Forex Crunch Pound Gets Bad News – Loses Support |
- Pound Gets Bad News – Loses Support
- Beware The Hidden Danger Of Early Success… Or Else!
- Bernanke Prints Dollars – Greenback Back Down
- Forex Daily Outlook – August 11 2010
- Fundamental Overview – Market Movers Last Week – 8/09/2010
- Forex Factory Adds Liquidity Gauge
| Pound Gets Bad News – Loses Support Posted: 11 Aug 2010 03:14 AM PDT
With disappointing employment figures and a lower growth forecast, GBP/USD loses another support line. Risk aversive trading adds to the move. Update on the Pound. Claimant Count Change, the first and most important employment figure in Britain showed a drop of only 3800 unemployed people in July, much less than 17,00 that was expected. This was the headline, and the bad news continued:
Also last month’s number was revised, and not in a good way – a drop of only 15,900 unemployed people, less than 20,800 that was initially reported. The unemployment rate for June remained at 7.8%, as expected. A short time after this disappointment, Mervyn King presented the inflation report. The governor of the BoE returned to his regular stand on inflation – that it will eventually return to the government’s 2% target and even lower in 2012 – only 1.5%. This came after King already expressed concern about inflation a few weeks ago. The annual rate of inflation now stands on 3.2%. King said it will remain higher in 2010 to higher taxes, and not anything substantial. King and his colleagues not only dismissed inflation, but also lowered the growth forecasts for 2010 – yet another blow to the Pound. Instead of 3.6%, the official forecasts now stand on 3%. GBP/USD tumbles down The British Pound traded at around 1.5810 before these news came out. This was lower than the highs it reached last week, and also below the 1.5833 resistance line, but well above the bottom of 1.5710 it reached before the Fed decision. The news sent it under 140 down to 1.5670 in a sharp move. GBP/USD currently stabilized at 1.5680. It now stands above a minor support line at 1.5660 which temporarily capped the pair last week. More significant resistance appears at 1.5520, which was a very tough resistance line in the past, and now works as support. A recovery of the Pound will sent it tackle the 1.5720, 1.5833 and the 1.60 lines. But there’s another force that hurts the Pound – risk aversion. The initial reaction to the Fed’s move was a weaker dollar, as Bernanke made a move to print dollars. But as the hours go by, the market digests the move and fears a global slowdown. A global slowdown brings back risk aversive trading – a feature that was absent from the markets in the past two months. As the whole world is weak, the “safe haven” currencies – dollar and yen, rise, while “risky currencies” such as the Euro, Pound, Aussie and Kiwi, lose ground. Will the Pound recover? Want to see what other traders are doing in real accounts? Check out Currensee. It's free..       |
| Beware The Hidden Danger Of Early Success… Or Else! Posted: 11 Aug 2010 01:11 AM PDT
Guest post from visionsofaffluence.com So you have been trading for a while now and you finally feel like you have gotten the hang of things. I mean you still take losses but now you know that they are an inevitable part of trading, and since you follow proper money management principles your wins always out weigh your losses. Since you are having so much success with your trading you decide to kick it up a notch. You figure that since you have finally turned the corner it would be ok for you to start trading more often and with larger lot sizes, because after all more trades = more money, and there is not such thing as too much money. So you start trading at times when you previously wouldn't have and with lot sizes that before you would have said were to large for your account. Things go fine at first but then all of a sudden you can't pick a winner to save your life and you account is hemorrhaging cash. You are lost, you have no idea what has happened or how to stop it. Everything was going fine and it seemed like you were on your way to being a great trader, and now it seems like you are right back where you started. What happened? What happened is that you fell prey to one of the scourges of new traders, overtrading. Overtrading occurs when traders allow themselves to be guided by pressures to perform well rather than the markets themselves. The most common of the pressures is the quest to make more money. Traders get caught up in wanting to make more money and it clouds their judgment and causes them to force trades. They trade at times when they have no business being in the market, like during times of low volatility, they throw proper money management rules completely out of the window, or they start to completely ignore their trading plans in the search for profits. All of these mistakes eventually lead to their accounts being decimated and their confidence being shaken to its core, and without capital and confidence in their abilities a trader is nothing. So if you want to be able to make it in this business then you are going to have to resist the urge to overtrade. We all want to be successful and make lots of money, but you have to realize that it's not going to happen overnight and that you can't force it. Remember, slow and steady wins the race and if you try to rush your success by overtrading, then the only race you'll be winning is the 100 meter margin call dash. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
| Bernanke Prints Dollars – Greenback Back Down Posted: 10 Aug 2010 02:01 PM PDT
Ben Bernanke prints more dollars as expected from early hints. The methods that the central bank will now use, and the worries about the slowdown, end the dollar’s round trip, and makes the break down of EUR USD a false break – at least for now. In my post about scenarios for the Fed decision, the scenario about the dollar sliding down had the highest probability. Indeed, this scenario was realized, as the Fed announced fresh dollar printing – and the result is as expected. While the headline was as expected and the result as well, the details are interesting: Update: The trend has reversed - the Federal Reserve’s move triggered deep fears of a global economic slowdown. The risk factor is back in the game. Big time. The “safe haven” dollar and yen are now on the move, EUR/USD, GBP/USD and other “risky” currencies are falling. The Federal Reserve announced that it will stop shrinking its balance sheet, and send the matured MBS back to the markets. The surprise came from the target of this new program – government bonds. This Quantitative Easing move will lower yields affects the mortgage market and is meant to make borrowing conditions easier – especially in the weakening housing sector. Bernanke didn’t announce that the balance sheet will be enlarged, yet shifting the money to government bonds is an escalation in its steps. This shows that Bernanke is determined to prevent the US economy from sliding into the feared “double dip” recession. Buying government bonds lowers their yields, making stocks more attractive. Indeed, stock markets immediately bounced back up. The FOMC Statement details about the deterioration of the economy, which is recovering in a “more modest” fashion, and how the economic indicators have dropped since the last meeting of the Committee. EUR/USD Erases False Break Talks about dollar printing were here for over a weak, and they already took their toll on the dollar. But the tension reversed the trend. As the hours ticked towards the event, it seemed that it would turn into a “Buy by the rumor, sell by the fact”. The greenback regained its losses. EUR/USD, that already passed the 1.3267 resistance line, lost it almost a day before the decision. In the hours before the announcement, it lost the all-important 1.3114 line, which it broke elegantly beforehand and remained safely above. But with the release – this was erased – EUR/USD jumped over 1.32 and after calming down, it’s still far from 1.3114. The pair trades at 1.3180 at the time of writing. This turned out into a false break. Also other currencies had the same behavior – losing ground before the release and winning against the dollar afterwards. As always with decision from the Federal Reserve, it often takes time for the markets to fully digest the sometimes obscure messages, so we might have more surprises later on. But after the dust fully settles, it’ll be each currency to its own: The Pound is in the limelight on Wednesday, the Aussie on Thursday and the Euro will attract attention on Friday. It’s never boring in forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
| Forex Daily Outlook – August 11 2010 Posted: 10 Aug 2010 02:00 PM PDT
U.S. and Canada’s Trade Balance followed by British Jobless Claims are the major activities today. Here is an outlook on the market moving events. In the US, American Trade Balance deficit is expected to decrease from 42.3B to 42.0B following the worse than expected deficit increase in May.
More in the US, Federal Budget Balance, Following a cutback to 68.4B in the government's deficit in the previous month a huge increase to 167.6B is expected badly affecting the US dollar. Finally in the US, Crude Oil Inventories decreased by 2.8M last week and are expected to decline further in the next few months. In Canada, Trade Balance surplus of 0.4B is expected now following a deficit of 0.5B in May Canaca’s return to Trade Balance surplus will strengthen CAD. For more on USD/CAD, read the Canadian dollar forecast. In Great Britain, Jobless Claims expected to improve the labor market conditions by dropping to 17.4K whilt the Unemployment rate is expected to remain 7.8%. Later in Great Britain, Bank of England Governor Mervyn King holds a press conference, along with other MPC members, about the Inflation Report, in London will impact interest rates. More in Great Britain, Average Earnings Index a leading indicator of consumer inflation is predicted to rise by 1.1% following a worse than expected rise of 2.7% in the previous month. Read more about the Pound in the GBP/USD forecast. In Australia, Westpac Consumer Sentiment index based on a survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions, employment, and climate for major purchases increased by 11.1% in July following three months of decreases. A further increase is expected now. For more on the Aussie, read the AUD/USD forecast. In New Zealand, Business NZ Manufacturing Index edged up by 2.2 points last month a further rise is expected now and Food Price Index also experienced a 1.3% rise in June and is predicted to rise again. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free.    |
| Fundamental Overview – Market Movers Last Week – 8/09/2010 Posted: 10 Aug 2010 09:27 AM PDT
Guest post by ForexTraders.com The U.S. Dollar continued showing signs of weakness last week on the back of an overall disappointing set of economic numbers from the jobs sector in the United States. The Greenback fell significantly against all the major currencies except for the Canadian Dollar, against which it only fell by 0.1%. Dollar Drops Against All Other Major Currencies The biggest drop in the Greenback was against the Euro, where the Dollar lost 2.0%. This was followed in magnitude by its change seen versus the Pound Sterling against which the Dollar fell 1.7%. More moderate U.S. Dollar losses were sustained against the Australian Dollar of 1.5%, the Japanese Yen of 1.2%, the New Zealand Dollar of 1.0%. Nevertheless, the Canadian Dollar was also rather weak last week, only managing to rise by a comparatively small 0.1% versus the softening U.S. Dollar. Forex Market Implications Despite the somewhat mixed economic data seen out of the United States last week, near term prospects for the U.S. Dollar do not look good. Also, the latest Non Farm Payrolls data and the large downward revision to the previous month's number was also a considerable disappointment to the market. Furthermore, with low interest rates, the high level of debt in U.S. society, and little hope of that debt ever being paid off, the Dollar continues to represent a great shorting opportunity. Buying the Euro should probably still be avoided on the basis of ongoing financial health issues in the Eurozone, but the U.S. Dollar could still be cautiously shorted against the commodity currencies like the Aussie, Kiwi and Loonie, as well as the Japanese Yen and the Pound Sterling. At least in the near-term, staying on the short side of the U.S. Dollar may well be the best way to trade this market. Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 8/09/2010 The U.S. Dollar declined against every major currency last week with the exception of the New Zealand Dollar which lost only 0.2% against the Greenback. The U.S. currency was particularly weak against the Japanese Yen which tested the 86.00 level last week and the Euro which managed to stay above the important 1.3000 psychological level. Read full report Weekly Recap and Outlook for EURUSD – 8/09/2010 EURUSD started the week off making its weekly low of 1.2876 on Monday as the Euro was pressured early in the session. The pair then reversed and began rallying despite positive U.S. New Home Sales coming in better than expected. The rally continued into Tuesday as European stocks showed considerable strength with strong earnings reports from UBS AG and Deutsche Bank, and GfK German Consumer Climate which increased to 3.9 versus 3.6 expected, while German Import Prices increased by 0.9% versus an expected increase of 0.7%. Read full report Weekly Recap and Outlook for GBPUSD – 8/09/2010 GBPUSD started the week on a soft note making its weekly low of 1.5408 Monday before subsequently rallying sharply. The pair continued the rally Tuesday after U.K. CBI Realized Sales came out at a whopping 33 in July, versus a reading of only 2 expected and the highest level since May of 2007. Cable then paused somewhat on Wednesday despite U.S. Durable Goods Orders coming out weaker than expected. Read full report Weekly Recap and Outlook for AUDUSD – 8/09/2010 AUDUSD rose again last week as risk appetite continued to favor the commodity currencies. The pair started the week on a positive note Monday, despite news that Australian PPI had risen by only 0.3% last quarter versus an expected rise of 1.2%. AUDUSD then made its weekly high of 0.9067 on Tuesday after the Australian Conference Board Leading Index increased from 0.1% to 0.3% quarter on quarter. Read full report Weekly Recap and Outlook for NZDUSD – 8/09/2010 NZDUSD began the week on a firm note in spite of the favorable U.S. New Home Sales data that came out on Monday. On Tuesday, the pair made its weekly high of 0.7394 — a level not seen since January — before selling off ahead of the release of NBNZ Business Confidence which came out at 27.9, considerably lower than the previous reading of 40.2. Read full report Weekly Recap and Outlook for USDJPY – 8/09/2010 USDJPY began the week on a soft note on Monday as the Japanese Trade Balance came out with a surplus of 0.46T versus an expected surplus of 0.54T, with the previous number revised downward to 0.32T from 0.42T. The rate then began climbing on Tuesday despite lower U.S. Durable Goods Orders. Read full report Weekly Recap and Outlook for USDCAD – 8/09/2010 USD/CAD traded with increased volatility last week despite a very sparse economic release calendar for Canada. The rate began Monday on a soft note even though U.S. New Home Sales came out better than expected. On Tuesday, the rate made its weekly low of 1.0254 as weaker U.S. CB Consumer Confidence data fueled general Greenback selling. The rate then reversed and began rallying sharply to make its weekly high of 1.0393, also on Tuesday. Read full report Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
| Forex Factory Adds Liquidity Gauge Posted: 10 Aug 2010 06:28 AM PDT
Forex Factory, one of the leading forex portals, has added a great addition in its market section – a gauge for real time liquidity. This addition can be very useful for traders. The Forex Factory Market page’s highlight is the independent quotes – quotes from brokers are aggregated using FF’s proprietary system, providing independent real time quotes on forex exchange rates.
Now, Forex Factory uses the data from these 17 brokers to show liquidity. There are colorful icons that show high, medium or low liquidity, and also the percentage of liquidity in comparison to the average. The data is loaded when the page loads, and toggling the “Live” checkbox makes the liquidity gauge to be updated in real time. This liquidity gauge can be used by traders for various purposes – some traders prefer high liquidity for quick scalping. Some prefer quiet times so they can enter a position for hours or even days. This gauge can help them in finding the right time to trade, or to avoid trading, which is no less important. This addition, isn’t automatically updated in real time and resides only on the Market page, as it’s still in testing. It will eventually reach the homepage. As far as I know, this system is unique. I wonder if other portals will also add liquidity gauges like this one. Want to see what other traders are doing in real accounts? Check out Currensee. It's free..    |
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