Forex News and Reports

Be Flexible In Chart Trading

forex — Wed, 21 Nov 2007 00:11:37 +0000

Where you stand in relation to the overall technical evidence may be more important than an individual candlestick pattern.

For example, a bullish candlestick in a major bearish market should not be used as a buy signal. A bullish candlestick formation, especially when confirmed by other technical indicators in a bull market, would be a buying signal point.

Proverb

forex — Wed, 21 Nov 2007 00:08:29 +0000

I’ve found this proverb in a trading book and i like it :

“A prudent man has more than a string in his bow “

Euro at New Record - 1.50 or Bust?

forex — Tue, 20 Nov 2007 21:50:40 +0000

After a dropping for most of the Asian session, EURUSD staged a vicious one-way rally that took the pair to record highs by early European trade.

USD largest single day loss in over a year

forex — Tue, 20 Nov 2007 21:49:46 +0000

The US dollar posted its largest single-day loss in over a year, as speculation for future US Federal Reserve interest rate cut doomed the greenback to further drops. Outlook has grown increasingly dim for the downtrodden US currency, as both speculative and sovereign traders show very little interest in holding dollars. Continued speculation that key oil producing countries may drop the dollar as their primary reserve currency has clearly hurt the USD, while increasingly pessimistic forecasts for US economic growth and interest rates has likewise hurt confidence in the dollar.

Bird Watching In Lion Country

forex — Mon, 19 Nov 2007 22:44:09 +0000

Retail Forex Trading Explained…

A few year ago, Dirk du Toit wrote this book.

Below are some of his ideas, as i can remember them. I hope this will help you to understand better the forex exchange market.

he has a personal trading system, 4×1 and median system.

it’s very important to understand probability.

trading is not a spectator game.

don’t forget that, we traders, are the market

the forex market is a game, a game of chess…

stop further losses

in currency trading, you live in real time, or you don’t live at all.

he believes that you must never forget that in the end forex is only a business where you must have profit.

don’t underestimate your common sense.

don’t use a very high leverage.

Forex exchange market is not a common exchange market.

be open minded and think always outside the box.

don’t be focused only on a technical analysis as also only on a fundamental analysis.

have always a goal, very clear stated.

have a business plan

don’t forget that there are no non-emotional trading.

have patience, tomorrow is another day.

you must be very disciplined.

As I will remember other ideas, I will post them here.

This is not supposed to by a very technical blog, is only a simple way to present some ideas I came across will trying to understand better the FOREX market exchange.

Table of forecasts for New Zealand’s official cash rate

forex — Wed, 25 Jul 2007 19:59:52 +0000

Following is a table of forecasts for New Zealand’s official cash rate at the four remaining reviews this year.

2007           July    Sept.    Oct.    Dec.
---------------------------------------------
Median         8.25%   8.25%   8.25%   8.25%
---------------------------------------------
ANZ National   8.25%   8.25%   8.25%   8.25%
ASB Bank       8.25%   8.25%   8.25%   8.25%
Barclays       8.0%    8.0%    8.0%    8.0%
BNZ            8.25%   8.25%   8.25%   8.25%
Citigroup      8.25%   8.25%   8.25%   8.25%
Deutsche       8.25%   8.25%   8.25%   8.25%
First NZ       8.25%   8.25%   8.25%   8.25%
Goldman Sachs  8.0%    8.0%    8.0%    8.0%
HSBC           8.25%   8.25%   8.25%   8.25%
ICAP           8.25%   8.25%   8.25%   8.25%
JPMorgan       8.25%   8.25%   8.25%   8.25%
Macquarie      8.25%   8.25%   8.25%   8.25%
RBC            8.25%   8.25%   8.25%   8.25%
TD             8.0%    8.0%    8.0%    8.0%
UBS            8.0%    8.0%    8.0%    8.0%
Westpac        8.25%   8.5%    8.5%    8.5%
==============================================

NFP: Trade the Momentum and not the Moment

forex — Fri, 06 Jul 2007 23:00:08 +0000

Trading the moment of the NFP relaese is hit and miss, trading the momentum of the NFP is a better bet.

The volatility of the 1st Friday of each month that NFP is released is not just down to the number of jobs created, this is a complex release that has four components that Traders must be aware of:

1. The actual number of jobs reported as being created this month; July’s number is expected in at 125k, and is an average of analysts’ figures that range from 300k to 20k. The High to Low difference in opinion is enormous.
2. The revision to the previous month’s number; Probably as important as the new number, the revision can add 50k to the previous amount, and that is what creates the volatility as Traders re-align their previous thoughts on what happened four weeks ago.
3. The Employment Rate; Currently at 4.5% is one of the lowest in the world and has stayed between 4.5-4.6% recently. Any move outside this area would be dramatic
4. Average Hourly Earnings; Looking at coming in around 0.4%, this is the number that the Fed stated was causing it concern as an inflationary read.

Click below for full article :

NFP: Trade the Momentum and not the Moment

Nonfarm Employment Change

forex — Fri, 06 Jul 2007 22:56:58 +0000

Measures the number of new jobs created in the previous month, excluding the farming industry. A rising trend has a positive effect on the nation’s currency. The number of new jobs being created is one of the most important indicators of the economy’s health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

Employment Situation Summary

Currencies Hit Multi Decade Highs After Strong Non-Farm Payrolls

forex — Fri, 06 Jul 2007 22:52:01 +0000

Rising oil prices and strong US job growth sent carry trades to fresh highs today. With the labor market sparing the US economy from a major downturn, the market is hungry for risk and yield. Selling in the Japanese Yen has been so strong that the currency hit a new record low against the Euro, a 20 year low against the high yielding New Zealand dollar, a 16 year low against the Australian dollar and a 14 year low against the British pound. In other words, the Yen crosses hit decade if not multi decade highs. The move in oil prices has also pushed the Canadian dollar to a new 30 year high.

For more on the ramifications of $80 oil on the currency market, see the Special Report

AUD Interest Rate Statement

forex — Wed, 04 Jul 2007 20:38:27 +0000

Each month, excluding January, the Reserve Bank of Australia (RBA) Board meets to set the nation’s short term interest rate (i.e., “cash rate”). The Board announces the decided rate shortly after the meeting, and when there is a change in rates they also releases a statement that contains the economic conditions that effected their decision. A rising trend in interest rates has a positive effect on the nation’s currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 3%, they will respond by raising interest rates in an attempt to bring prices down.

The Reserve Bank of Australia (RBA) will announce their decision on their interest rate at 2330 GMT on 03-July, which incidentally would be 04-July in Australia. The last time, they had changed rates was in November 2006, when they had raised the interest rates by 25 bps to 6.25%.

RBA is expected to keep the rates unchanged this time at 6.25%. This would be their sixth pause in the year 2007 and the seventh pause since their last hike back in Nov-06. In Australia the CPI number comes out quarterly and hence the RBA does not have any more fresh inflation data on hand since their last meeting to evaluate the new emerging trends in the economy.

Interest Rate Statement

How Much More Can the GBP Rally ?

forex — Wed, 04 Jul 2007 20:31:09 +0000

How Will The Markets React?
Interest rate announcements are always important for the foreign exchange market. With the Bank of England, this upcoming rate decision will be market moving regardless of whether they decide to raise interest rates or not. After having raised rates in May and then leaving them unchanged in June, the BoE is expected to lift rates from 5.50 to 5.75 percent tomorrow. Of the 60 economists surveyed by Bloomberg, 52 or 87 percent of them are calling for an interest rate hike. This almost unanimous view puts the “surprise” element of the event risk to the downside. Therefore if the Bank of England leaves rates unchanged or raises rates and then issues some very neutral language in their statement, we could see a far larger move in the GBP/USD than if they do exactly what the futures curve is pricing in, which is to raises rates and remain hawkish. According to futures traders, the BoE could bring rates up to 6 percent by the end of the year. The recent movements in the currency, bond and stock markets indicate that British pound and Gilt traders are expecting higher rates while stock traders are not.

If the Bank of England Raises Rates, How Much More Can the GBP Rally?

GBP Interest Rate Statement

forex — Wed, 04 Jul 2007 20:27:56 +0000

Each month the Bank of England (BOE) Monetary Policy Committee (MPC) votes on where to set the nation’s short term interest rate (i.e., “bank rate”). Shortly after each vote, the MPC releases a statement that contains the outcome of their vote, a brief commentary of the economic conditions that effected their decision, and most importantly, clues regarding the outcome of future votes. A rising trend in interest rates has a positive effect on the nation’s currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down.

Leading Index m/m

forex — Wed, 04 Jul 2007 20:24:11 +0000

Measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads. The index is published monthly by The Conference Board, a leading private US research group, but traders tend to pay little attention because the components that make up the index are reported at an earlier date.

Oil Prices above $70 Oil

forex — Wed, 04 Jul 2007 19:54:44 +0000

If crude continues to rise, it will not be long before the average price of gasoline in the US moves back above $3 a gallon. When this happens, companies around the world will begin to add fuel surcharges, which will also boost core inflation. Over the past few years, we have seen oil become the primary driver of hawkish monetary policy across the globe. The higher oil prices rise, the longer central banks will keep interest rates high, which in one word, boils down to CARRY.

Prices above $70, Big Ramifications for Currency Market

Will ISM Manufacturing take the EUR/USD to 1.36?

forex — Sat, 30 Jun 2007 11:34:49 +0000

How Will The Markets React?

Next week, the US economic calendar will be exceptionally busy and US manufacturing ISM is the first of many key pieces of data due for release. Regional indexes have been strong. Both the Empire State and Philadelphia Fed surveys jumped in the month of June. The Empire State survey reached a 1 year high while the Philly Fed survey hit the highest level since March 2006. Even though Chicago PMI fell in the month of June, it still remains above 60, which is well into expansionary territory.

Overall, the regional indexes suggest that the national index will be strong but when it comes to the ISM, there is always more than meets the eye. With US growth and inflation being the market’s top focus, the employment and prices paid components will be closely scrutinized. The employment component is a leading indicator for non-farm payrolls while prices paid will shed some light on how concerned the Federal Reserve should be about inflation. The prices paid component of the regional indices all dropped, so even if the headline number increases, the reaction in the US dollar could be tempered by any downward surprises in the inflation component. Going into the number, the bond and currency markets are not expecting a stronger release. Yields are down sharply while the dollar has sold off. The rebound in the stock market entails a bit optimism, but overall the financial markets are not expecting a strong number. Having already sold off significantly, bonds will probably see a limited reaction to a weak number. The bigger move will be in the EUR/USD and the stock market. In the event that the headline does overshadow prices paid, then we could see a bigger move in yields, stocks and USD/JPY, which has the advantage of carry.

Will ISM Manufacturing take the EUR/USD to 1.36?

Dollar In Retreat As Weak Consumer Data Adds To Soft Inflation

forex — Fri, 29 Jun 2007 18:55:59 +0000

Today’s economic calendar was a good follow up to the Fed’s decision to leave rates unchanged at the end of its two day meeting yesterday. The central bank’s favored inflation gauge cooled to a new multi-year low, while weak consumer spending numbers added another facet to the concerns for the economy.

The dollar’s tumble was clearly seen in the EURUSD’s take off. The pair made one more test of1.3430 support before taking off on a gradual 110-point climb to 1.3540. USDCHF threw the market off after its push through resistance yesterday evolved into a false break and then sharp sell off this morning. After 120 point drop for the greenback, USDCHF was trading near 1.2215 support with few technical levels in the vicinity. Interestingly enough, the usually active British pound was conservative in its advance against the dollar as the pair rose only 65 points from overnight lows before finding a weak ceiling at 2.0075. Finally, it was a battle of the weakest for USDJPY as the pair spent most of the day in a 30 point range below 123.55.

Dollar In Retreat As Weak Consumer Data Adds To Soft Inflation

Investing Secrets of Warren Buffett

forex — Sun, 08 Apr 2007 21:54:25 +0000

WarRen Buffett is acknowledged by investors around the world as the world’s best investor.

Here are some of his investing secrets :

Invest in quality businesses, not stock symbols.
Don’t invest for ten minutes if you’re not prepared to invest for ten years.
Scan thousands of stocks looking for screaming bargains.
Calculate how well management is using the money they have.
Stay away from “glitter” stocks.
Know what a fat pitch is and what to do with it.
Calculate how much money you will make, not whether the stock is undervalued or overvalued according to some academic model.
Remove the weeds and water the flowers - not the other way around.
Become a conscious investor.

Guide to Implementing Carry Trades

forex — Sun, 08 Apr 2007 17:32:50 +0000

The main economic law of supply and demand is that markets that offer the highest return to investment will attract more investors and capital. These markets are those where the nations offer the highest rates and in this way they will create the most demand for their currencies.

How do Carry Trades Work?

The way a carry trade work is to buy a currency that offers a high interest rate while selling a currency that offers a low interest rate. Carry trades are profitable because an investor is able to earn the difference in interest - or spread - betwwen the 2 currencies.

If a country’s economy is doing well(high growth,high productivity, rising incomes,low unemployment), it will be able to offer those who invest in the country a higher return on investment. As a result, the countries with better growth can afford to pay a higher rate of interest on the money that is invested in them.

Carry trades work better during certain times than others. When investors as a whole are willing to take on risk, we say that they have low risk aversion or in other words, are in risk seeking mode. On the other hand, when investors are drawn to more conservative investments and are less willing to take on risk, we say that they have high risk aversion.

Carry trades are the most profitable when investors have low risk aversion and are willing to take the risk of investing in high interet paying currencies.

Sometimes the mood of investors will change rapidly and these sharp movements in currency values occur when risk aversion quickly changes from low to high. As a result, when risk aversion shifts, a carry trade can just as quickly turn from being profitable to unprofitable.

Country trade balances can also affect the profitability of a carry trade. Even when investors have low risk aversion, large trade imbalances can cause a low interest rate currency to appreciate.

In general, a carry trade is a long-term strategy.

In conclusion, carry trade investors should be aware of factors such as currency appreciation, trade balances, and time-horizon before placing a trade. Any of these factors can cause a seemingly profitable carry trade to become unprofitable.

A good trader should have…

forex — Fri, 15 Dec 2006 23:22:47 +0000

A good trader should have a plan with specific guidelines.This plan should answer to some of these questions :

How the market works ?
What is your purpose ?
What will you do in order to get to the edge ?
Are you prepared to have some bad trades ?
Can you “survive” to the worst scenario ?

What makes a good trader

forex — Fri, 15 Dec 2006 23:14:12 +0000

thinker not “feeler” - can see the big picture
good self-esteem
non-conformist - follow their ideas
strong math skills
very strong honesty
strong integrity
don’t get caught up in the excitement