Month: March 2009

By Sean Hyman

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As you all know, I recently published an article that talked about the state of the U.S. economy and that it may be in the “beginning’ stage of an economic recovery.

I talked about the valuable indicator of copper and why it leads the way and tells you that the economy will recover long before the “nightly news” or even analysts tell you. Read more about it here.

Today, another site that I highly regard, also talked about the importance of copper in leading the way to an economic recovery. Daily Wealth.com gave this checklist for an economic recovery.

The True Wealth Script for Economic Recovery

• Investment-grade corporate bonds rally first,
• then stocks rally. Around the same time,
• the price of copper recovers.
• The CILI (aka “Silly”) Recession End-icator goes up for three months. This is a ratio of “coincident economic indicators” to “lagging economic indicators.” Dennis Gartman, one of my favorite newsletter writers, pointed out this indicator has called the end of recessions with remarkable accuracy for 40 years.
• The recession ends.
• Consumer confidence indexes rise.
• Housing begins its recovery.

So with all of that said, what does that mean for Main Street?

It means that as the economy recovers, inflation will grow. This means that your purchasing power is about to erode some more. This is why it’s imperative to save more than you typically do.

It also means that it’s time to invest in stocks for the long haul. Buy your ETFs and mutual funds with cash, no margin. But before you do this, make sure you have adequate savings set aside first. If that step is not done first, then if an emergency comes up, you are forced to sell the investments usually in a time when it’s not prudent to do so.

Make no mistake about it. Inflation is coming. Gold is already pointing the way. Just as the Fed announced that it was buying up $300 billion of long term U.S. Treasuries, it shows that they are trying to push yields down artificially low and make money “cheap” in order to spur economic growth. This inflationary action boosted gold almost immediately from $880s up to the $920s and shortly thereafter it hit $950 an ounce.

Not only is gold pointing to inflation but so is copper, oil, the CRB index (which is a basket of commodities). Remember, that commodities are things that you use every day on Main Street, whether you have one stock investment or not. Its things like wheat, sugar, gold, copper, oil, gasoline, etc. This is why the rise of commodities should matter to you on Main Street no matter whether you invest directly in a commodity contract or commodity ETF ever.

Another sign that the purchasing power of Main Street is about to erode is that the “decline of the dollar”. When the Fed made that statement about the purchase of treasuries, it’s obvious that they will be printing more money “like a mad man”.

This oversupply of dollars will only dilute the value of your dollar and boost the cost of goods that you buy and use in every day life.

So, most importantly, what can you do about all of this to protect yourself?

Beef up your savings like never before. With the employment situation still “touchy” and inflation coming, it’s only prudent to take this step NOW.

Invest in stocks through ETFs or Mutual Funds for the long term. If your dollar is eroding and the Fed wants stocks to rise again, then you’d better align yourself with their wishes because they will eventually win this battle.

Buy Commodity based ETFs through your stock brokerage account. One way to fight inflation and to hold your purchasing power is by buying the things that are going to go up on you. There are ETFs on gold, silver, oil, natural gas, etc. All of these things will rise in value as inflation returns and as the dollar falls (which as begin already).

Buy foreign currencies. Now for Americans, this may sound “foreign” and even difficult since we aren’t as familiar with the exchange of currencies as much of the rest of the world is. However, this is simple. You never have to “hold” or “physically exchange” any currency. You can open a forex (currency investing) account and buy foreign currencies against the U.S. dollar. As the dollar falls against these major currencies like the euro, Australian dollar, New Zealand dollar, etc., your account will gain and help offset the erosion of the purchasing power of the money in your wallet. To learn more about currency investing, click here.

Get Educated about these BEFORE you invest in them. Believe it or not, you can have a very good understanding of these areas in about a week’s time through our online courses which only cost $20-$25 and you can take them in your spare time. In this day and age we live in, I think you can see that Main Street has to “take charge” of their own financial future and not just entrust it to Wall Street. This is an inexpensive and convenient way that you can do this

Help someone else out. It’s always good for everyone to “give back”. You can do this by emailing this article to a friend, relative or co-worker, by buying them an online course so that they can also directly ask us their own financial questions which will allow us to directly help them. The people that are the most blessed generally are the ones that think of others and not just about themselves. This is a practice that I’ve held for over 30 years now and it’s served me well.

I’d encourage you to print out these steps and post them somewhere where you can review them from time to time. This is the roadmap to help you in the coming days and years.

Thanks for reading my articles. I value my readers and the insights that I’m able to pass along to you all.

Feel free to post these articles on your Facebook, MySpace, Digg them, Stumble upon them, Twitter them, email them, send them You Tube links and IM the links to friends and family, etc. Help us to spread the word and therefore help others. As you can see by watching the nightly news, people are in dire need out there and you can bring them a solution.

Sean Hyman

Head Course Instructor

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Seeking Alpha

By GCI Fx Research

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The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3515 level and was capped around the US$ 1.3725 level.  The common currency came off as traders booked profits following a week of massive U.S. dollar depreciation.  Dealers sold the greenback earlier this week on fears that the Fed’s plan to create up to US$ 1.15 trillion in new liquidity will result in inflation and erode the value of the dollar.  Also, the Fed’s purchases of U.S. Treasuries and mortgage-backed securities will depress interest rates and make certain fixed-income assets less attactive to investors.  Federal Reserve Chairman Bernanke defended the Obama administration’s plan to limit remuneration at certain U.S. financial institutions and said the U.S. “does not have a realistic alternative to preventing such failures (of big banks).”  In eurozone news, European Central Bank member Weber said no eurozone country is currently facing payment difficulties.  The ECB remains under pressure to initiate quantitative easing measures like other central banks have done.  Data released in the eurozone today saw EMU-16 January industrial output off 3.5% m/m and 17.3% y/y.  German February PPI was off 0.5% m/m and up 0.9% y/y.  Euro bids are cited around the US$ 1.2385 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.25 level and was supported around the ¥94.15 level.  Liquidity was muted in Japan overnight on account of the Spring Day holiday.  Bank of Japan announced it will likely provide subordinated loans to Japanese companies ahead of the end of the fiscal year at the end of this month.  The government is eager to prevent corporate collapses that may originate because of dysfunction in the asset-backed commercial paper market.  The Nikkei 225 stock index lost 0.33% to close at ¥7,945.96.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥130.45 level and was supported around the ¥129.00 figure.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥138.95 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.55 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Canadian Retail Sales rebounded in January according to the monthly report released by Statistics Canada today.  Retails sales increased by 1.9 percent to C$33.7 billion in January after falling by 5.2 percent in December.  December’s decrease marked the largest monthly decrease for retail sales in over 15 years.  Today’s sales data almost doubled the market forecasts that were expecting sales to increase by 1.0 percent for the month.

Core retail sales, excluding automobile sales, rose by 1.3 percent in January following a revised decline of 3.1 percent in December. The rise in core sales also surpassed economic forecasts expecting a 0.4 percent increase in January.

Contributing to the gain in the retail sales numbers was an increase in the automotive industry as sales rose by 3.8 percent in January. Sales at gasoline stations also increased in January by 2.6 percent. Sales in pharmacies & personal care stores and food & beverages stores increased for the month with gains of 2.1 percent and 2.0 percent, respectively.

Negative contributors to the retail sales data were sales at furniture, home furnishings & electronic stores which fell by 0.7 percent and sales at building & home supplies stores which decreased by 0.7 percent.

Canadian Loonie mixed in Currency Trading.

The Canadian loonie dollar has been mixed today in the currency markets versus most of the major currencies. The Canadian currency has increased versus the euro, British pound and Japanese yen while falling so far today against the U.S. dollar, Australian dollar and New Zealand dollar.

The U.S. dollar has advanced slightly so far today against the Canadian loonie as the USD/CAD pair trades at the 1.2423 in the afternoon of the US session at 2:01pm EST. The USD/CAD opened the day trading at 1.2405 at 00:00GMT according to currency data by Oanda.

The euro has lost ground today against the loonie as the EUR/CAD trades at the 1.6862 level after opening the day at 1.6943.

The loonie has advanced versus the Japanese yen as the CAD/JPY trades at the rate of 77.09 yen per loonie level after opening the day at 76.22.

The British pound has declined versus the loonie as the GBP/CAD trades at the 1.7955 level after opening the day at 1.7976.

The Australian and New Zealand dollars have gained ground today versus the Canadian currency as the AUD/CAD trades at 0.8538 after opening at 0.8526 while the NZD/CAD trades at 0.6953 after opening the day at 0.6910.

USD/CAD Chart – The US Dollar gaining versus the Canadian Dollar today in Currency Trading following two days of sharp USD weakness(30min. Chart).

Source: ForexYard

Today, U.S. Federal Reserve Chairman Ben Bernanke is scheduled to speak at 16:00 GMT. Whatever the content, the Dollar is likely to record a great amount of volatility as a result of Bernanke’s speech.

Economic News

USD – Dollars Tumbles on Increasing Money Supply

The has continued its weekly demise this week , as it reached close to a two month low against the EUR on Thursday. The greenback also saw significant downtrends against the GBP and the JPY as well. The Federal Reserve’s decision to expand the supply of Dollars by buying government debt, which was announced 2 days ago, is continuing to severely damage the U.S currency. Yesterday the USD lost a staggering 200 pips against the EUR to close at 1.3659. Against the JPY, the Dollar dropped a staggering 150 pips or 1.5% to close at 94.55. The Dollar’s losses against the Pound were notable, as the greenback lost nearly 300 pips on Thursday to close at the 1.4489 level.

In general it can be said that the Federal Reserve’s decision has had two different effects, both weakening the Dollar. Firstly, the Fed’s actions were received quite enthusiastically among analysts across the world, which had an instant reaction among investors that now have more confidence that the U.S will manage to pull out of the current recession. Thus, as was proven recently, good news for the U.S economy signifies even better news for the rest of the western world, as these countries rely greatly on U.S consumption. The second effect is, as was described above, is a process in which the supply of Dollars increases, and thus makes the USD more available and cheaper in the long-term.

The other important factor that added to the Dollar’s misfortune yesterday was the release of U.S Unemployment Claims data. Despite being slightly better-than-expected figures of 646,000 individuals filed for unemployment insurance during the past week, as opposed to the expected 652,000 individuals, these figures are still very disappointing. The next publications of this indicator could be the leading measurement of the U.S. economy’s condition, and prospects for recovery. Traders are advised to follow it very carefully when it is published at 12:30 GMT next Thursday.

Looking ahead to today, the only significant event on the U.S calendar is the speech of the Federal Reserve Chairman Ben Bernanke, which is expected to take place at 16:00 GMT. After the reaction to Bernanke’s announcement from 2 days ago, traders cannot afford to overlook his speech today, as it could impact the market dramatically once again. The result of the speech may incite a modest correction to the last days’ trends in USD weakness.

EUR – EUR Soars vs. the Dollar

The EUR continued its bullish rally yesterday. The EUR saw its most dominant uptrend against the USD, as the EUR/USD reached over the 1.37 level, to eventually close up 200 pips at the 1.3659 level. Against the JPY, however, it finished yesterday’s trading session virtually unchanged at 129.15, as the Yen continues to uphold its value. The EUR did gain over 50 pips vs. the British Pound to close at 0.9423, as the EUR/GBP pair heads for parity yet again.

It appears that the European Central Bank’s (ECB) reluctance to match the Federal Reserve plan to rescue the Euro-Zone economy by buying government’s debt is one of the main factors that have led to the European currency towards such high ranks against the leading currencies. However, it is widely accepted that the ECB won’t be able to sustain the public demand for a rescue plan, and will soon launch a plan of its own. The plan will probably be more modest than the American one, but could have similar effects on the European currency.

A significant economic rescue plan for the Euro-Zone economy may lead to the current bullish trend in the EUR reaching its end much sooner than expected. Traders should stay extremely alert in the coming days and weeks, as an opportunity to profit from a reversal in the EUR’s fortunes, spurred by the case that the ECB will indeed announce its desire to implement a rescue plan might be a rare opportunity to catch a trend in its first steps. Therefore, forex traders may be able to make large profits by employing this trading strategy.

As for today, a batch of data is expected from the Euro-Zone. The most significant indicators will be the German Producer Price Index at 07:00 GMT, which is expected to drop by 0.2% as opposed to the previous month. The European Industrial Production figures at 10:00 GMT is expected to drop by 3.8% from the last publication. If forecasts will indeed come true, traders might witness a relatively bearish trading day for the EUR. However, it is advised to follow economic news coming from the U.S., as this may change the course of trends today

JPY – Yen Climbs Against the Dollar

The Yen soared against the Dollar yesterday, mainly as a result of the weakening USD, and not as a result of high demand for JPY. The Dollar’s weakness was largely owed to the Federal Reserve’s decision to keep Interest Rates near 0 at 0.25%, and announcing a mass buying of debt, by dramatically increasing the Dollar supply. The Yen’s strength is also owed to the Bank of Japan’s (BoJ) extremely pessimistic line by stating that Japan’s economic conditions have deteriorated significantly, and are likely to keep worsening. In other times, such a saying would have generated a massive bearish trend for the JPY, but as of late, it appears that all the currencies will appreciate against the Dollar without any relevance to their local economic conditions. In the long-term, if the BoJ will continue with its desire to see a weak JPY, the Yen is very likely to depreciate over time, and traders should take this under consideration.

The JPY saw mixed results against the major currencies in yesterdays trading. The JPY rose against the USD by a dramatic 150 pips or 1.5%, as the USD/JPY cross reached as low as the 93.53 level, before finishing at the 94.55. The Yen lost 60 pips against the GBP to close at 137.01, reversing some of the GBP’s losses against the Japanese currency. The EUR/JPY currency cross finished Thursday’s trading session virtually unchanged to close at 129.15, as both currencies made significant gains against the greenback. As for today, Japanese banks will be closed in observance of Vernal Equinox Day. Traders are advised to follow the economic news coming from the leading regions, such as the U.S., Euro-Zone and Britain.

Crude Oil – Crude Oil Hits the $52 Level

Crude Oil rose to over $52 yesterday, before closing at $51.39, an increase of 150 pips or 3%. This marks a massive weakly gain for Crude Oil of about 13%. This is largely owed to signals of a possible economic recovery from the U.S. It appears that OPEC’s unusual high level of discipline, is one of the other reasons for the high value of Crude Oil. OPEC managed to keep up to their estimations of the right amount of barrels produced per day, and as a result managed to halt the ongoing erosion in Oil prices.

High Crude prices are also owed to the significant drop in the Dollar. Thus Crude Oil is valued in Dollars, and as such, any downtrend of the USD is likely to generate a bullish trend for Oil. As for today, traders are advised to follow economic data, especially from the U.S, and even more importantly, follow the USD’s movements against the leading currencies, in order to predict Oil’s trend for today. If the Dollar will continue to slide, Crude Oil might reach $55 a barrel before the week ends.

Technical News

EUR/USD

The price of this pair appears to be floating in the over-bought territory on the daily chart’s RSI, indicating a downward correction may be imminent. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4460 level. A bearish cross on 4-hour chart’s Slow Stochastic implies that a downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The 4-hour chart’s is showing that the pair is still in the bearish configuration. However, the RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The hourlies chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour Chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Gold

Gold prices rose significantly in the last two days and peaked at $956 for an ounce. However, there is a bearish cross on the 4- hour chart Slow Stochastic suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The U.S. Leading Indicators Index published by the Conference Board today showed a decline in the month of February. The Leading Indicator Index, which measures future economic activity, registered a 0.4 percent decline in February following a revised increase of 0.1 percent in January. February’s decrease was less than the market forecasts which were predicting a decline of 0.6 percent for the month.

Consumer expectations, weekly jobless claims, stock prices and average weekly manufacturing hours were all negative sectors impacting the leading index. Real money supply, building permits, interest rate spread, supplier deliveries, manufacturers’ new orders for consumer goods & materials and manufacturers’ orders for nondefense capital goods helped positively contribute to the leading index.

The coincident index, which is viewed as a measure of the current economic activity, decreased by 0.4 percent in February after falling in January by 0.6 percent while the lagging index decreased by 0.4 percent after declining by 0.3 percent in January.

Weekly Jobless Claims fall.

Weekly U.S. initial jobless claims fell in the week that ended on March 14th according to the U.S. Labor Department today. Jobless claims totaled 646,000 unemployed workers, a decline of 12,000 from the week prior that had 658,000 initial jobless claims.  The 4-week moving average of unemployed workers rose by 3,750 from the prior week to 654,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending March 7th grew by 185,000 workers to a total of 5,288,000 unemployed workers. The four week moving average of continuing claims grew by 118,750 workers from the previous week to 5,251,250 workers. The prior week’s moving average had registered 5,132,500.

Dollar continues decline in Forex Trading.

The U.S. dollar continued its sharp decline today in forex trading a day after the US Federal Reserve pledged to increase new spending measures to help stimulate the U.S. economy.

Today’s trading saw the U.S. currency falling against all of the major currencies.

The euro gained versus the dollar today as the EUR/USD has advanced from its 1.3455 opening(00:00 GMT) to trading at 1.3659 near the end of the U.S. trading session at 4:50pm EST according to currency data from Oanda.

The British pound climbed today as the GBP/USD has rose from its 1.4214 opening exchange rate to trading at 1.4507 usd per gbp. The dollar has declined versus the Japanese yen and trading at 94.60 after opening at the day at the 96.01 exchange rate.

The dollar fell today versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.2393 after opening at 1.2466.

The dollar has gained against the Swiss franc as the USD/CHF trades at 1.1236 after opening at 1.1431 today while the dollar has also been weaker against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.6854 after an 0.6754 opening while the NZD/USD trades at 0.5538 today after opening at the exchange rate of 0.5415.

EUR/USD Chart – The Euro continued to advance today versus the US dollar in forex trading after making a dramatic spike yesterday following the US Fed’s announcement of new spending measures.

Source: ForexYard

Investors fled the USD en masse yesterday after the U.S. Federal Reserve stated that it would begin quantitative easing – basically printing money – in order to revive the U.S. economy hopefully by the beginning of next year. After such a devastating loss in value, traders now have the opportunity to discover a new range for the value of the USD and will begin to do so throughout the rest of this week. Once stabilized, the USD may in fact begin to climb back up as it returns to safe-haven status in the coming weeks.

Economic News

USD – Dollar Plunges on Federal Reserve Plan

The greenback dropped on Wednesday, hitting a 2-month low against the EUR on speculation the Federal Reserve is debasing the U.S currency. The Fed has said that it will buy $300 billion of long-dated U.S. Treasuries over the next six months to boost the U.S. economy, thus contributing to the Dollar sell-off. As a result, the USD may extend further losses as the Fed is preparing to flood the market with Dollars. This move is likely to diminish the appeal of the Dollar as a safe-haven and lead to further weakness of the U.S currency; it might slide to $1.37 per EUR in the upcoming days.

The Dollar was traded at $1.3485 per EUR yesterday, after depreciating as much as 3.6%, the biggest intra-day decline since September 2000! It earlier reached $1.3535, the weakest seen since Jan. 9th. The USD has also weakened 2.4% against the JPY, falling to 95.69 Yen, and against the British Pound Sterling down 1.2% to $1.4224, in yesterday’s trading. The surprisingly strong move by the Fed comes after central banks in Britain, Japan and Switzerland have embraced some form of quantitative easing, the process of flooding the banking system with funds to promote lending when interest rates are already at zero.

The Federal Open Market Committee (FOMC) said in its statement yesterday that the central bank will buy longer-term U.S. government debt and purchase an additional $750 billion of agency mortgage-backed securities, in a policy known as quantitative easing. In its statement at the conclusion of its 2 day policy meeting, the Fed indicated that it is more pessimistic about economic outlook. Officials removed language saying they expected the economy to recover later this year.

However, some analysts have said that the Dollar weakness may not last long given the worsening economic conditions throughout the world. In their view, the Dollar will continue to be seen as the safest store of value at this time of contracting global growth and its role as a funding currency outside of Europe will lend it support during the crisis. The return of investor risk aversion and all the major central banks embracing quantitative easing will cause safe-haven seeking flows to resume and may push the U.S. dollar higher back toward its long-term fair value of $1.20 this year.

EUR – The EUR Rallies as a Result of Dollar Weakness

Yesterday, the EUR rose the most against the U.S. dollar in almost nine years, after the U.S. Federal Reserve said it will buy government debt, while the European Central Bank (ECB) has remained reluctant to match the Fed’s steps. The EUR traded at $1.3493 rising as much as 3.7%, its biggest intra-day advance since 2000.

Analysts say that traders should expect the EUR to keep overshooting for now with the EUR/USD back toward $1.40. The EUR also jumped to its highest in three months against the JPY, climbing above 130.00 Yen. The ECB President Jean-Claude Trichet has said that the central bank is studying at the moment whether to take complementary measures that won’t necessarily be the same as other central banks; the bank’s benchmark rate is at 1.5% compared with 0.1% in Japan and as low as zero in the U.S. Economists expect that the ECB will now have to react rapidly to the Fed’s monetization of government debt by also embracing quantitative easing with an announcement likely as early as the ECB’s next meeting at the start of April.

The EUR also advanced versus the British Pound to its highest level in 7 weeks to 94.16 pence, after a government report showed unemployment increased in February at the fastest pace since at least 1971. The market is still very much concerned about the British economy and that there’ll be more problems in the housing and banking sectors, analysts have said. The U.K economy will probably contract into next year after most of the Group of Seven (G7) economies begin to recover, economists predict.

JPY – Yen Remains Weak as BoJ Holds Rates Unchanged

The Bank of Japan (BoJ) said it would increase its purchases of government bonds from banks by nearly a third, pumping cash into the economy to help ease the worst recession since World War II. The central bank kept interest rates unchanged at 0.1% Wednesday, but also forecasted that the economy would remain under stress in the new fiscal year and said that substantial liquidity is required to ensure stability in financial markets.

The Yen-selling was limited, however, with repatriation by Japanese investors ahead of the fiscal year-end at the end of this month preventing the currency from falling too much. Against the EUR, the Yen steadied but remained weak, with the EUR staying close to an earlier 11-week high of 128.83. Against the Dollar, the JPY was up significantly trading around 95.50, after the USD dropped in value following announcements by the Fed about quantitative easing. The BoJ said overnight it was holding interest rates steady at 0.10% and increasing its outright buying of Japanese government bonds to 1.8 trillion Yen ($18.28 billion) per month from 1.4 trillion Yen. Yet the JPY showed little reaction to this news, as other central banks, notably in the UK and Switzerland, have already announced aggressive monetary easing measures.

Crude Oil – Crude Oil Prices Reverse Losses

Crude Oil prices rose more than 2% to above $50 a barrel on Thursday, after a surprise move by the Federal Reserve to buy government bonds revived hopes the battered U.S. economy could soon begin its recovery. Oil’s rebound was also supported by a sharp drop in the USD, which posted its largest percentage drop since 1985, as the Fed’s move, aimed at resuscitating lending, prompted a sharp fall in market interest rates.

The U.S. Federal Reserve on Wednesday stunned markets by announcing it would pump another $1 trillion into the ailing U.S. economy by buying long-term government debt for the first time since the 1960s, and by expanding its purchases of mortgage bonds. Still, analysts cautioned that a continued weakness in Oil demand could limit Crude’s gains in the near term. Slowing demand and rising inventories have helped drag Crude Oil off record highs over $147 a barrel struck in July as the economic meltdown hit consumption across the globe. But oil prices, which sank to levels below $35 last month, have since stabilized in the $40-$50 range, as the Organization of Petroleum Exporting Countries (OPEC) cut output by 4.2 million barrels per day and vowed on Sunday to achieve stricter enforcement of existing curbs.

Technical News

EUR/USD

After an exceedingly volatile price-spike yesterday, the price of this pair has remained floating in the over-bought territory on the RSI of every chart, signaling that a downward correction may occur in the coming hours. With fresh bearish crosses on the 4-hour and daily charts’ Slow Stochastic, this move may indeed be imminent. Going short with tight stops might be the right choice today.

GBP/USD

The price of this pair appears to be floating in the over-bought territory on the hourly chart’s RSI, indicating a downward correction may happen in the nearest future. However, a fresh bullish cross on the hourly chart’s Slow Stochastic signals the opposite. Today it may be wise to wait for a more clear direction before entering this pair.

USD/JPY

Yesterday’s volatile downward movement has pushed this pair into the over-sold territory on the RSI of both the hourly and 4-hour charts, signaling an upward correction may occur shortly. The violent breach of the lower border on the Bollinger Bands of all charts also signifies upward pressure. Going long might be a wise choice today.

USD/CHF

This pair has recently witnessed a sharp downward movement and has since begun to stabilize within a new range. The price of this pair remains floating in the over-sold territory on the RSI of the hourly and 4-hour charts, signaling that there may still be room for an upward correction. The recent bullish cross on the 4-hour chart supports this notion. Going long might be a wise choice today.

The Wild Card – NZD/USD

This pair has been giving off relatively clear signals about its upcoming movement. With the price floating in the over-bought territory on the RSI of all charts and a fresh bearish cross on the daily chart’s Slow Stochastic, there appears to be an imminent downward correction in the making. Forex traders have the opportunity to join this impending move at an early entry point for a chance to earn great profits.

Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By John H. Anderson

Trading in the Forex market has to be one of the most interesting experiences out there, and if you don’t know what you are doing, you have probably joined a fraternity of more than several tens of thousands of new traders who are entering the market every year. It is not a traditional market, and in fact, it can be said that the Forex market is one of the most dynamic and most volatile markets that are out there. The solution is currency demo trading and this article will tell you why. All you have to do is look at the nature of the Forex market. The amount of data available is infinitely staggering and you never know what you need to use and when. The trading options are also plenty. Should you day trade? What is a pivot point? How do I measure price feeds and integers? What indices should I be looking at?

And these are just some of the market factors. While falling under the technical analysis umbrella is a league of pretty hefty information, we have not even begun to touch on fundamental analysis, which looks at the external factors that could affect market psychology. You have economic factors like global finance policies, behaviours of central banks (the market makers of the paper trade), governments, fiscal policies, inflation, budgets, GDPs!. Then you need to look at things like political factors like wars, unions, bilateral agreements, world trade, policies between transnational companies.

And this just scratches the surface of the Forex dilemma. Think we are done? No chance. You have to understand market movements and market psychology and the patters that Forex market might fall into when thrust into different situations. You have to know where investors will flock to when things are going bad and how to manoeuvre around the price points and look for the swing trade. You need to know what kind of system you will be employing to balance the amount of data that you will be getting and you must have a strategy on the table. You also need to understand that money management is a good thing, and how much to risk on your initial margin. You have to be familiar with the software given to you to manipulate the market and you need to be able to do things like read exchange rates and use a currency calculator effectively.

You have to understand when the market starts and where it shifts to, and that different regions of trading often has with it different sets of rules to trade with. The only way you are going to balance all of this and even understand that the Forex market is the one for you is to sign up for a currency demo trading which will put you into a simulated environment that mirrors the Forex market, its real world situations and all the foibles and difficulties you will be facing along the way. If you come out unscathed and ready for more, then you know that you are ready for the currency market.

About the Author

John H. Anderson is a specialist in Forex Trading with more than a decade of experience. He owns Trade-currency.org where he provides his Forex Trading Review! Click here to get your “Master Plan of The Forex Millionaires” FREE !

The U.S. Federal Open Market Committee concluded its monetary policy meeting by holding the U.S. interest rate steady at its record low level. The FOMC had cut the interest rate to a new target range of 0 percent to 0.25 percent on December 16th and today’s decision to keep the rate unchanged was widely expected by market forecasts.

The Fed statement accompanying the rate decision announced that it would further expand its balance sheet by spending more money in the mortgage market and by buying longer-term Treasury securities.

The statement said, “To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion.  Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.”

The interest rate also looks to be at its record low level for “an extended period” according to the FOMC as the economy continues to be weak through the near term.

You can read the full Fed statement here.

Forex Market – US Dollar falls sharply after rate announcement and monetary decision.

The U.S. dollar plunged today in forex trading following the interest rate decision and the accompanying monetary details. The dollar has fallen against the all of the major currencies for the day.

The euro is higher versus the dollar today as the EUR/USD has gained from today’s 1.3045 opening(00:00 GMT) to trading at approximately 1.3471 in the afternoon of the US trading session at 3:54pm EST according to currency data from Oanda.

The British pound has advanced today versus the American currency from the 1.4045 opening to trading at 1.4256 dollars per pound. The dollar has dropped against the Japanese yen today as the USD/JPY has declined from its 98.46 opening to trading at 96.18 yen per usd.

The USD has declined against the Swiss franc from the 1.1786 opening to trading at 1.1407. The Australian dollar has gained as the AUD/USD has jumped from 0.6622 to 0.6783 while the New Zealand dollar has also jumped from 0.5299 usd per nzd to trading at 0.5459 later today.

The dollar has declined against the Canadian dollar after opening at 1.2687 earlier today to trading later at 1.2463.

EUR/USD Chart – The Euro spiking today against the US Dollar following the US Fed decision.

By Art Gib

With the recent tanking of the American stock market and fiscal disasters happening around the world, many investors have turned to the Foreign Currency Exchange Market (Forex) as a way to make more money. Knowing how to use a candlestick chart as well as the standard bar and line charts can help traders do even better.

Candlestick charts have been used to make price predictions for at least 300 years. Candlestick analysis was used in Japan to predict the movements in the price of rice. It was one Munehisa Homma who, in the 1700’s, amassed a huge fortune using this method, and his astounding success led to an explosion in popularity for the candlestick.

In the context of Forex, candlesticks have the same features of being able to chart the open, close, high and lows of the currencies as the bar and line charts do. Many experienced traders agree, that the distinct advantage of using a candlestick chart is that it is much easier and clearer to read, especially at a glance.

The illustrative design of a candlestick with a wick at each end forms an easier representation of the data a trader wishes to understand. When your price at initiation exceeds the rate when you close, the candlestick appears to be solid. When the opposite is true, the image is called hollow, and the difference can be immediately apparent.

When you can easily gain an overall picture of the patterns in the unpredictability of the Forex markets, it draws your attention to noticing the difference between the opening and closing prices of your currency. The clearer your power of discernment and analysis, the more likely you will be to find more accurate ways to trade better and earn profits.

Because of the color coding of this method, detecting a certain color more than others can be an early warning of trouble. For instance, if the candlestick looks red to you, then it could be an indication that the currency’s trend means problems for you.

The upper wick is the highest price for that taper, and the bottom of the wick is the lowest price, while the middle red part is the differential. As these colors vary, you can get instant feedback on what the currency is doing without having to have specific numbers.

In order to succeed and make money in the Forex market, traders need to use every advantage and tool at their disposal in order to make the most accurate predictions possible. This ancient Japanese method should be added to your arsenal, and used often.

About the Author

For the very latest in Forex market news, or to check out a free demo Forex account, contact the experts at InterbankFX, LLC. Art Gib is a freelance writer.

By MoneyTec

What are the most simple things you studied or knew in technical analysis that you can use in FOREX trading?, of course most will answer this without even thinking about it, trend lines, resistance and support points and moving averages.

The more professional traders will think more about it and would answer “Yes, trend lines, resistance and support points and moving averages but who can use them alone successfully in trading FOREX?”.

Here it is my turn to answer, trend lines, resistance and support points and moving averages are the best simplest ways to achieve success trading FOREX and keep in the positive area always. Just to make it simple we need first to state the definition of these tools and later to know how to use and apply them to our chart in order to succeed and build a real FOREX fortune.

1. Trend Line : Trend line is the line that we can draw between two or more price tops or bottoms on a chart whatever was the type of the chart “linear, bars or candlesticks”, this line itself which could be an uptrend line which is being drawn between bottoms in a bullish market and it becomes a good support if the price goes south again or a downtrend line which is being drawn between price tops on the chart when market is down and it considered as a resistance when the price turns to up direction. Note: The line which touches more tops or bottoms is more stronger and the signal produced by it is more reliable.

2. Trend Channel : A trend channel is the space between two lines, the trend line and a parallel line to it which is always drawn on the opposite side of the trend line so it is drawn between tops in an up trend direction or through bottoms in a bearish price movement. The trend channel requires some conditions to give an accurate signal, the most important are: to be a wide channel, more wider more reliable and to last more longer.

3. Moving Average : Moving average is a mathematical average of set of prices we can say that a simple moving average (SMA) with value of 5 and applied to close is the sum of close prices for 5 moving bars on the chart divided to 5 (eg. the average of Friday is the sum of the previous 5 days “week” on a daily chart divided to 5, while Thursday’s average is the sum of the 5 days before divided to 5 and so, the moving average is the line which passes through these averages points”, the most important condition for its reliability is its value, more greater value more reliable moving average. Note: I suggest using more than one moving average, 2 or 3 are acceptable.

4. Support And Resistance Points : Support points are the price points were tested more than two times when price was going south and it could not pass it, support points are completely the opposite. These points are being used to measure the probability of price turning at mean points, these points can be decided by using “pivot points, fibonacci rates….etc.” Note : The more times price touches a point and turn its direction the more stronger it is. How can we apply this to chart and get money, I’ll summarize this in the following chart image, it explains itself, it’s a chart for GBP/JPY, signal return was 1000+ pips in 2 days: Three moving averages were going south, trend line was broken “price in green circle” a good support point “23.6% fibonacci was nearly broken”, strong signal, yes?

For the chart please visit moneytec.

The best resource for FOREX trading is MoneyTec. MoneyTec, – Active Traders Community Forum, Chat.

About the Author

Balayya is an active trader at  MoneyTec. MoneyTec, – Active Traders Community Forum, Chat. MoneyTec is an online trading community that promotes mature, intelligent & respectful discussion in a positive & safe environment for everyone.