want to learn the underlying fundamentals of what really moves markets can begin learning too. I'm a simple person so this will be a very simple explanation...
The yield curve is just a basic graph with a line that represents the difference in yields and the time in which the particular debt issuance matures. The benchmark yield curve for the financial markets is between Treasury debt that matures in 2-years and 10-years. 2-year notes are considered a shorter dated maturity and the 10-year note is considered on the longer end of maturity in addition to being most closely correlated to the US housing and mortgage market. In general, the longer the date of maturity, the higher the interest rate yield should be.
When analyzing the yield curve, market participants look at the slope of the curve, whether it shows a pattern of more of an upward or downward slope. Under most markets conditions the slope or shape of the yield curve should always be up or positively sloped. A down slope or inverted slope is an extraordinary situation, but we'll get to that in a bit.
How the yield curve and spread between the interest rates of 2's and 10's can be used in a predictive manner is based purely on the actual factor that determines the yield curve -- future expectations. Interest rates are the #1 key driver of all markets and the prospect of future interest rates are the #1 key driver of money-flows in and out of the Forex, equity, commodity, and bond markets.
Yield curve and economic growth--
When it comes to interest rates, market participants always put a risk premium on the future of rates. When the yield curve positively and upwardly steepens that is a sign that a greater majority of market participants have future expectations of better and rising growth. As the sentiment of market participants becomes more euphoric, more hopeful, and more positive, the yield curve steepens to the upside. This means interest rates are expected to rise because growth and economic expansion is expected.
But, with better growth and economic expansion comes the prospect for rising price pressures and greater price-related inflation. Because longer dated maturities like the 10-year devalue under an inflationary environment, market participants will force the Treasury to pay a better yield in order to take on the risk of holding a debt instrument that may devalue due to inflation. With growth comes higher rates, higher inflation, and therefore higher yields must be returned.
Yield curve and Forex--
If you see an upwardly steepening yield curve between 2's and 10's what you can glean from this is the market telling you the prospects for better future growth are rising. And what happens when prices go higher and inflationary price pressure tick up? Simple, higher prices equate to higher equity prices, higher commodity prices, lower bond prices and higher bond yields and all that translates into a weaker US dollar and Japanese yen.
Whether Wall St. admits or not, they absolutely, positively need price inflation and higher prices, and whether or not Forex traders realize it, higher equities = higher crude and higher crude + higher equities = lower dollar. Very simple.
Just last week the interest rate spread between 2's and 10's rose by a healthy 25bps. That means the yield curve between 2's and 10's upwardly steepened and maintained a positive upward slope and look what US equities did... they all gained 7% or more and the US dollar fell. If the trend of steepening yield curve between 2's and 10's remains intact I would expect to see the S&P 500 and Dow continue making gains while the dollar and yen stay pressured lower.
Foreign exchange currency trading is a risky business with much to lose and much to gain. As a professional forex broker and personal trader, I have realized the fast profits this market can reap, while witnessing the dog-eat-dog nature of the beast, in which buyers lose their shirts every minute.
Whether you are a forex trader or just curious about forex currency trading, you owe it to yourself to separate the wheat from the chafe. The Internet is awash in foreign exchange currency trading websites whose sole existences are dependent upon ignorant forex investors. From get-rich-quick forex software schemes to free forex training, forex educational seminars, free forex signals, forex forums, and more, the fraudulence that surrounds the fx trading market is frightening.
Forex trading is very different from the U.S. stock market. The major differences include:
Forex has no central exchange
Forex trading can be done around the clock
Forex has no overseeing regulatory commission, such as the SEC
The forex market is a wild, open arena without rules, laws, or a governing body. No one cares if your money is taken. No one will lose any sleep if you’ve been lied to. There are no repercussions if you’re treated unfairly. Investors trade at their own risk and have no legal recourse to enforce justice.
I know. I’ve been there. The scammers have burned me more than once. In an attempt to further my own knowledge, I fell for the magical software sales pitches and followed the crooked paths to the stolen treasures, only to be let down ad nauseam.
I served my time as a forex broker, which was an eye-opening experience. I heard and saw the manipulation of client profits that was business as usual. It quickly shifted my interest in trading and brokering forex to that of protecting forex traders. I redirected my efforts from studying daily forex signals to researching forex websites. I was determined to devise a resource on which forex investors could rely for honest, fair information exchange.
Whether you are a forex trader or just curious about forex currency trading, you owe it to yourself to separate the wheat from the chafe. The Internet is awash in foreign exchange currency trading websites whose sole existences are dependent upon ignorant forex investors. From get-rich-quick forex software schemes to free forex training, forex educational seminars, free forex signals, forex forums, and more, the fraudulence that surrounds the fx trading market is frightening.
Forex trading is very different from the U.S. stock market. The major differences include:
Forex has no central exchange
Forex trading can be done around the clock
Forex has no overseeing regulatory commission, such as the SEC
The forex market is a wild, open arena without rules, laws, or a governing body. No one cares if your money is taken. No one will lose any sleep if you’ve been lied to. There are no repercussions if you’re treated unfairly. Investors trade at their own risk and have no legal recourse to enforce justice.
I know. I’ve been there. The scammers have burned me more than once. In an attempt to further my own knowledge, I fell for the magical software sales pitches and followed the crooked paths to the stolen treasures, only to be let down ad nauseam.
I served my time as a forex broker, which was an eye-opening experience. I heard and saw the manipulation of client profits that was business as usual. It quickly shifted my interest in trading and brokering forex to that of protecting forex traders. I redirected my efforts from studying daily forex signals to researching forex websites. I was determined to devise a resource on which forex investors could rely for honest, fair information exchange.
The Mortgage Bankers Association said demand for U.S. home loans rose last week as a three-week low in 30-year fixed mortgage rates boosted applications for refinancing. That came a day after U.S. data showed pending home sales jumped 3.6 percent in June, adding to hope that the decline in U.S. home prices may finally be [...]
China Warns Against Flood of Dollars
By: Ffd Analyst
A top Chinese official said on Tuesday the United States should be careful about flooding global markets with dollars while the world struggles to restore economic stability. Sitting next to U.S. Treasury Secretary Timothy Geithner, Chinese Vice Premier Wang Qishan made clear at the start of the concluding day of the “Strategic and Economic Dialogue” [...]
USD/CAD: BOC Rate Statement Looms
By: Ffd Analyst
While many pairs are still consolidating or just begining to break out, the Canadian dollar has been on a race for new highs. Since last week, the currency appreciated 5 percent against the U.S. dollar and is up more than 15 percent since March.
The Bank of Canada will be announcing their monetary policy [...]
China Warns Against Flood of Dollars
By: Ffd Analyst
A top Chinese official said on Tuesday the United States should be careful about flooding global markets with dollars while the world struggles to restore economic stability. Sitting next to U.S. Treasury Secretary Timothy Geithner, Chinese Vice Premier Wang Qishan made clear at the start of the concluding day of the “Strategic and Economic Dialogue” [...]
USD/CAD: BOC Rate Statement Looms
By: Ffd Analyst
While many pairs are still consolidating or just begining to break out, the Canadian dollar has been on a race for new highs. Since last week, the currency appreciated 5 percent against the U.S. dollar and is up more than 15 percent since March.
The Bank of Canada will be announcing their monetary policy [...]
STOP
The signs of the road are easy to read. No matter where you are in the world, chances are pretty good that you’d know what to do at a red octagonal sign or a green light. We combined forex learning with the rules of the road to give you a fun and easy way to learn the basics of forex trading. Driving a car can be exciting, fun and, if you’re not doing it properly, very dangerous. Just like forex trading. If you’re ready to learn, have a seat, fasten your belt and enjoy our Forex Ed lessons.
How the Road was Paved
The Basic Mechanics behind a Trade
How to Get There Safely
Keeping Your Eyes on the Road
LOOK
Yellow means look. Take a look around and see why Forex Club’s platforms and advantages are unique and beneficial to you.
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TRADE
The light’s green! It’s time for you to put the pedal to the metal and get en route to your forex career.
The Vehicles
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The signs of the road are easy to read. No matter where you are in the world, chances are pretty good that you’d know what to do at a red octagonal sign or a green light. We combined forex learning with the rules of the road to give you a fun and easy way to learn the basics of forex trading. Driving a car can be exciting, fun and, if you’re not doing it properly, very dangerous. Just like forex trading. If you’re ready to learn, have a seat, fasten your belt and enjoy our Forex Ed lessons.
How the Road was Paved
The Basic Mechanics behind a Trade
How to Get There Safely
Keeping Your Eyes on the Road
LOOK
Yellow means look. Take a look around and see why Forex Club’s platforms and advantages are unique and beneficial to you.
Sign Up for Forex Ed Classes
Ride with Comfort
Trade with the best Safety Features
TRADE
The light’s green! It’s time for you to put the pedal to the metal and get en route to your forex career.
The Vehicles
Fueling Your Ride
Currency Symbol Bank Buying
TT Clean Bank Selling
TT & OD Charts
Australian Dollar AUD 68.26 68.43
Canadian Dollar CAD 75.09 75.27
Danish Krone DKK 15.71 15.75
Euro EUR 116.99 117.27
Hong Kong Dollar HKD 10.67 10.7
Japanese Yen JPY 0.87 0.87
Saudi Riyal SAR 22.05 22.11
Singapore Dollar SGD 57.07 57.21
Swedish Korona SEK 11.29 11.32
Swiss Franc CHF 76.44 76.62
U.A.E Dirham AED 22.52 22.57
UK Pound Sterling GBP 136.38 136.71
US Dollar USD 82.7 82.9
TT Clean Bank Selling
TT & OD Charts
Australian Dollar AUD 68.26 68.43
Canadian Dollar CAD 75.09 75.27
Danish Krone DKK 15.71 15.75
Euro EUR 116.99 117.27
Hong Kong Dollar HKD 10.67 10.7
Japanese Yen JPY 0.87 0.87
Saudi Riyal SAR 22.05 22.11
Singapore Dollar SGD 57.07 57.21
Swedish Korona SEK 11.29 11.32
Swiss Franc CHF 76.44 76.62
U.A.E Dirham AED 22.52 22.57
UK Pound Sterling GBP 136.38 136.71
US Dollar USD 82.7 82.9
Have You Learnt to Read the Forex Quote Yet?
To have a better insight about currency exchange rate and learn how it affects the value of your Forex investment, we will discuss everything about Forex Quote in this article. The information will also help you to become a more successful trader.
By: Vahid Chaychi Published Date: 08-20-2009
Online Trading: Preparedness is a Key Factor to Your Success
When you engage yourself in online trading, you need to come prepared. Many new traders are often under-equipped and they lack the necessary things needed to succeed. You see, in this line of business, you could earn so much but you can also go down hard.
By: CristianStan Published Date: 08-19-2009
Forex Platforms
The financial industry has made full use of what information technology has to offer, especially in the area of trading where real-time data spells the difference between being ahead of the market and being left behind.
By: CristianStan Published Date: 08-19-2009
To have a better insight about currency exchange rate and learn how it affects the value of your Forex investment, we will discuss everything about Forex Quote in this article. The information will also help you to become a more successful trader.
By: Vahid Chaychi Published Date: 08-20-2009
Online Trading: Preparedness is a Key Factor to Your Success
When you engage yourself in online trading, you need to come prepared. Many new traders are often under-equipped and they lack the necessary things needed to succeed. You see, in this line of business, you could earn so much but you can also go down hard.
By: CristianStan Published Date: 08-19-2009
Forex Platforms
The financial industry has made full use of what information technology has to offer, especially in the area of trading where real-time data spells the difference between being ahead of the market and being left behind.
By: CristianStan Published Date: 08-19-2009
Auto Forex trading stands consistent to its name. Being able to make money trading even if you are resting seems questionable but it's possible. There's an automated form of Forex trading in which you are permitted to set up the criteria that you need in order to make your trading work.
Then you just let a software work your own trades automatically. It's definitely a very easy system to use. All that you need to initially do is make your very own goals and just know what you really want to achieve. Basically, you must set your own principles and standards regarding what are your desired goals and what do you aim to achieve.
You must then initially write down whatever you really want then prepare and arrange it in order to utilize it with your own trading strategy. It's very critical that you set up a trading strategy. This will function as the one that you will have to incorporate your needs that are associated with your goals that. Also, it shall help you in defining the existing rules required to set the system signals in the automated system. These are helpful keys to the success of your own auto Forex trading.
After this, you must set the system parameters accordingly with the pairings that you've set. With this, each system will acquire its own parameters. Also with this, you can come up with variations if you plan to change them.
Research may also be required to be able to find out the range regarding the pairings that would interest you. After you finish setting all up, you must then have to set up the stop signal. The greatest choice for this set up is to make it stop instantly when any of your own trades or exchanges is in trouble or terribly threatened.
Adding up to this, you also might need more added research to be able set up the correct signals in its proper position. Auto Forex trading systems commonly include brokers, tutorials, and other things that can aid you to set up your very own signals. Then you must test and check the signal software as soon as you've set it up. After you've done this, you will then be able to set up the program itself. Auto Forex trading system will then take care of the trades as it adheres to the signals that you set up.
Auto Forex trading is an easy way of performing Forex trading even if you're working part time or even having a full time job. It also can serve as your own reliable personal assistant. All that you have to do is just set everything up properly and let it handle the Forex trading. There are so many effective Auto Forex trading systems, it has definitely become a very significant program for all in the Forex trading world. Getting your own Auto Forex trading program can help you in a lot of ways and you can also have more time doing other stuffs. It is such a very reliable tool.
Then you just let a software work your own trades automatically. It's definitely a very easy system to use. All that you need to initially do is make your very own goals and just know what you really want to achieve. Basically, you must set your own principles and standards regarding what are your desired goals and what do you aim to achieve.
You must then initially write down whatever you really want then prepare and arrange it in order to utilize it with your own trading strategy. It's very critical that you set up a trading strategy. This will function as the one that you will have to incorporate your needs that are associated with your goals that. Also, it shall help you in defining the existing rules required to set the system signals in the automated system. These are helpful keys to the success of your own auto Forex trading.
After this, you must set the system parameters accordingly with the pairings that you've set. With this, each system will acquire its own parameters. Also with this, you can come up with variations if you plan to change them.
Research may also be required to be able to find out the range regarding the pairings that would interest you. After you finish setting all up, you must then have to set up the stop signal. The greatest choice for this set up is to make it stop instantly when any of your own trades or exchanges is in trouble or terribly threatened.
Adding up to this, you also might need more added research to be able set up the correct signals in its proper position. Auto Forex trading systems commonly include brokers, tutorials, and other things that can aid you to set up your very own signals. Then you must test and check the signal software as soon as you've set it up. After you've done this, you will then be able to set up the program itself. Auto Forex trading system will then take care of the trades as it adheres to the signals that you set up.
Auto Forex trading is an easy way of performing Forex trading even if you're working part time or even having a full time job. It also can serve as your own reliable personal assistant. All that you have to do is just set everything up properly and let it handle the Forex trading. There are so many effective Auto Forex trading systems, it has definitely become a very significant program for all in the Forex trading world. Getting your own Auto Forex trading program can help you in a lot of ways and you can also have more time doing other stuffs. It is such a very reliable tool.
STOP
The signs of the road are easy to read. No matter where you are in the world, chances are pretty good that you’d know what to do at a red octagonal sign or a green light. We combined forex learning with the rules of the road to give you a fun and easy way to learn the basics of forex trading. Driving a car can be exciting, fun and, if you’re not doing it properly, very dangerous. Just like forex trading. If you’re ready to learn, have a seat, fasten your belt and enjoy our Forex Ed lessons.
How the Road was Paved
The Basic Mechanics behind a Trade
How to Get There Safely
Keeping Your Eyes on the Road
LOOK
Yellow means look. Take a look around and see why Forex Club’s platforms and advantages are unique and beneficial to you.
Sign Up for Forex Ed Classes
Ride with Comfort
Trade with the best Safety Features
TRADE
The light’s green! It’s time for you to put the pedal to the metal and get en route to your forex career.
The Vehicles
Fueling Your Ride
All the Direction You Need
Getting Yourself a System
The signs of the road are easy to read. No matter where you are in the world, chances are pretty good that you’d know what to do at a red octagonal sign or a green light. We combined forex learning with the rules of the road to give you a fun and easy way to learn the basics of forex trading. Driving a car can be exciting, fun and, if you’re not doing it properly, very dangerous. Just like forex trading. If you’re ready to learn, have a seat, fasten your belt and enjoy our Forex Ed lessons.
How the Road was Paved
The Basic Mechanics behind a Trade
How to Get There Safely
Keeping Your Eyes on the Road
LOOK
Yellow means look. Take a look around and see why Forex Club’s platforms and advantages are unique and beneficial to you.
Sign Up for Forex Ed Classes
Ride with Comfort
Trade with the best Safety Features
TRADE
The light’s green! It’s time for you to put the pedal to the metal and get en route to your forex career.
The Vehicles
Fueling Your Ride
All the Direction You Need
Getting Yourself a System
Senior foreign exchange correspondent Nicholas Hastings reports our Dow Jones news with an insight found nowhere else in the industry. Read his daily articles for ideas of where currencies will move. Autochartist, one of the most advanced signal tracking software on the market, offers Forex Club customers a daily article with a detailed account of a powerful forming trend. Forex Club is proud to offer you Forex Factory's daily economic calendar. By making a study of the calendar and its events, you can ensure that you'll be on the right side of every trade.
Sterling Support Will Ebb Away Now. By Nicholas Hastings
There's no excuse for not selling sterling now. As even the Bank of England governor has implied, the U.K.'s economic recovery is still far from secure and further monetary easing might yet be necessary.
USD/JPY Forms Falling Wedge as Risk Appetite is tested
Each morning there is slight fear as the last weeks of the August doldrums lead into September. Next month normal participation and better volume is expected to resume.
Forex Club is proud to offer you Forex Factory's daily economic calendar. By making a study of the calendar and its events, you can ensure that you'll be on the right side of every trade.
Sterling Support Will Ebb Away Now. By Nicholas Hastings
There's no excuse for not selling sterling now. As even the Bank of England governor has implied, the U.K.'s economic recovery is still far from secure and further monetary easing might yet be necessary.
USD/JPY Forms Falling Wedge as Risk Appetite is tested
Each morning there is slight fear as the last weeks of the August doldrums lead into September. Next month normal participation and better volume is expected to resume.
Forex Club is proud to offer you Forex Factory's daily economic calendar. By making a study of the calendar and its events, you can ensure that you'll be on the right side of every trade.
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REASON #1
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REASON #1
Trade with zero spread, pay commissions only when you profit
Forex Club offers exclusive trading terms. You can trade without spreads and pay a simple flat rate of just $0.40 for every $1,000 lot. And, you get it refunded if your trade was not profitable. Open an account now
REASON #2 Trusted broker worldwide
NFA regulated broker. NFA ID 0358265.
Services clients from over 50 countries, opening over 1,000 accounts per day*
Partners with the leading financial organizations including Dow Jones and Bloomberg
Offers powerful free charting, daily market research, including market signals for all accounts.
All of Forex Club's services are available in three major languages, English, Chinese and Russian.
REASON #3 Rated the Best Broker to start on Forex with
Forex Club offers one of the most intuitive trading platform on the market, which allows Forex traders to make trades with as little as $10. In addition, Forex Club supplies its customers with indispensable learning materials, such as online videos and guides to Forex. Activation of free practice accounts takes just a few minutes and live accounts can be activated in as little as one business day.
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Place market and numerous contingent orders with simple steps.
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Trade currencies online with a professional software. Enhanced features and performances, advanced analysis and charting tools designed with the professional trader in mind.
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Advanced Mobile Trader:
Do you need extra mobility? Learn more about our Advanced Mobile Trader platform.
Trade currency, place your order and check your account from anywhere via any wap enabled mobile phone.
Truly access and trade your account from anywhere with your mobile phone!
Increased Mobility.
Appealing and easy to use interface, easily move from screen to screen.
Place market and numerous contingent orders with simple steps.
Even view full reports including execution and open order reports from your mobile!
Risk appetite started to improve in yesterday’s US markets (S&P 0.68%) and continued firm into Asia. Asian regional indexes are broadly higher, with the critical and much watched Shanghai composite up 4.52%. The correlations between Shanghai and the EURUSD, USDJPY and Oil remain intact, providing us with some direction in this range bound market. The JPY made some small gains against the USD, trading down to 93.98, while the EUR was relatively unchanged, trading between 1.4200 and 1.4250. The big news yesterday was the BoE minute’s surprise, which showed a 6-3 vote regarding the level of asset purchases. The 3 dissenters included Governor King, along with Messrs Besley and Miles, who wanted a £75bn increase (to £200bn) instead of the passed £50bn. In addition, the minutes revealed "the potential adverse consequences of adding another large monetary stimulus might be less severe than the possible costs of acting too cautiously." There seems to be a fear that provided insufficient economic stimulus might have severe economic consequences. Given the tone, we still believe that the door is open for additional asset purchasing in late 2009 and the potential for sterling weakness. During writing, UK retails sales printed higher than expected at 3.3% y/y vs. 2.7% exp. The knee jerk reaction sent the cable higher to 1.6605, but the market quickly reversed its position trading the pair down to 1.6518. And in Europe, ECB Governing Council member Weber said the surprise expansion of German Q2 GDP was mainly the product of stimulus measures and therefore might not be sustainable (similarly to ZEW president Franz comments). Currently risk appetite seems healthy, but in this light economic calendar day and thin volume, a rapid change in sentiment should be expected. Upcoming releases for today: we have Canada Wholesales from the month of June and the US will post its weekly jobless claims, the Philadelphia fed index and natural gas storage.
Risk appetite started to improve in yesterday’s US markets (S&P 0.68%) and continued firm into Asia. Asian regional indexes are broadly higher, with the critical and much watched Shanghai composite up 4.52%. The correlations between Shanghai and the EURUSD, USDJPY and Oil remain intact, providing us with some direction in this range bound market. The JPY made some small gains against the USD,...
Trading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.
The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.
Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.
The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.
Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.
Trade Balance
The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.
The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.
It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.
Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time.
Gross Domestic Product
The Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity available. Reported quarterly, GDP growth is widely followed as the primary indicator of the strength of economic activity.
GDP represents the total value of a country's production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners and the government.
As GDP reports are often subject to substantial quarter-to-quarter volatility and revisions, it is preferable to follow the indicator on a year-to-year basis. It can be valuable to follow the trend rate of growth in each of the major categories of GDP to determine the strengths and weaknesses in the economy.
A high GDP figure is often associated with the expectations of higher interest rates, which is frequently positive, at least in the short term, for the currency involved, unless expectations of increased inflation pressure is concurrently undermining confidence in the currency.
Consumer Price Index
The Consumer Price Index (CPI) is a measure of the average level of prices of a fixed basket of goods and services purchased by consumers. The monthly reported changes in CPI are widely followed as an inflation indicator.
The CPI is a primary inflation indicator because consumer spending accounts for nearly two-thirds of economic activity. Often, the CPI is followed but excludes the price of food and energy as these items are generally much more volatile than the rest of the CPI and can obscure the more important underlying trend.
Rising consumer price inflation is normally associated with the expectation of higher short term interest rates and may therefore be supportive for a currency in the short term. Nevertheless, a longer term inflation problem will eventually undermine confidence in the currency and weakness will follow.
Producer Price Index
The Producer Price Index (PPI) is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly PPI reports are widely followed as an indication of commodity inflation.
The PPI is considered important because it accounts for price changes throughout the manufacturing sector.
The PPI is often followed but excludes the food and energy components as these items are normally much more volatile than the rest of the PPI and can therefore obscure the more important underlying trend.
Studying the PPI allows consideration of inflationary pressures that may be accumulating or receding, but have not yet filtered through to the finished goods prices.
A rising PPI is normally expected to lead to higher consumer price inflation and thereby to potentially higher short-term interest rates. Higher rates will often have a short term positive impact on a currency, although significant inflationary pressure will often lead to an undermining of the confidence in the currency involved.
Payroll Employment
Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity.
Payroll employment is one of the primary monthly indicators of aggregate economic activity because it encompasses every major sector of the economy. It is also useful to examine trends in job creation in several industry categories because the aggregate data can mask significant deviations in underlying industry trends.
Large increases in payroll employment are seen as signs of strong economic activity that could eventually lead to higher interest rates that are supportive of the currency at least in the short term. If, however, inflationary pressures are seen as building, this may undermine the longer term confidence in the currency.
Durable Goods Orders
Durable Goods Orders are a measure of the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. Monthly percent changes reflect the rate of change of such orders.
Levels of, and changes in, durable goods order are widely followed as an indicator of factory sector momentum.
Durable Goods Orders are a major indicator of manufacturing sector trends because most industrial production is done to order. Often, the indicator is followed but excludes Defence and Transportation orders because these are generally much more volatile than the rest of the orders and can obscure the more important underlying trend.
Durable Goods Orders are measured in nominal terms and therefore include the effects of inflation. Therefore the Durable Goods Orders should be compared to the trend growth rate in PPI to arrive at the real, inflation-adjusted Durable Goods Orders.
Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates that are often supportive to a currency at least in the short term.
Retail Sales
Retail Sales are a measure of the total receipts of retail stores. Monthly percentage changes reflect the rate of change of such sales and are widely followed as an indicator of consumer spending.
Retails Sales are a major indicator of consumer spending because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity.
Often, Retail Sales are followed less auto sales because these are generally much more volatile than the rest of the Retail Sales and can therefore obscure the more important underlying trend.
Retail Sales are measured in nominal terms and therefore include the effects of inflation. Rising Retail Sales are often associated with a strong economy and therefore an expectation of higher short-term interest rates that are often supportive to a currency at least in the short term.
Housing Starts
Housing Starts are a measure of the number of residential units on which construction is begun each month and the level of housing starts is widely followed as an indicator of residential construction activity.
The indicator is followed to assess the commitment of builders to new construction activity. High construction activity is usually associated with increased economic activity and confidence, and is therefore considered a harbinger of higher short-term interest rates that can be supportive of the involved currency at least in the short term.
The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.
The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.
It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.
Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time.
Gross Domestic Product
The Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity available. Reported quarterly, GDP growth is widely followed as the primary indicator of the strength of economic activity.
GDP represents the total value of a country's production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners and the government.
As GDP reports are often subject to substantial quarter-to-quarter volatility and revisions, it is preferable to follow the indicator on a year-to-year basis. It can be valuable to follow the trend rate of growth in each of the major categories of GDP to determine the strengths and weaknesses in the economy.
A high GDP figure is often associated with the expectations of higher interest rates, which is frequently positive, at least in the short term, for the currency involved, unless expectations of increased inflation pressure is concurrently undermining confidence in the currency.
Consumer Price Index
The Consumer Price Index (CPI) is a measure of the average level of prices of a fixed basket of goods and services purchased by consumers. The monthly reported changes in CPI are widely followed as an inflation indicator.
The CPI is a primary inflation indicator because consumer spending accounts for nearly two-thirds of economic activity. Often, the CPI is followed but excludes the price of food and energy as these items are generally much more volatile than the rest of the CPI and can obscure the more important underlying trend.
Rising consumer price inflation is normally associated with the expectation of higher short term interest rates and may therefore be supportive for a currency in the short term. Nevertheless, a longer term inflation problem will eventually undermine confidence in the currency and weakness will follow.
Producer Price Index
The Producer Price Index (PPI) is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly PPI reports are widely followed as an indication of commodity inflation.
The PPI is considered important because it accounts for price changes throughout the manufacturing sector.
The PPI is often followed but excludes the food and energy components as these items are normally much more volatile than the rest of the PPI and can therefore obscure the more important underlying trend.
Studying the PPI allows consideration of inflationary pressures that may be accumulating or receding, but have not yet filtered through to the finished goods prices.
A rising PPI is normally expected to lead to higher consumer price inflation and thereby to potentially higher short-term interest rates. Higher rates will often have a short term positive impact on a currency, although significant inflationary pressure will often lead to an undermining of the confidence in the currency involved.
Payroll Employment
Payroll employment is a measure of the number of people being paid as employees by non-farm business establishments and units of government. Monthly changes in payroll employment reflect the net number of new jobs created or lost during the month and changes are widely followed as an important indicator of economic activity.
Payroll employment is one of the primary monthly indicators of aggregate economic activity because it encompasses every major sector of the economy. It is also useful to examine trends in job creation in several industry categories because the aggregate data can mask significant deviations in underlying industry trends.
Large increases in payroll employment are seen as signs of strong economic activity that could eventually lead to higher interest rates that are supportive of the currency at least in the short term. If, however, inflationary pressures are seen as building, this may undermine the longer term confidence in the currency.
Durable Goods Orders
Durable Goods Orders are a measure of the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods. Monthly percent changes reflect the rate of change of such orders.
Levels of, and changes in, durable goods order are widely followed as an indicator of factory sector momentum.
Durable Goods Orders are a major indicator of manufacturing sector trends because most industrial production is done to order. Often, the indicator is followed but excludes Defence and Transportation orders because these are generally much more volatile than the rest of the orders and can obscure the more important underlying trend.
Durable Goods Orders are measured in nominal terms and therefore include the effects of inflation. Therefore the Durable Goods Orders should be compared to the trend growth rate in PPI to arrive at the real, inflation-adjusted Durable Goods Orders.
Rising Durable Goods Orders are normally associated with stronger economic activity and can therefore lead to higher short-term interest rates that are often supportive to a currency at least in the short term.
Retail Sales
Retail Sales are a measure of the total receipts of retail stores. Monthly percentage changes reflect the rate of change of such sales and are widely followed as an indicator of consumer spending.
Retails Sales are a major indicator of consumer spending because they account for nearly one-half of total consumer spending and approximately one-third of aggregate economic activity.
Often, Retail Sales are followed less auto sales because these are generally much more volatile than the rest of the Retail Sales and can therefore obscure the more important underlying trend.
Retail Sales are measured in nominal terms and therefore include the effects of inflation. Rising Retail Sales are often associated with a strong economy and therefore an expectation of higher short-term interest rates that are often supportive to a currency at least in the short term.
Housing Starts
Housing Starts are a measure of the number of residential units on which construction is begun each month and the level of housing starts is widely followed as an indicator of residential construction activity.
The indicator is followed to assess the commitment of builders to new construction activity. High construction activity is usually associated with increased economic activity and confidence, and is therefore considered a harbinger of higher short-term interest rates that can be supportive of the involved currency at least in the short term.
When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.
Spot and forward trading
When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.
Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.
Spot and forward trading
When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.
Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.
Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.
In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed. Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions.
In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed. Please refer to our page Forex Rates & Conditions for current Spreads, Margins and Conditions.
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