Daily FX Profit Signal December 1st, 2009

Hi everyone. The market was in cautious mode yesterday and we are waiting to see further reaction to the big story out of Dubai, link below. Today, we are paying close attention to the Royal Bank of Australia Cash Rate and Rate Statement. If Australian government officials are hawkish for further rate increases then the dollar may have another round of selling.   Without further momentum on most of the majors against the dollar, traders may start to worry, and as we mentioned yesterday, fear may be the driving force in helping the dollar strengthen.

http://online.wsj.com/article/SB10001424052748703300504574568002230955672.html?mod=WSJ_hpp_sections_markets
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Daily FX Profit Signal November 30th, 2009

Happy Monday everyone. We had pretty exciting action on Thursday and Friday to make things interesting following reports of the Dubai investment arm possibly failing.   I’ve been saying that these are turbulent times and everyone should trade with caution. After seeing a fresh breakout above 1.5050 on the EUR/USD, reaching to the high of 1.5150, we thought the run higher was going to continue; however, last week’s breakdown to the lows of 1.4800 now puts the bull run into question.  Even though the reports have been mollified and the euro is back above 1.5000, we think this could once again become a front page story.

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Economic Calendar 30 November - 4 December

DATE	TIME	CRNCY	EVENT	ACTUAL	FORECAST	PREVIOUS
Mon	13:30	CAD	CAD Quarterly Gross Domestic Product Annualized (3Q)	0.40%	1.00%	-3.1% (R+)
30-Nov
Tue	3:30	AUD	AUD Reserve Bank of Australia Interest Rate Decision	3.75%	3.75%	3.50%
1-Dec
	5:30	AUD	AUD RBA Commodity Index SDR (YoY) (NOV)	-25.30%		-30.3%
	6:38	JPY	JPY BOJ Target Rate	0.10%		0.10%
	6:45	CHF	CHF Gross Domestic Product (QoQ) (3Q)	0.30%	0.30%	-0.30%
	6:45	CHF	CHF Gross Domestic Product (YoY) (3Q)	-1.30%	-1.50%	-2.4% (R-)
	8:55	EUR	EUR German Unemployment Change (NOV)	-7K	5K	-26K
	8:55	EUR	EUR German Unemployment Rate (s.a)	8.10%	8.10%	8.2% (R-)
	15:00	USD	USD ISM Manufacturing (NOV)	53.6	55	55.7
Thu	10:00	EUR	EUR Euro-Zone Gross Domestic Product s.a. (QoQ) (3Q P)	0.40%	0.40%	0.40%
3-Dec
	10:00	EUR	EUR Euro-Zone Gross Domestic Product s.a. (YoY) (3Q P)	-4.10%	-4.10%	-4.10%
	12:45	EUR	EUR European Central Bank Interest Rate Decision	1.00%	1.00%	1.00%
Fri	12:00	CAD	CAD Net Change in Employment (NOV)		15.0K	-43.2K
4-Dec
	13:30	USD	USD Change in Non-Farm Payrolls (NOV)		-120K	-190K
	13:30	USD	USD Unemployment Rate (NOV)		10.20%	10.20%

Interest Rate Decisions

Interest rates decisions news flashes provide guidelines for the overnight lending rate which are bound to have an effect on businesses and consumers alike. An upward surge in the cost of living - inflation and a runaway economy is slowed by hiking the interest rates. Lowering interest rates rejuvenates an economy from the doldrums by enabling consumers to get easy credit thus increasing consumption. Currencies strengthen when interest rates move north and weaken when the rates move southwards.

 

Change in Employment

Change in employment index compares the employment to the unemployment rates in a certain economy. The index which is calculated by economist is used to predict future spending and consumption pertains which are likely to occur due to change of one of the parameters. An economy can either grow or contract depending on which of the two parameters changes.

 

Consumer Price Index (CPI)

CPI is one of the most reliable parameters used to gauge the extent of inflation on the economy. Every household spends money on some basic commodities and utilities, these items are collectively referred to as “the consumer basket”. By monitoring the changes in price of the consumer basket, economists are able to predict the interest trends. This is largely due to the fact that central bank will more often than not act to tame inflation by raising interest rates and vice versa. The adjustments of interest rates to keep consumer basket within the majorities reach will affect the underlying currency either strengthening or weakening it.

 

Retail Sales

Retails sales are good pointers of the state of the economy. When the economy is strong and growing, retails sales escalate and consumer are more willing to spend money on luxury goods. Conversely, a shrinking economy is characterized by a reduction in retail sales and cautious spending by consumers.

 

Trade Balance

This is simply the difference between total exports and total exports between two or more trading nations. Multinational trade involves the export and import of goods and services between nations. When one country exports more than it imports the net effect is a trade surplus. The reverse of this is known as trade deficit. Great emphasis is placed on Trade Balance Report as it shows the movement of goods and services between nations. Countries with trade surplus usually have stronger economies as there have more money in than what there are spending.

 

Gross Domestic Product – GDP

GDP is derived at by measuring the consumers’ ability to consume / afford goods and services produced within their economy. A strong GDP is a sign of a robust economy which should be checked for inflation - rising interest rates - while a weak GDP could be interpreted to indicate a recession meaning interest rates are likely to head south.

 

ISM Manufacturing Survey

This survey gauges the mood and sentiments of companies’ top brass, decision and policy makers towards inflation. The centerpiece of this survey is their take on business outlook - new business, production capacities, backlogs, inventory levels and manpower issues. A 50 points scale is used to interpret the findings with value 50 indicating expansion, while values below 50 are a sign of recession.

Free Daily Forex Video November 30, 2009

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Daily FX Profit Signal November 26th, 2009

As we had thought, the EUR/USD had broken above the 1.5050 area and then ran to the 1.5150 level or resistance, where it currently resides. With this bull run now in place before the US holiday, we expect a continuation. Not much can be said about this market other than traders will push currencies to extremes, so expect irrational technical movements.
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Free Daily Forex Video November 26, 2009

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Daily FX Profit Signal November 25th, 2009

Even with a bit of a retracement on the EUR/USD pair, almost exactly to the 61.8% retracement level from the last move up that started at 1.4830 to the high of 1.4998, the euro has managed to bull its way back above 1.4950. Economic reports out of the US were taken with stride and overall, the market seems ready to make another run at the 1.5000 level. As we’ve been saying the last few weeks, there is plenty of risk in the market for a possible dollar recovery. Given the holiday week in the US, we expect small volume across the board; with that being said, the market could be more volatile than before. Our bias is for further dollar losses; extreme caution.
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Free Daily Forex Video November 25, 2009

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Daily FX Profit Signal November 24th, 2009

The EUR/USD had a nice rally overnight during the European session. US Equities are supporting this move higher and are up over 100 points as of now, 1pm EST. Fundamentally, the USD is weak. There are only several things that can help the buck at this time. One of those things is a geopolitical event that pushes risk into the forefront and brings the carry trade (the USD) back to the States. The second is a double dip recession that will cause investors to second guess the world wide economic recovery. Both of the mentioned events may happen eventually, but are not on our daily calendar as of now. We see an opportunity the dollar to extend its losses this week.
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Free Daily Forex Video November 24, 2009

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