Month: October 2010

By CountingPips.com

Important News Releases – October 28, 2010

00:00 Australia conference Board leading index
00:00 Japan interest rate decision
06:00 United Kingdom nationwide house prices
07:55 Eurozone German unemployment data
09:00 Eurozone business climate indicator
09:00 Eurozone consumer confidence
10:00 United Kingdom CBI sales data
12:30 United States weekly jobless claims
21:45 New Zealand trade balance
21:45 New Zealand building permits
23:01 United Kingdom GfK survey
23:30 Japan manufacturing PMI
23:30 Japan household spending
23:30 Japan unemployment rate

See full Calendar here

By James McKee – In a surprise development the growth of US GDP has outpaced that of England, in fact England’s GDP has dropped over 30% overall. Such stark differences certainly make the case for looking into the USD|GBP pair. The UK’s trouble is only beginning though because the country’s export demands are dwindling and the country’s austerity measures are truly having a large impact. In the US a strengthening stock market combined with an optimistic G20 summit could spell out some serious gains in the coming months.

In regard to the GBP investors should pay careful attention to the country’s construction sector as well because it is one of the few areas that seems to be making any gains whatsoever. The Chancellor of England stated his intent to cut public spending by 81 billion dollars overshadows the construction market, such cuts certainly seem like a joke in America but in England that is big money. If these cuts do take effect England could be looking at riots and social upheaval similar to what has been occurring in France and Greece.

In the end what separates the US from the UK in this instance is the simple fact that the US is focusing closely on any way they might be able to increase their exports and bring jobs back to America. President Obama has already said that he is going to be offering American corporations tax incentives to bring jobs back to America from overseas companies. Bringing jobs back to America and making an effort to balance export numbers with import numbers would greatly improve the US economy. This would in turn have a great effect on the USD, only time will tell if these measures are the best course of action but it is certainly better than no action at all.

The USD has been bearish and probably will be for the next couple months until Australia and other country’s GDP reports have been made public. Until this time it is probably best if we all give the USD a rather wide berth with regard to hasty trading, watch any interaction you have with this currency very carefully. Happy Trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

GBPUSD may be forming a cycle top at 1.5895 level on 4-hour chart. Another fall to re-test 1.5649 key support is expected later today, a break below this level will confirm the cycle top, then deeper decline could be seen to 1.5500-1.5550 area. Only break above 1.5649 level could suggest that lengthier correction of downtrend from 1.6105 is underway.

Daily Forex Forecast

DJIA Priced in Gold: What It Means for the Long-Term Trend

Of the many forward-looking
market indicators we at EWI employ,
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(and least discussed in the financial media) is the DJIA priced
in gold — “the real money,” as
EWI’s president Robert Prechter
calls it. What implications might the present position of Dow/gold
have for the long-term trend of the nominal Dow? In this video,
Elliott Wave International’s Steven Hochberg shows you several revealing
charts that answer this question.

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By Jared Levy, Editor, Smart Investing Daily, taipanpublishinggroup.com

Remember the old adage that it is much easier and cheaper to buy insurance when the weather is good as opposed to when a tornado is coming down your street?

Here’s a lesson I learned quickly in my early days as a trader:

Professionals almost always have a “hedge” or some form of protection just in case things go wrong. A hedge could be as simple as diversification or an option strategy like a covered call. Hedges can also be done with hard assets like real estate or numismatic coins.

“Hedge” funds are very actively managed and invest in all sorts of assets to try to provide exceptional returns for their investors and minimize volatility when things go south in the markets.

When I was a trader on the floor of the stock exchange, I almost NEVER took on a position without having a full or partial hedge to protect it.

But hedging isn’t just a tool for the pros. You could (and should!) be implementing this technique too, especially now. Here’s what you need to know…

An Easy Example

If I were long 1,000 shares of Apple and thought the market was looking a bit overbought, I might sell 300 shares of the SPY to lower my trading account’s overall “volatility.” In other words, if I am still bullish on Apple and don’t want to sell my Apple position, maybe for tax reasons, my short SPY position helps to buffer my account when the market sells off. I will still make money when it goes up.

Here is what a hedge looks like:

Long Apple Stock Alone:

Apple is down $1 — my account would be down $1,000 (1,000 shares)

Net result is a $1,000 loss on that day

Long Apple Stock With Short SPY Hedge:

Apple is down $1 — my Apple investment would be down $1,000.00 (1,000 shares)

Short SPY might be up $1 — my SPY investment would be up $300 (300 shares)

Net result is a $700 loss on that day (30% less of an overall loss)

See how a basic hedge works?

Of course, this is a simplified version and I don’t recommend you go out and short the SPY or sell a bunch of stock short unless you know what you’re doing. Remember that hedging may also slow down your profits, but you can remove hedges as you see fit.

Also remember that shorting stock can be an extremely risky proposition, but at least you can consider the method and in this case, you won’t have to short anything.

(Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the market for you with our easy-to-understand articles.)

Protect Your Long Stock Positions Now, Without Going Short or Selling Anything!

Since the dollar has been driving the majority of the rally in stocks and commodities (gold and silver included), chances are that a good portion of your investments are going to be sensitive to a change in direction in the dollar, or more specifically, a dollar rally.

Don’t worry; you don’t have to go and short the dollar in the Forex market!

There is an ETF called the PowerShares DB US Dollar Index Bullish (UUP:NYSE), which is a bullish dollar ETF (if the dollar is stronger against other major currencies, the UUP will rise in value). As you can see from the chart below, the UUP has been moving in direct contrast to the SPY. This makes for a good hedging vehicle.

So What Do You Do?

Consider allocating 4-8% of your higher-risk investments (stocks, etc.) into the UUP. If the market continues to rise, you may not make as much as you would if you did not have this investment. However, if the market begins to retreat from a dollar rally, you will not lose as much, as your UUP investment will grow.

For you option traders out there, you can also sell covered calls on your UUP position; this will help not only reduce your cost basis, but will help when the dollar remains weak!

These are some unique and slightly advanced tactics, but if you want to trade like a professional, you must learn to think like one!

P.S. As soon as I joined up with the Taipan Publishing Group, I quickly learned that another trader here shares a similar style to me. Adam Lass not only has a love of charting… but also frequently utilizes hedging techniques in his services. If you want some more extensive education on hedging like a pro, I suggest you follow Adam’s latest service. You can watch a short video right here, explaining all the details.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

About the Author

Jared Levy is Co-Editor of Smart Investing Daily, a free e-letter dedicated to guiding investors through the world of finance in order to make smart investing decisions. His passion is teaching the public how to successfully trade and invest while keeping risk low.

Jared has spent the past 15 years of his career in the finance and options industry, working as a retail money manager, a floor specialist for Fortune 1000 companies, and most recently a senior derivatives strategist. He was one of the Philadelphia Stock Exchange’s youngest-ever members to become a market maker on three major U.S. exchanges.

He has been featured in several industry publications and won an Emmy for his daily video “Trader Cast.” Jared serves as a CNBC Fast Money contributor and has appeared on Bloomberg, Fox Business, CNN Radio, Wall Street Journal radio and is regularly quoted by Reuters, The Wall Street Journal and Yahoo! Finance, among other publications.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar continued to find support during the Asia session after a slightly weaker than expected CPI report from Australia, and a newspaper article which said the FOMC would likely ease in “measured” fashion. EURUSD traded 1.3802-1.3878, USDJPY 81.32-81.76. Although the scope of any further Fed easing remains a significant unknown, consecutive days of decent US data have probably encouraged investors to scale back some short dollar positions. Comments by New York Fed President Dudley overnight may also have helped. While he supports further easing, he said, “I would put very little weight on what is priced in or not priced into the market&We make our decision on the way we think is the best way to achieve our mandate.” US equities closed flat while Treasury yields picked up, likely due to moderating expectations for further QE. The Conference Board consumer confidence index rose more than expected to 50.2 though there was some deterioration in the current assessment of the labor market. The S&P/Case Shiller home price index fell 0.3% m/m in August as prices have turned from rising in Q2 to falling in Q3 following the expiration of homebuyer tax credits. We maintain our view that the dollar could benefit from too much QE being priced in ahead of Nov 3. Durable goods and new home sales are due.
EUR

The euro was weaker on the broader dollar rally, despite claims by ECB Governing Council Member Quaden that the euro’s current value is not out of line with economic fundamentals. ECB Governing Council Member Weber said that Germany’s recovery is not yet fully self-sustaining.
The Irish government announced a target of EUR15 bn in budget savings over four years, almost double the figure announced in the December 2009 Stability Programme update but in line with a recent estimate by a government-sponsored think-tank. Details should be in the 4-year fiscal plan, which is scheduled for mid-November.
GBP

MPC Member Posen has reaffirmed his dovish stance, saying that overshooting the inflation target by a little over a percentage point does not mean inflation is high, and that looking at short-term data can miss the point.
UK preliminary Q3 GDP was reported +2.8% y/y, vs consensus for +2.4% and the Q2 reading of +1.7%. The improvement was largely driven by construction and the y/y figure was the highest since Q3 2007. The service sector’s contribution to growth remained limited. The better GDP and S&P’s decision to change the UK ratings outlook to stable from negative and affirm the AAA rating helped sterling gain versus the euro while cable came back down on the back of the broader dollar move.
Although the latest data decreases QE expectations, we stay cautious on sterling as recently announced spending cuts will likely weigh on domestic growth.
AUD

The AUD fell heavily after Q3 CPI missed expectations. The headline reading came in just short at +0.7% q/q (cons. +0.8%, prev. +0.6%). The core reading also missed, rising only +0.6% q/q (cons. +0.7%, prev. +0.5%). Consequently, our Australia economics team no longer expect the RBA will raise the cash rate next week. Instead, they now think the next 25bp hike will come in Feb. 2011.

TECHNICAL OUTLOOK
USDCHF 1.0329 next resistance.
EURUSD BULLISH Look for a break above 1.4159 for resumption of the bull trend. Support at 1.3637/1.3559 zone
USDJPY BEARISH While resistance at 82.52 holds, expect decline towards 79.75 with scope for 77.91 next.
GBPUSD BULLISH Recovery has scope for 1.6107. Support holds at 1.5606
USDCHF BEARISH Rise through 0.9918 breakout low exposes 1.0329. Support holds at 0.9463 ahead of 0.9225.
AUDUSD BULLISH Move above 1.0004 would expose 1.0166. Support defined at 0.9662 ahead of 0.9542 reaction low
USDCAD BEARISH As long as 1.0380 continues to cap the upside, expect decline towards 0.9981 and 0.9820 next.
EURCHF BULLISH Violation of 1.3665 leaves next resistance at 1.3924. Near-term support at 1.3456 ahead of 1.3265
EURGBP BULLISH Sudden decline through 0.8773 exposes 0.8689 and 0.8636 next. Resistance at 0.8885 yesterday’s high
EURJPY BULLISH Need a break below 111.56 to trigger bear trend. Upside capped at 115.68.

Forex 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.

By Yan Petters – The U.S. dollar entered a bullish trend yesterday for the first time in three months. This was due to speculation that the Federal Reserve will increase debt purchases. The market has reacted positively to the speculations, largely because they feel U.S. inflation will go up as a result. Economists agree that this is a necessary step by the Fed, and that it will have positive effects on the economy. This was enough the support the dollar yesterday.

However, this might have little effect on today’s trading, due to the large amount of significant economic releases from all over the world.

Here are today’s leading economic indicators:

• 12:30 GMT, U.S. Core Durable Goods – This report measures the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items, which tend to distort the underlying trend. If the end result will beat analyst’s expectations for a 0.4% rise, the dollar might rise further.
• 14:00 GMT, U.S. New Home Sales – This is one of the most significant housing sector indicators in the U.S. and thus tends to have a large impact on the market. Analysts have forecasted that 301,000 new homes were sold on September. Such a result will mark the best figures in 3 months, and is likely to support the dollar.
• 20:00 GMT, New Zealand Official Cash Rate- This is in fact New Zealand’s interest rates announcement for the following month. Current Expectations are that the Reserve Bank of New Zealand (RBNZ) will leave rates at 3.00%. However, if the RBNZ will surprise and decide to hike rates, the NZD might be boosted as a result.

Forex Market Analysis provided by ForexYard.

© 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.

Source: ForexYard

The U.S. dollar gained against most of its major rivals yesterday, for the first time in three days. The dollar’s recovery came due to speculations that the Federal Reserve will increase debt purchases. Investors believe that this step will spark inflation in the U.S. and will strengthen the greenback as a result. As for today, several news releases are expected from the U.S. and the euro-zone. This is likely to create large volatility in the market in what promises to be a very exciting trading day.

Economic News

USD – Dollar Strengthens On Speculations Fed Easing Will Accelerate Inflation

The U.S. dollar gained against most of the major currencies on Tuesday. The dollar strengthened against the euro for the first time in 3 days, and the EUR/USD fell as low as the 1.3825 level. The dollar strengthened against the Japanese yen as well, gaining about 100 pips in a single trading day.

The dollar rose against most of the major currencies on speculations that an increase in debt purchase by the Federal Reserve will spark inflation. The current sentiment in the market is that the Federal Reserve will manage to accelerate inflation, and as a result demand for the greenback has increased.

In addition, a positive U.S. Consumer Confidence release supported the dollar yesterday. Confidence among U.S. consumers rose in October from a seven-month low. The index increased to 50.2 from a revised 48.6 in September, beating expectations for 49.3. The recovering confidence came despite disappointing labor market figures which were recently released. This has increased optimism that the U.S. economy is recovering, and as a result boosted the dollar.

Looking ahead to today, a batch of data is expected from the U.S. economy. The most significant releases look to be the Durable Goods Orders figure and the New Home Sales report. Analysts have published positive forecasts for both reports. If the end results will indeed show positive signals, the dollar might strengthen for the second day in a row.

EUR – Euro Drops On All Fronts

The euro fell against all of the major currencies during yesterday’s trading session. The euro dropped about 140 pips against the U.S. dollar, and the EUR/USD reached the 1.3825 on Tuesday. The euro fell about 140 pips against the British pound as well, and the EUR/GBP has reached the 0.8730 level.

The currency dropped yesterday as investors became unwilling to boost the euro further due to the uncertainty of U.S. elections and Federal Reserve meetings. Analysts claim that the market feels unease with the EUR/USD trading at the 1.40 level, especially during such an uncertain period, and a technical correction was simply a measure of time. Another reason for the euro’s depreciation is speculations regarding an increase in debt purchases by the Federal Reserve, which may cause inflation to accelerate in the U.S. This has increased demand for the dollar, and as a result damped demand for its major rival, the euro. It currently seems that as long as the U.S. economy will continue to provide recovery signals, the euro might fall as a result.

As for today, several interesting economic indicators are scheduled from the euro-zone. Special attention should be given to the German Preliminary Consumer Price Index and the M3 Money Supply report. Both indicators are expected to provide positive figures. This will show that the euro-zone’s economic condition is improving as well, and may support their currency.

JPY – Yen Drops On Fears of another BOJ Intervention

The Japanese yen fell on Tuesday against most of its major counterparts. The yen dropped about 100 pips against the U.S. dollar, and the USD/JPY pair rose to the 81.60 level, from a 15-year low on Monday. The yen’s most notable fall came against the British pound, as it fell about 200 pips, and the GBP/JPY cross reached above the 129.00 level.

The yen fell yesterday due to comments made by Japanese officials, which some refer to as “verbal intervention”. The Japanese Vice Finance Minister Fumihiko Igarashi said yesterday that Japan cannot make an announcement in advance that it will act, but on the other hand, Japan can’t say that it won’t act either. It appears that despite public criticism made by the G20 regarding the Bank of Japan’s former intervention, investors still fear yet another intervention. For now this appears to be enough to halt the yen’s bullishness, and to weaken it from record highs.

Looking ahead to today, the most significant news release from the Japanese economy looks to be Japan’s Retails Sales report. This report measures the total value of sales at the retail level. Analysts have forecasted that retail sales in Japan rose by 3.3% in September. If the end result comes in as predicted, the yen might strengthen as a result.

Crude Oil – Crude Oil Remains Steady Around $82.50 a Barrel

Crude oil saw a very volatile trading session yesterday. Crude began yesterday’s trading with a bearish trend, and dropped to almost $81.80 a barrel. However the commodity managed to rebound later on and by the end of the day was trading above $82.80.

Crude oil began yesterday’s trading with a downtrend due to the dollar’s appreciation. The dollar gained against most of the major currencies, especially the euro, and as a result dollar dominated commodities, such as crude oil, were weakened. Crude corrected losses later on in the day following the U.S. Consumer Confidence report. The report showed that confidence among U.S. consumers rose in October from a seven month low, and boosted speculations that demand for energy will increase in the U.S.

As for today, traders are advised to follow the major economic releases, especially from the U.S. as these are likely to have a large impact on oil trading. Traders should also follow the U.S. Crude Oil Inventories release, which is scheduled for 14:30 GMT, as this report usually has an instant impact on the market.

Technical News

EUR/USD

The EUR/USD pair dropped sharply yesterday, after peaking at the 1.4080 level on Monday. At the moment, the Slow Stochastic and the MACD on the 4-hour chart continue to provide bearish indications, suggesting that the downward movement will continue today.

GBP/USD

The cable saw a bullish correction yesterday, and has reached as high as the 1.5895 level. However, the RSI on the 4-hour chart has now dropped below the 70-line, indicating that a bearish move may be impending. Going short with tight stops might be the preferable strategy today.

USD/JPY

The USD/JPY pair gained about 150 pips over the past couple of days, and is currently trading near the 81.70 level. Currently, the pair is testing the 82.00 resistance level. If it manages to breach it, the pair may rise towards the 83.00 level. Otherwise it may drop back towards the 80.80 level.

USD/CHF

There is a very distinct bullish channel formed on the 4-hour chart, and the pair is now floating at the middle of it. In addition, the MACD on the daily chart continues to point up, suggesting that the uptrend has more steam in it. Going long might be the right choice today.

The Wild Card

Crude Oil

Crude oil trading was very still over the past three days, and has remained around $82.20 a barrel. However, as a bearish cross takes place on the daily chart’s Slow Stochastic, and the 4-hour chart’s RSI has dropped below the 70-line, a bearish move appears to be imminent. This might be a good opportunity for forex traders to catch the trend at its beginning.

Forex Market Analysis provided by ForexYard.

© 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.

USD/JPY

Daily graph: http://www.real-forex.com/charts-daily/271010/JPY_DAILY_271010.JPG

For quite a long period, and until the 25-10-2010 session, the evolution of the pair was clearly downward. Two sessions ago, the support of 80.86 was tested. Following that little and short breach, the pair started to increase again during last session, creating an opportunity to go “Long”.

The test of the support, in addition to the new uptrend, created the increasing envelope template, indicator of future reversal, which should be confirmed by the identification of an increasing configuration on 1 H graph.

Potential trade

1 H graph: http://www.real-forex.com/charts-daily/271010/JPY_1H_271010.JPG

The required configuration should be created once the pair will cross the resistance of 81.64 on 1H graph. In such a case, entering the following transaction might be very profitable:

• “limit” order on “Long” position 10 pips above the mentioned resistance: 81.74
• “Stop Loss” on the last “Low” occurred, which is 81.18.
• “Take Profit” on the next resistance which is 81.91.

NZD/USD

Daily graph: http://www.real-forex.com/charts-daily/271010/NZD_DAILY_271010.JPG

For several sessions already, the pair is navigating between 0.7550 and 0.7425. In the session of 25-10-2010 the pair reached the 0.7560 USD and started to go down in the following session. The way the pair will behave once the support of 0.7425 reached will determine the best strategy.

If a test occurs (vain breach of the Support), going “Long” might have positive consequences.

If the support is crossed and broken downward, going “Short” after a small technical correction could be more adapted to the situation.

Keep following the evolution of the pair and act in function

Have a profitable day!

Real-Forex team.

By CountingPips.com

Important News Releases – October 27, 2010

00:30 Australia consumer price index
01:00 Eurozone German consumer price index
02:00 New Zealand business confidence
05:00 Japan small business confidence
08:00 Eurozone money supply
12:30 United States durable goods orders
12:30 United States durable goods orders minus transportation
14:00 United States new-home sales
14:30 United States crude oil inventories
20:00 New Zealand interest rate decision
23:50 Japan retail trade

See full Calendar here