Forexs Trading EUR/USD Snaps Rally on Good US GDP

EUR/USD dropped today after it was rallying for more than a week. The US economic growth, while a little slower than was anticipated, is still good and consumer sentiment gradually improves. The currency pair rose at the beginning of the trading session, but later was mostly falling. EUR/USD trades now at 1.3657.
US GDP, according to the advance estimate, increased at an annual rate of 3.2% in the fourth quarter of 2010. While the increase was bigger than 2.6% in the third quarter, forecasts promised even faster growth at a rate of 3.5%. (Event A on the chart.)
University of Michigan Sentiment Index was 74.2 in January, below the 74.5 in December, but above the preliminary estimate of 72.7 and analysts’ expectations of 73.1. (Event B on the chart.)


If you have any comments on the recent EUR/USD action

Forexs Dollar Surging

The US dollar is higher across the board as better than expected economic data continues to come in, highlighting the fact that economic recovery in the US may be taking place. However, the market is sending mixed signals as commodities prices are lower again today, with falling demand being cited as the reason.

But wouldn’t an improving US economy increase demand? Well I guess that depends on your point of view. As I have been saying all week, the market correlations that so many have relied on in the past are beginning to break down a bit. However this morning appears to have started out as a classic risk aversion sort of day (with one notable exception), though that may be changing as better US economic data is released.

That notable exception is the Japanese yen, which seems to be weakening across the board regardless of sentiment or economic climate, despite no news this week out of Japan. Suspicious to say the least.

So far this morning, the ADP employment change figures showed a gain of almost 300K jobs, nearly 3 times the expectation of 100K. While this figure is not nearly as important as Friday’s NFP number, it could be a sign that the employment picture is improving.

Earlier across the pond, both the Euro and Pound weakened, as tepid economic data and lower equities and commodities helped encourage the slide.

In the forex market:

Aussie (AUD): The Aussie is mostly lower, trading in lock-step with commodities which have been lower all week. In addition, new home sales came in lower than expected as the effect of higher interest rates cools the economy.

Kiwi (NZD): The Kiwi is mostly weaker as well, also taking its cues from commodities.

Loonie (CAD): The Loonie is higher across the board despite lower oil prices as the raw materials price index and the industrial product price index came in much hotter than expected. This could be a sign that inflation is picking up in Canada which could mean an interest rate hike sooner than later. (Click chart to enlarge)

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Euro (EUR): The Euro is lower this morning as the anti-dollar sentiment has increased dramatically. Better than expected Euro zone PMI data was offset by lower than expected Industrial New Orders. In addition, the Bank of Switzerland has refused Irish government bonds as collateral, which could be a sign of things to come.

Pound (GBP): The Pound is mixed this morning as PMI construction data came in lower than expected, showing a 49.1 reading vs. an expectation of 51. The jury is still out on the effects of the austerity measures which won’t likely show true economic conditions until later this quarter.

Dollar (USD): The Dollar is surging, particularly against its safe-haven counterparts (JPY & CHF) as the market has blown off the potential effects of QE2 and last year’s trade of “economy up, Dollar down”. This breaks from the risk trades that we speak about often despite the fact that today could be viewed as a risk aversion day.

Yen (JPY): The Yen continues to weaken on no news or economic data and is seemingly trading “risk agnostic” as its safe haven status has not been utilized despite weaker commodities prices and the currencies that follow them. This could simply be “allocation trades”—which means that investors are rebalancing portfolios and taking directional bets to start the New Year. Keep an eye on this as a reversion to mean scenario could take place with any heightened risk in the market. (Click chart to enlarge)

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So far in 2011, it has been difficult to peg the type of trading day that is occurring. But that’s OK. As I mentioned yesterday, an understanding of the fundamentals can help you figure out who is strong and who is weak, but it really is the charts that tells us where the action is.

Old habits die hard on Wall St. so there is tremendous opportunity as the market comes to realize that paradigms may shift and that old plays may go away.
Are you comfortable in your understanding of how to read charts? In what moves the markets? If not, then contact us today!

Forexs Fundamentals In Focus

2011 has started out of the gate with a focus on the fundamentals and less on the risk themes that were so dominate in 2010. While this is not tacit approval of where prices may be, there is some semblance of individual data guiding the markets.Case in point—this morning has started out with stocks higher across the board, but commodities are lower. Under last year’s risk scenario, this would be more of an anomaly than anything. As a result, we are seeing a lot of mixed trading as the market is unsure how to proceed.

As commodity prices are lower, so are the commodity currencies. Yet there is individual strength in both the Euro and the Pound, as economic data has dictated strength today. In the Euro zone, CPI data came in higher than expected, showing signs that inflation may be rearing its ugly head. In the UK, better than expected PMI figures and mortgage approvals data has pushed the Pound higher across the board.

Later today, we will get the minutes from the Fed meeting as well as factory orders which will likely give support to the idea of a US economic recovery.

In the forex market:

Aussie (AUD): The Aussie is lower as manufacturing slowed for the 4th straight month, according to the performance of manufacturing index, which showed a decline to 46.3 from last month’s reading of 47.6. Higher borrowing costs due to rate hikes helped dampen consumer spending. Also, the flooding is affecting commodity production facilities, particularly steel and coal. (Click chart to enlarge)

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Kiwi (NZD): The Kiwi is following the Aussie lower, as it is apt to do. Lower commodity prices, particularly gold off nearly 2%, has reduced demand. In addition, Bloomberg reported that carry trade strategies made slightly negative returns last year, which may be fresh in the minds of investors.

Loonie (CAD): The Loonie is lower as oil prices have retreated to 91 as demand has seemingly lessened. It was reported this morning that Canadian bonds performed the best of all countries last year, which could help drive money flows to Canada.

Euro (EUR): The Euro is higher this morning as CPI data came in hotter than expected, posting a 2.2% increase vs. an expectation of 2%. Unemployment figures in Germany gained vs. an expected loss (jobs gains) and French consumer confidence came in worse than expected. With the ECB mandate to control inflation as its primary function, this could set up for some interesting action as the balance between Euro debt crises and inflation muddies the water. (Click chart to enlarge)

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Pound (GBP): The Pound is higher across the board as PMI figures came in better than expected, reporting a reading of 58.3 vs. an expectation of 57.2. In addition, mortgage approvals and net lending figures came in higher than expected as well showing signs that the UK may not be dead just yet.

Dollar (USD): The Dollar is mixed and showing some strength as economic data and conditions appear to be improving. The Fed minutes later will likely show no change in sentiment among policy-makers, who at this point are content to let QE2 play out. Yesterday’s manufacturing data rose to a 7-month high.

Yen (JPY): The Yen is weaker against all but the Pac Rim commodity currencies, as economic conditions in the US are driving Dollar strength. There is no news or data due out for Japan this week.

As you can see, it is possible for both the Dollar and the equity markets to strengthen at the same time. As I mentioned in my 2011 preview, this may be a recurrent theme that we see this year. If you take stocks out of the equation, then today looks like a risk aversion type day, with notable Pound and Euro strength.

However, I don’t think 2011 is going to be as easy as “risk on, risk off” types of trades. It is important now more than ever that you have a good understanding of the fundamentals that can drive forex markets.

Everyone wants to be a technician these days and read the charts; however to take your trading to the next level, a fundamental understanding of the big picture can help turbo-charge your results!

Forexs Climate Change

No, I’m not talking about the Al Gore hocus-pocus with regard to global warming, err make that cooling, no it’s warming—but rather the changes taking place in Washington DC. Just yesterday a new Congress was sworn in after last year’s elections with the intentions of promoting a more friendly business environment which will hopefully put more people back to work and improve economic conditions.

This week the employment reports are hopefully going to show an increase in positive sentiment as the market is anticipating policies intended to help business, not attack it. Yesterday’s ADP employment change figures were a step in the right direction, coming in nearly 3 times higher than the expectation.

This morning, the weekly jobless claims came slightly higher than expected, but back in the 400K range as opposed to the last reading which was revised higher to 391K. I believe last week’s number to be a bit of an anomaly, as we were dealing with holiday-shortened weeks.

Tomorrow’s NFP report will show where we really stand as 140K jobs were expected to be added, with the unemployment rate ticking lower to 9.7%.

Employment figures are also due out for Canada tomorrow as well.

In the Euro zone, retail sales figures came in worse than expected, as did consumer confidence. But economic and industrial confidence came in higher than expected, so it’s a bit of a wash.

Commodities are lower to start the day but equities are higher, which is a continuation of recent patterns. Dollar and Yen strength highlight the early action.

In the forex market:

Aussie (AUD): The Aussie is lower to start the morning as building approvals fell 4.2% from the previous month, slightly higher than expectations. In addition, lower commodities prices (particularly gold) are still weighing on the Aussie.

Kiwi (NZD): With lower commodities prices to start the morning, one would think that the Kiwi would follow suit with the Aussie lower, but this is not the case. The Kiwi is actually higher across the board, and I can’t find any news that would support a reason for this. This could be part of a re-allocation trade, led by China diversifying its holding.

Loonie (CAD): The Loonie is lower taking its cues from oil which is trading just below $90 a day ahead of the Canadian employment report. The expectation is that 20K jobs are to be added with the unemployment rate ticking slightly higher to 7.7% from a current 7.6%.

Euro (EUR): The Euro is lower across the board as slightly negative economic data is outweighing the positive data. German factory orders came in much better than expected, but retail sales figures came in much worse. The Euro has been trading lower on Dollar strength due to promising US economic data points, though Irish bailout bonds were snapped up by Asian investors. (Click chart to enlarge)

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Pound (GBP): The Pound is mixed this morning with Cable running positive. The PMI Services reading came in lower than expected, posting a reading of 49.7 vs. an expected 52.8. However, it has since rebounded as risk appetite is apparently increasing this morning. (Click chart to enlarge)

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Dollar (USD): The Dollar is giving back earlier morning gains as the weekly jobless claims came basically on point. It has been interesting to see how the Dollar has been reacting to risk sentiment as of late, and may be a little while before things shake out and become more “normal”.

Yen (JPY): Yen is mostly higher today after a few days of weakness as it appears to be trading today like a more classic risk aversion scenario. With no news out of Japan this week, it is difficult to gauge how the yen is going to trade.

Markets are forward looking so sometimes what takes place today is not indicative of today’s news, but rather a hope for tomorrow. It appears as though classic risk themes are somewhat muddled, with stock markets somewhat decoupled.

For example, in the past when there was good economic data, stocks and commodities would move higher, with the Dollar moving lower. Carry trades take place and yield seeking investors are willing to take on risk.

But what we are seeing of late is a scenario with commodities lower, but stocks HIGHER. The Dollar is has been trading closer to its classic inverse relationship with commodities, and usually by day’s end there is some reversion to mean.

What this means is that there is great opportunity as a trader of ANY market to profit from these movements. In today’s global macro trading environment, it is important to have an understanding of ALL markets and how they affect one another.

And it all starts with the forex market. By understanding how currencies move, you can position yourself to take advantage of anomalies and correlations in world markets.

Isn’t time you found out how the currency market works?

Forexs Employment Friday

This morning’s trading action was not lacking for excitement as the major volatility ensued after the release of the Non Farm Payrolls report. The jobs added figure was disappointing, showing that we gained 103K jobs, vs. an expectation of a gain of 145K.

However, the unemployment rate came in better than expected, showing it decreased to 9.4% from 9.8%. Analysts were expecting the rate to come in at 9.7%. This number is very questionable as December is usually a tough month to gauge due to seasonal employment and the number of people leaving the workforce. My guess is that the latter had more to do with this figure as initial jobless claims have held fairly steady in the low 400K range, and the number of jobs added was lower.

But expect the media outlets to trumpet this number as signs of an improving employment picture, even though that might not be the case. Yet.

In Canada, the unemployment rate came in steady at 7.6% vs. an expectation of an increase of.1% to 7.7%. The net change in employment was an additional 22K jobs added, vs. an expectation of a gain of 20K. This math seems more palatable.

In the Euro zone, German retail sales figures and exports came in lower than expected, and GDP forecasts were revised slightly lower.

So this morning we have Dollar weakness, as the recently the Dollar has been trading more in-line with economic reality and not inversely on risk themes.

In the forex market:

Aussie (AUD): The Aussie is mostly higher though trading lower than the Kiwi and Loonie as Dollar weakness on the NFP report has increased demand.

Kiwi (NZD): The Kiwi is showing the biggest gains for the second day in a row as it appears as though some of the money leaving the Aussie is making its way to the Kiwi.

Loonie (CAD): The Loonie is the second best performer this morning as the employment report showed an improving and more realistic picture. More jobs than expected were added so the unemployment rate remained the same. Pretty simple concept, huh? (Click chart to enlarge)

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Euro (EUR): The temporary gains the Euro made against the Dollar on the NFP released were short-lived as the fundamental picture trumped the anti-Dollar sentiment. Austerity measures around the Euro zone have decreased demand for German exports, and Germany has been the major driver of economic stability in the region. If Germany falters, look out! (Click chart to enlarge)

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Pound (GBP): No news is good news for the Pound as Euro weakness is helping to divert money flows back to the Pound. While the economic problems in the UK may be as big (or bigger) than that of the EU, it is their ability to control their own currency that makes their currency more desirable.

Dollar (USD): The Dollar is lower (except for the Euro) as the NFP release was disappointing. I don’t think anyone believe the headline unemployment rate figure (down to 9.4%) as everyone knows it is more a function of temporary distortions related to the end of the year and the December holidays.

Yen (JPY): The Yen is mostly weaker though the Dollar has given back earlier gains against its safe-haven counterpart. I’m still trying to get a handle on what the actual driver of the Yen has been as early trading in it has been erratic to say the least. (Click chart to enlarge)

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All is not lost in the US with regards to employment; however there is some mild disappointment that things aren’t improving at a more rapid pace. We can pretty much forget about the headline number for now as next month’s revisions and participation rate may move it back toward expected levels.

While the anticipation of a more friendly business climate has been around for some time, it does indeed take time for things to get moving. Fed Chairman Bernanke just got finished speaking and he says that economic growth should be better in 2011 than last year.

However, just because he says it, doesn’t make it so. Business has to rebound and employment has to increase to get things moving again. The challenge for the Fed for 2011 is how to stimulate growth while keeping inflation manageable.

Good luck with that, Ben!

Forexs Currency Games

There is a “game” being played in the market place involving the Euro zone countries and it goes something like this: A debt-troubled nation is due to issue debt sometime during the week so the rumors start that the country may need to access the emergency facility so that yields will be pushed higher thereby increasing the rate of return to potential investors. It is then up to Germany to decide if they want to try to defend those nations or allow the ruse to spiral out of control.

Well if you are a country that has an extremely low corporate tax rate and “steals” businesses from Germany, then chances are you will fall by the wayside. Sorry, Ireland. If on the other hand, you are the smallest of three countries looking to peddle debt in the same week, then you will get a helping hand. So Portugal survives another day, as a counter-rumor is floated that the EU is thinking of expanding the emergency facility. As a result the Euro is higher this morning, despite the obvious risk.

Some other items of note this morning are that China has a trade balance that came in much lower than expected. As is always the case with the Chinese, this come ahead of an important meeting with the West and will surely be used as the reason why China can’t do anything about its currency peg to the Dollar. The game just continues.

Meanwhile, housing prices in the UK are falling as the austerity measures kick in ahead of this Thursday’s BOE rate decision. I’m expecting no further change in policy, but be on the lookout for a potential policy statement (different than the official release of the meeting minutes) to see if they may need to be more accommodative to offset fiscal austerity.

In the forex market:

Aussie (AUD): The Aussie is lower to start the morning despite higher commodities prices as global stocks are lower after news out of China and the EU. Retail sales figures came in as expected.

Kiwi (NZD): The Kiwi is mostly higher after reporting trade balance figures that came in better than expected. Aussie and Loonie weakness are helping to encourage money flows to NZ. (Click chart to enlarge)

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Loonie (CAD): The Loonie is lower as building permits figures came in way worse than expected, posting a decline of 11.2% vs. an expectation of a gain of 1.5%. An oil leak in the Alaskan pipeline has halted supply so this could affect prices going forward. Oil is trading higher this morning.

Euro (EUR): The Euro is higher despite all of the chatter surrounding Portugal, as French Industrial and Manufacturing Production figures came in much better than expected. Talk of expanding the EFSF has prevented the Euro from decline, and Portugal, Spain, and Italy are due to auction some 33 billion euro in debt this week.

Pound (GBP): The Pound is mixed this morning as house prices declined more than expected, showing a decrease of 1.4% vs. an expected .4% decrease. This Thursday will be the BOE rate decision but don’t expect any change to policy.

Dollar (USD): The Dollar is mostly higher as the market determines the real risk in Portugal. With no economic data on tap for the US today, keep your ears open for Fedspeak—that is our Central bankers attempting to allay the markets—ahead of Friday’s busy calendar.

Yen (JPY): The Yen is showing some strength today as risk themes and a potential Chinese slowdown have increased demand for the safe haven status of the Yen. (Click chart to enlarge)

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With all of the different games that go on in the market, one must have a clear understanding of how these games work in order to profit from them. While there is still considerable risk in the global economy, the constant media obsession helps speed up the game. If sovereigns or investors are slow to react, then the results could be disastrous.

Meanwhile, it is no secret that austerity measures are taking place in some regions around the globe, so it is extremely naïve to think that there won’t be some type of slowdown. Yet the market insists that someone has to pick up the slack, and Central bankers around the world believe that they can manage the ebb and flow of the global economy.

So the game continues, yet there are rule-changers, cheaters, liars, speculators, and those just happy to be at the table. How this group is going to figure out how to place nice is beyond me.

In the meantime, I will continue to take advantage of this motley bunch and the global inefficiencies that they create!

Forexs Mother Nature Unleashed

The Aussie is once again lower as flooding continues to ravage the country. This could have a seriously negative effect on the Australian economy, as this is the worst flooding in nearly 100 years. Here in the US, we are bracing for another major snowstorm along the eastern coast, which could also cause an economic slowdown. This could have inflationary consequences in the energy sector, as supply and demand are affected accordingly.

One region whose climate is looking better is the Euro zone, as overnight Japan said they would be looking to buy Euro bonds to help the support the region. While not truly a philanthropic venture, this makes sense from an investment perspective as yields are likely to be higher than elsewhere. In addition, the Portuguese PM has stated that no aid is needed, though we’ve heard that before. So the Euro is higher, the Yen is lower.

Retail sales in the UK were lower putting pressure on the Pound as austerity measures begin to take effect. The market is waiting on Thursday’s BOE rate decision.

The Loonie is higher as oil is up trading just under $90, as the weather on the East coast may increase demand, and the Alaska oil pipeline situation is still in flux. Adding to Loonie strength is the notion that Canada, and not New Zealand, may be the next to raise interest rates sometime in Q2, according to range of analysts.

Here in the US, we have some Fedspeak going on today, with no major news slated. Both stocks and commodities are higher, so today looks like some risk taking.

In the forex market:

Aussie (AUD): The Aussie is lower in the wake of the flooding, and trade balance figures came in lower than expected on dwindling exports. This is a major natural disaster which could cause economic slowdown, which means that the RBA would stay steady with rates for some time.

Kiwi (NZD): The Kiwi is also lower as signs that NZ may have avoided an official recession have increased, though the economy is far from operating on all cylinders. Home-building approvals rose 8.8%, and improved confidence may help improve GDP figures, which were negative last quarter after NZ was rocked with an earthquake.

Loonie (CAD): The Loonie is higher across the board as eyes are turning toward the Canadian economy for the next sign of interest rate growth. Increased US demand has helped Canadian exports and higher oil prices due to inclement weather and possible supply shocks have buoy the Loonie higher. Money flows from the antipodean currencies show that the market expects the BOC to be the next to move on rates. (Click chart to enlarge)

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Euro (EUR): The Euro is trading higher in a bit of a relief rally as Japan has said that they want to buy Euro debt as well, providing the region with yet another bidder. This may help keep rates from spiraling out of control, which will allow PIIGS countries to issue debt without having to offer inflated rates of interest that the market may demand. The ECB is also releasing its rate decision on Thursday, but expect that to have little impact. (Click chart to enlarge)

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Pound (GBP): The Pound has regained some earlier losses and is trading higher despite retails sales figures which came in showing a decrease of .3%. Thursday’s rate decision will show whether there is a shift in policy statement or not.

Dollar (USD): Not much happening here in the US from an economic data standpoint, but US stock earnings season is upon us and so far positive results have lifted markets higher. Fedspeaker Plosser today said that he expects to see growth this year of 3-3.5%.

Yen (JPY): The Yen is weaker as Finance minister Noda said that Japan would buy European debt. It looks like Japan is about to start making its own carry trades!

While the weather outside may be frightful, the climate inside is delightful if you are a currency investor!

Economic stability appears to be taking place and we are seeing signs that economies that were slow to grow may be catching up; and those who were quick to grow may be slowing down. As the economic landscape evens itself out, money flows will make their way to best the best performing economies.

Investors who can stay ahead of the curve can profit from these global shifts. Inflationary pressures and austerity measures will be two of the biggest clues as to where money flows will go, as Central bankers scramble to find balance.

So buy the winners and sell the losers and your account balance will thank you later!

Forexs Rates Steady, Inflation Worries

Earlier this morning, Spain had a successful bond auction after yesterday’s successful Portuguese bond auction which is showing a stabilizing force in the Euro zone. So it was no surprise that the ECB left interest rates unchanged, however ECB President Trichet was quick to point out that inflation poses a serious risk to economic stability. This dual action was enough to catapult the Euro higher, as French CPI data and German wholesale prices confirmed his assertion.

In the UK, the BOE also left rates and their asset purchase program unchanged as expected though next week’s CPI data may show rising inflation as well which could prompt a change in policy. The balance between austerity and inflation is going to come to a head in many countries around the globe and how it handled could pose a risk to global economic recovery going forward.

In the US, the trade deficit came in lower than expected as increased demand abroad helped exports. But initial jobless claims came in worse than expected at 445K, vs. an expectation of 410K which shows that the employment picture may not be moving in the right direction.

So today we have Dollar weakness, with stocks and commodities marginally lower.

In the forex market:

Aussie (AUD): The Aussie has traded back to parity with USD despite a weaker than expected jobs report. While the unemployment rate ticked down to 5%, the participation rate also decreased which likely is the difference between the numbers of jobs added which was 2300, vs. an expectation of 25K. (Click chart to enlarge)

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Kiwi (NZD): The Kiwi is also higher as Dollar weakness and Euro strength is driving the markets. While not an entirely risk taking day, commodity prices in NZ were up 2% showing signs that inflation may be heating up.

Loonie (CAD): The Loonie is lower across the board as oil prices and commodities are pulling back, and US economic weakness due to worse than expected initial jobless claims.

Euro (EUR): The Euro is trading higher as renewed confidence that the sovereign debt crisis may be under control and that the ECB is concerned about inflation may lead to change in monetary policy. (Click chart to enlarge)

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Pound (GBP): The Pound is trading similarly to the Euro, except substitute “British austerity” for “sovereign debt crisis”. Next week’s CPI data will show whether austerity measure have been enough to tame inflation, though I doubt the viability of that plan to begin with.

Dollar (USD): The Dollar is weaker against all but the Loonie as PPI data came in hotter than expected, though removing food and energy the numbers came in less than expected. Initial jobless claims moved back toward the “new normal” of 450K, rather than the expectation of getting closer to the 300s. Stocks are lower as a result, and the Dollar is trading with the market today.

Yen (JPY): The Yen is mostly lower though higher than the N. American currencies as a news story reported that China went from a net buyer to a net seller of Japanese yen which is likely to help cause Yen weakness.

The true battle in the world today is going to be how governments are going to manage inflation and encourage economic growth at the same time. It seems like a near impossibility as the problem of falling asset prices will potentially harm the Big Banks, but inflation will harm all of us, especially those who make less money.

The US government has devised a way to get around this by reporting inflation data “ex food and energy”, meaning they strip out 2 of the 3 necessities in life to show why prices aren’t rising. Unfortunately for them, this game is getting old and people have caught on so it is only a matter of time before the public outrage begins.

China is already seeing massive inflation and emerging market countries around the globe have also been battling it for some time. Much of this inflation can be tied to a weak US dollar due to extraordinarily low interest rates and various rounds of quantitative easing.

Throw the UK and Europe into the mix and it is pretty clear that worldwide inflation is a major problem.

So will we see a return to normalized interest rates any time soon?

Unfortunately I say no. Monetary policy will remain accommodative and the general public will bear the brunt of inflation so that home prices *may* remain steady so the banks won’t lose even more money on foreclosed properties.

Meanwhile, this will force China to do something regarding their own monetary policy, and I’m sure that the US secretly hopes this will force them to allow their Yuan to appreciate.

With the current path that we are on now, there is going to be a showdown unless something is done to fix this problem. Unfortunately, I don’t think there isn’t enough political will or cooperation that can get this done. So someone (if not all of us) is eventually going to feel the pain.

Will it be you? Or will you trade currencies to help provide yourself added relief?

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

Forexs Who’s A PIIG

Portuguese Problem?Not from where I am standing, nor where the French or Germans are concerned either. Portugal successfully auctioned off more of its debt which was oversubscribed; and both the French and Germans praised Portugal for going above and beyond in trying to get their fiscal house in order. This is a far cry from the rumors spread over the weekend, and it appears that for now Portugal may be safe.

This has buoyed the markets higher this morning, as risk appetite has increased on this news as well as better than expected US corporate earnings. No surprise that oil is higher this morning as well (see my previous article) in that the snowy weather on the East Coast increases perceived demand.

The economic data and news out this morning is relatively benign, with no big market moving or earth shattering impact expected.

Euro zone officials will meet next week to discuss what other measures should be taken to help shore up the Euro and provide a stable environment for the debt-laden countries to meet their debt obligations as well as reduce the size of their deficits.

So today seems like a bit of a relief rally—as stocks are higher around the globe as the market is “relieved” that Portugal was successful in its offering.

In the forex market:

Aussie (AUD): The Aussie has bounced back from overnight lows just above .98 vs. USD as risk appetite has increased in the market. The flooding in Australia continues to be a problem, with some estimates claiming that it could shave 1% off of GDP. Higher than expected home loan approvals though show that there is still demand, and overall risk taking has boosted the Aussie. Tomorrow brings the Australian employment figures. (Click chart to enlarge)

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Kiwi (NZD): The Kiwi is surprisingly lower this morning on no news despite the risk appetite in the market. The reason for Kiwi weakness may be that money flows from the Aussie may be reversing as recent down beat economic data was reported in NZ, and they may be on hold for a while with rate hikes.

Loonie (CAD): The Loonie is higher as oil prices have surged back to just under 92 on the back of snowy weather and the Alaskan pipeline situation. The Loonie is back to two and half year highs vs. USD. (Click chart to enlarge)

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Euro (EUR): The Euro has moved higher on the successful Portuguese bond auction, though there are still stories being floated that some may want the Portuguese to take a bailout. This appears very unlikely to happen at this time.

Pound (GBP): The Pound is higher as today is setting up as a “classic 2010″ risk-taking scenario despite the fact the UK trade balance figures came in worse than expected. Tomorrow is the BOE rate policy decision.

Dollar (USD): The Dollar is lower this morning as today is a “classic 2010″ risk-taking scenario. By this I mean that we entered a condition in 2011 where both stocks and commodities AND the US dollar were rising simultaneously when there was risk appetite was increased, as opposed to the Dollar weakness we would see last year under similar circumstances. Perhaps this was a function of Euro weakness (due to debt fears) and individual, regional weakness. It will be interesting to note how the correlations shake out as the year progresses.

Yen (JPY): The Yen is lower across the board on risk appetite, despite the fact that bank lending fell for the 13th straight month. The Japanese trade surplus and trade balance fell slightly.

So what’s in store for the Dollar in 2011? We’ve obviously seen some aberration from what we would normally expect from the risk themes in the market. Does the Dollar now go up with the stocks and commodities market, or does it still go down?

Asset allocation to start the year may have been an early driver, though it is important to know that correlations in the market work great—until they don’t! What I mean is that it is easy to get in a mindset that if X happens, Y will follow. Resist the urge to be that black and white, and use that knowledge to identify potential market plays.

While I’m not certain that there will be certainty in the inter-relationships between different markets and currencies, what I do know is that there will be TONS of opportunities via increased volatility!

Are you prepared to take advantage of these forex market moves?

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

Forexs Citizens Of The World Unite

Here It Comes!

Over the last few days I have been harping on the inflation and it is starting to rear its ugly head. Yesterday, ECB President Trichet surprised the markets by mentioning the risk it imposes to economic recovery. One would think that the sovereign debt issues he is dealing with would be caution enough, but he took the opportunity to add fuel to the fire with his hawkish comments, sending the Euro higher.

This did not escape the Chinese, however, as they raised bank reserve requirements by 50 basis points in an attempt to curb lending to reduce their money supply to slow down demand. Treasury Secretary Geithner noted yesterday that Yuan appreciation may not be such a big deal anymore, as higher prices in China will reduce demand for their goods, which will reduce their overall current account surplus. On a personal note, I can confirm that indeed prices and domestic demand in China are increasing as businesses that have been working with China are now seeking cheaper alternatives. Keep your eye on India, folks.

Earlier this morning, German CPI data came in as expected but showing signs that inflation may be on the rise which would fall in line with Trichet’s comments. This could cause a rise in Euro zone interest rates, despite the need for cheaper re-fi costs for the PIIGS countries. PPI input data in the UK was also higher, boosting the Pound.

And lastly, CPI data here in the US came in hotter than expected, as the headline number showed a 1.5% rise vs. an expectation of 1.3%. This comes as no surprise as agricultural commodities have been soaring higher, so be prepared to pay more for food and energy unless something is done to combat this problem.

However, equities and commodities markets are lower which highlights China’s influence on those markets as they are the only country that appears to be doing something to attempt to put the brakes on from a monetary policy standpoint. Though allowing their currency to appreciate would go a long way to combat their problem. In time.

In the forex market:

Aussie (AUD): The Aussie is lower across the board as the China’s attempts at a slowdown will affect the Australian economy greatly as China is the largest buyer of Australian exports.

Kiwi (NZD): The Kiwi is also lower for the same reasons as the Aussie, for as Australia goes so does NZ only to a lesser extent.

Loonie (CAD): The Loonie is also lower this morning as a pullback in commodities, particularly oil, is weighing on the currency. However, it is strengthening vs. USD off of the morning lows as it traded close to parity. (Click chart to enlarge)

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Euro (EUR): The Euro is mixed this morning, trading higher against the commodity currencies but lower against the rest. After yesterday’s spectacular run higher, the Euro may be experiencing a bit of “buy the rumor, sell the news” as CPI data in Germany was as expected. In addition, Euro zone trade balance figures showed a deficit vs. an expected surplus. (Click chart to enlarge)

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Pound (GBP): The Pound is higher across the board as PPI input data came in much higher than expected. If this translates over to higher CPI data (which is to be reported next Tuesday), then the BOE may be under major pressure to do something about monetary policy through either a reduction of bond-buying or a rate hike.

Dollar (USD): The Dollar is giving back earlier gains after the CPI data was reported as the market has no conviction that the Fed will do anything about rates or QE2 anytime soon and would prefer to allow US citizens to pay the extra tax (inflation) on necessities rather than potentially harm the banks and the housing market by normalizing policy. The Lame-stream media is reporting that retail sales rose .6% for the month of December, which makes 6 months in a row, but insiders know that the market was really expecting a rise of .8%. Never ruin a good story for the want of a few facts!

Yen (JPY): The Yen is mixed this morning as various carry trades are unwound and the safe haven status of the Yen is in demand as the potential Chinese slowdown affects demand and risk appetite.

Citizens of the world unite!

Consider this a “capitalist manifesto”. Your government (wherever you are) has sold you down the river to protect the banks and the financial elite. You know, the people who got the world into this financial mess in the first place.

Now they expect you to pay MORE for the basic necessities you require to live. How are they doing this? Through the insidious tax known as inflation. Inflation affects us all equally, but not proportionally.

When prices of food and energy move higher, it becomes harder to make ends meet, especially for working-class folk. Do you think that the CEO of a big bank cares that it costs that the price of milk goes higher, or that the cost to heat one’s home is through the roof. Not at all, its pocket-change to him.

Yet he’s protected by the Fed under the guise of “too big to fail”, so he gets to not only keep his job but pay himself an enormous bonus to boot! Never mind the fact that it was you, the tax-payer, who allowed this charade to continue despite having no say in the matter.

Now they want you to pay even more! This isn’t just a US phenomenon, look at what is happening around the globe. A weak US dollar is driving prices higher and exceptionally low interest rates around the globe have flooded the world economy with too much cash chasing too few goods. Central banksters could reduce this through tightening monetary policy by raising rates, but they are too afraid to harm their bankster buddies!

So what can you do about it? The answer friends, is the forex market. Protect yourself from those who want to harm you by allowing your wealth to disappear through inflation. It’s no coincidence that central bankster is not an elected position!

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Forexs Open For Business

Today is Martin Luther King Day here in the US and both the stock and bond markets are closed as it is a bank holiday. Yet the forex market is open for business! This really highlights the international influence of this market and why it is the largest and fast-growing financial market in the world.

Speaking of international influence; today brings a meeting of Euro area finance ministers in Brussels which the market hopes will bring about more clarity with regard to the debt crisis. However, it appears as though the market has little confidence that this will happen, as the Euro is selling off this morning.

The Pound is higher this morning a day ahead of UK CPI and retail sales data. While inflation is expected to rise, the BOE may be forced to comment on rates, though the balance between tame inflation and continued growth is so slim that they may not act at all.

Tomorrow is also the Bank of Canada rate policy meeting and while they are not expected to raise rates, the market will be on the lookout for any hawkish comments from Governor Carney.

Lastly Chinese President Hu was in town, basically saying that the US needs to cooperate more with China and telling the US to back off the rhetoric surrounding a rising Yuan. Cooperation is not very likely at this point and perhaps the US is willing to let economic forces push China to act.

In the forex market:

Aussie (AUD): An inflation gauge in Australia showed that prices increased 3.8%, marking the fourth straight month of gains. However, this reading was taken before the flooding occurred so it is uncertain what impact this may have on inflation. On the one hand, economic slowdown cause ease pressure on prices, though it seems more likely that repair costs from the flooding will actually increase demand.

Kiwi (NZD): The Kiwi is higher as it is benefitting from the uncertainty over the Australian economy so money flows are making their way to New Zealand as it is seen as more likely to strengthen in the near-term.

Loonie (CAD): The Loonie is mixed this morning as the market awaits tomorrow’s rate policy decision. While no change is expected, the policy statement going forward will determine the direction of the Loonie. In addition, mortgage lending rates were tightened in order to limit household debt and prevent rampant inflation from harming the economy.

Euro (EUR): The Euro is lower across the board as Finance honchos meet to decide how to best handle the debt crisis going forward. While there is much speculation surrounding the talks, it is unlikely that anything concrete will be determined today and the market has re-affirmed that position by selling the Euro this morning. (Click chart to enlarge)

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Pound (GBP): The Pound is higher across the board as tomorrow’s CPI release will show whether inflation is becoming unmanageable or not. While inflation has been outside of the target range for some time, any further increase may pressure the BOE to act. The Rightmove home price index rose .3%, suggesting that indeed inflation may be a problem. (Click chart to enlarge)

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Dollar (USD): The Dollar is mostly lower except against the Euro as most markets are closed here in the US so there is no news that would sway market sentiment one way or the other.

Yen (JPY): The Yen is mixed as the outlook for Japanese stocks has improved as a perceived Chinese economic slowdown may help Japan’s exports. This has encouraged carry trades with the antipodean countries, but marginal strength elsewhere.

With US markets on holiday today, volume in the US session will be greatly decreased. However, that does not mean that there will be a lack of volatility. In fact, it may actually help increase it.

Why is this important? Because volatility is a forex trader’s friend, and not to be avoided. But if you are a longer term investor, then you just may want to wait for what we call “follow through” before establishing longer term positions, as the lack of volume may provide false moves.

This week may provide further clues as to where we as a global economy stand with regard to inflation, whether anyone will (or wants to!) do anything about it is another story.

To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!

To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!

Why Trade the FOREX?

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.
So now, let's compare features of currency trading to those of stock and commodity trading.
Liquidity — The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.
Trading Times — The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.
Leverage — Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.
Trading costs — Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.
Minimum investment — You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.
Focus — 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.
Trade execution — In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.
While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

7 Reasons to Trade Forex

There are many money-making opportunities out there and we've been involved with quite a few, namely property marketing, web development, residential construction security, multi-level marketing businesses etc.

We've come to a few conclusions with the help of some well-known properity coaches.

Often people with the income they desire don't have the time to enjoy it. Those that have time don't often have money. You don't have to sacrifice your life-style to earn an above-average income. If you focus on the for a few months you can make that dream a reality and create time and money to do what you REALLY want.

To earn a living money is given in exchange for a product or service rendered. It needs to be sold continuously otherwise your income stops abruptly unless it's a repeat type of product or service.

Money is a medium of exchange. There's no magical formula to possess it, you need to exchange something of value for it.

What if, you could have access to thousands of customers who are ready, willing and able to buy from you whenever you wanted? Wouldn't it be great to avoid any hassles like money collection problems (just had a delayed payment from my web business), keeping difficult customers happy (we all know what that's like), competition stealing your business without providing the same value etc.

All that is possible with . You can also trade from anywhere. Take your laptop with you, find an internet connection and away you go.

Another advantage is that you don't need experience to get started. Get a traditionally job involves accumulating specialized experience, having a well-polished resume and having the right contacts. With the right training course, you can get started straight away.

Here's 7 more reasons to trade :

1. It never closes. It's open around the clock, worldwide. Trading positions open at Monday 7am, New Zealand time and close 5pm New York time on Friday. During this time, you can enter or exit the market whenever you like. It's a continuous electronic currency exchange. This is great because you can trade whenever you have spare time.

2. Leverage. Standard $100 000 currency lots can be traded with as little as $1000. This is mainly because of the ease with which you can buy and sell, some brokers will leverage up to 200 times, so with $100 you can control a 200 000 unit currency position. It's the best use of trading capital around, even banks lending on property investments don't come close.

3. Accurately predict the outcomes. Currency prices generally repeat themselves in predictable cycles so you can see what the trends are. 'Technical Analysis' helps to see these trends and profit from them.

4. Low Transaction Cost. In other words, you mistakes won't cost you a fortune. Good brokers won' charge commissions to trade or maintain an account even if you have a mini account and trade small volumes.

5. Unlimited Earning Potential. has a daily trading volume of over 1.5 trillion, the largest financial market in the world. It dwarfs the equities market (50 billion daily) and the futures market (30 billion).

6. You can make money in any market conditions. Each market is one currency against another, so when you buy in one, you're selling in another so there's no biase towards either currency moving up or down. This means it's up to you to choose which currency to buy or sell with. Yu can make money going up or down.

7. Market transparency. This is an advantage in any business or trading environment. It means you can manage risk and execute orders within seconds. It's highly efficient and allows you to avoid unexpected 'surprises'.

I hope you're now convinced that is the best investment and income opportunity around.

Forex The Future Investment

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

Investing in Forex

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

Advantages of the Forex Market

What are the advantages of the Forex Market over other types of investments?

When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.

The Forex market is also very liquid. When trading Forex you have full control of your capital.

Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control

Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.

The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.