InvestMacro FX

By Dan Eduard – Sweden continues to be one of the major success stories in European economics. Recently, comments from the Swedish Central Bank signaled a possible rise in interest rates in the near future. This led to fairly significant gains for the krona, particularly against the euro and US dollar. Over the last several days, the EUR/SEK pair has dropped over 1200 pips, and is currently trading around the 9.2450 level. The USD/SEK had dropped over 1000 pips late last week, but the pair managed to stage an upward rally when markets opened on Sunday night. The trend for USD/SEK is still very much bearish, and analysts do not foresee a significant upward correction in the near future.

Turning to the other Scandinavian currencies, both the NOK and DKK have not been able to match the success of its Swedish counterpart. Since markets opened for the week, the Norwegian krone has lost almost 400 pips to the euro and close to 1000 pips against the dollar. While the Danish krone has been consistently gaining against the greenback in recent months, it has started off the week loosing over 600 pips against the USD. While the EUR/DKK pair has moved relatively little this week, the pair seems locked in an upward trend which is unlikely to break in the near future.

This week, traders will want to pay attention to several economic indicators out of the US that are likely to influence the Scandinavian currencies. US Fed Chairman Bernanke is scheduled to give a speech on Wednesday and Friday. His speeches typically give a clear indication of the direction the US economy is heading and consistently lead to market volatility. Any news that the US is moving to implement quantitative easing measures in order to stave off another recession, is likely to bring the dollar down against the Scandinavian currencies.

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 fell against the EUR on Tuesday after minutes from the U.S. Federal Reserve’s latest meeting confirmed that the U.S. central bank would likely soon inject the markets with cash to support the fledgling economy

Economic News

USD – USD Down Following FOMC Meeting Minutes

The U.S. dollar fell against most of its major currency rivals yesterday on news that policy makers at the last meeting of the Federal Reserve suggested they are closer to increasing money supply to revive a struggling U.S. economy. By yesterday’s close, the USD fell against the EUR pushing the oft-traded currency pair to 1.3940. The dollar experienced similar behavior against the JPY and closed at 81.80.

Markets reversed course after meeting minutes from the Federal Open Market Committee showed that officials discussed several ways to aid the economy including buying additional longer-term Treasury securities. Fed policymakers also discussed how to nudge the public into expecting higher levels of inflation in the future, which would inflate asset prices, especially commodities and stocks.

Looking ahead to today, the most important economic indicator scheduled to be released from the U.S. is the Import Prices at 12:30 GMT. Traders will be paying close attention to today’s announcement as a stronger than expected result may boost the USD in the short-term. Traders are also advised to follow Fed Chairman Bernanke’s speech at around 20:10 GMT. Traders are advised to watch closely, as this is likely to set the pace of the dollar for the rest of the week.

EUR – EUR Benefits from USD and GBP Bearishness

The EUR strengthened against most of its major counterparts yesterday, further demonstrating that for the time being, that this is the currency that traders can rely on to provide them with steady profits. The 16-nation currency extended gains versus the British pound on Tuesday, going as high as 0.8810 amid a broad sell-off of the GBP. The EUR experienced similar behavior against the USD and closed at 1.3940.

Sterling also fell broadly against the majors, after UK trade activity declined markedly in August, which added to concerns over the deceleration of the economy in the third quarter. Figures released by National Statistics showed total August exports fell 2.1% for the month while imports fell 2.7%. The figures caused the trade deficit to go up, adding to the concerns regarding the British economic recovery.

Today, there is plenty of economic news coming out of both Britain and the euro-zone that will likely determine the GBP and EUR levels for the rest of the week. From the euro-zone, there is the Industrial Production figure at 09:00 GMT. From Britain, the most important news will be the Claimant Count Change and Average Earning Index figures at 08:30 GMT. Traders are advised to watch closely, as the indicators are likely to generate market activity.

JPY – JPY Sees Mixed Results versus the Majors

The yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged vs. the EUR yesterday and closed its trading session at around the 113.80 level. The JPY saw bullishness against the GBP as it jumped around 100 pips and closed at 1.2930.

Traders today have very little fundamental news coming out of Japan. The only indicator being released is the CGPI report. Analysts forecast the figure to be unchanged from its previous reading. This indicator typically generates little volatility, and traders are advised to follow the news out of the US and euro-zone. The results of today’s main economic indicators will likely be the driving force for yen values.

Crude Oil – Crude Oil Prices Hold Near $82

Crude oil fell below $82 a barrel on speculation that U.S. inventories rose to a three-month high last week and signs that OPEC will leave production targets unchanged. Crude began dropping two days before the U.S. Energy Department’s report, which is forecasted to show a gain of 1.4 million barrels to 362.3 million.

OPEC said in its monthly report on Tuesday there was a broad consensus that oil prices around their current range have helped support economic recovery and promote industry investment. While crude prices have dropped over the last two days, an upward correction took place in overnight trading. This appears to be largely due to the dropping value in the dollar. Analysts are forecasting that for now, as long as the dollar remains low, oil has the potential to go up.

Technical News

EUR/USD

The pair has seen much bullish behavior in the past several weeks. However, the technical data indicates that this trend may reverse soon. For example, the daily chart’s RSI signals that a bearish move is imminent. Going short with tight stops might be a wise choice today.

GBP/USD

The daily chart is showing mixed signals with its RSI fluctuating in 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 near future. Going long with tight stops may turn out to bring big profits today.

USD/JPY

The cross has experienced much bearishness in the past few weeks, and currently stands at the 81.80 level. There is evidence in the daily chart’s oscillators, including the RSI, indicating a possible bullish correction today. Going long with tight stops may turn out to bring big profits today.

USD/CHF

The price of this pair appears to be floating in oversold territory on the daily chart’s RSI, indicating an upward correction may be imminent. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops may be preferable.

The Wild Card

Silver

Silver prices rose significantly in the last few weeks and peaked at $23.50 an ounce. However, the daily charts’ RSI is floating in overbought territory suggesting that the recent upward trend is losing 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. Going short with tight stops seems like the preferred strategy.

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.

AUD/USD

Daily graph: http://www.real-forex.com/charts-daily/131010/AUD_DAILY_131010.JPG

One hour graph: http://www.real-forex.com/charts-daily/131010/AUD_1H_131010.JPG

A few sessions ago, the pair reached the resistance of 0.9918, stopped and started to decrease. Last session’s hammer (professional name for a specific candle) suggests the end of the correction process occurred during the last sessions.

About 33% of the movement has been corrected when the pair reached the support level 0.9769. Once crossed, a new uptrend started. This new trend may create an opportunity to trade “Long”.

Potential trade

On the one-hour graph, an ascending configuration might be identified once the pair will cross the resistance level of 0.9877.

• “Limit” Order on “Long” position 10 pips above the resistance, meaning 0.9887.
• “Stop Loss” on the last low occurred: 0.9829

USD/CAD

Weekly graph: http://www.real-forex.com/charts-daily/131010/CAD_WEEKLY_1301010.JPG

For the last months, the pair didn’t follow any specific trend. Only a weekly graph is able to show the different levels where the pair might be stopped (resistances or supports). Currently, we are about 170 pips far from the next support level, 0.9928.

Once the support reached, we anticipate reversing trend which may create an opportunity for a “Long”. The trade should last until the upper side of the channel.

Have a profitable day!

Real-Forex team.

By Karren Pollard – For most stock traders, the first difference they will notice between the forex market and equities is timeframe. Although the hours of stock trading have been expanding in recent years, they are still subject to a normal business work day and will be closed on banking holidays and weekends. The forex market is still the only one which can truly be viewed as 24-hour.

The lack of an exchange like a NYSE is probably the next big thing that stands out as being different in forex. The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market. While it is true that there is exchange-based forex trading in the form of futures, the primary trading takes place over-the-counter via the spot market or in the form of online trading.

The lack of an exchange also means a difference in how a transaction is processed. In the stock market an order is submitted to a broker who facilitates the trade with another broker/dealer or through an exchange. In spot forex much of the trading done by individuals is actually executed directly with their broker/dealer. That means the forex broker takes the other side of the trade. This is not always the case, but a very common approach.

Margin trading is a familiar term to those used to trading in futures. Margin accounts are not limited to equities – they are also used by currency traders in the forex market. A major difference between the forex and equities markets is the number of traded instruments: the forex market has very few compared to the thousands found in the equities market. This makes currency trading easier to follow because rather than having to cherry-pick between 10,000 stocks to find the best value.

Although these are just a few of the differences between the traditional stock market and the fast-paced forex market, investment of any type should be considered carefully weighing the benefits and risks of each type of transaction before deciding the best option for you.

About the Author

This article was provided by Franklin Global Capital LLC, NFA member (#0391263), a Spot Forex management and investment research firm. They specialize in providing investors alternative market opportunities to diversify portfolio risk. For more information about all of their services, please visit their new website at: http://www.franklinglobalcapital.com

By Elliott Wave International

Over the weekend, I went shopping for Halloween decorations. In the store, one of the clerks was wearing a white T-shirt with a puff-paint rendering of the Dow Jones Industrial Average. The line representing prices was the color of blood red, dripping and splashed across the front. When I asked him what it was, he said “the October Curse.”

‘Tis the season of stock market adages; those age-old Wall Street platitudes that claim stock prices perform a certain way during certain months of the year. The problem is, such correlations are hardly a guarantee.

Take October, for example. Yes, this month has marked some of the darkest periods in stock market history: 1929, 1987 and on. Historically, however, it’s not the worst performing month. For example, the supposed “Halloween Jinx” failed to bring a deathly pallor to stocks in 2008, as the final days of that year’s October saw the biggest weekly gain since 1974.

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Then there are these familiar saws of seasonal wisdom:

“As Goes The First Week of January, So Goes The Month”– In the first week of January 2010, the stock market enjoyed a powerful winning streak. Yet, by the end of the month, prices were back in the red, circling the drain of a two-month low.

“Sell In May And Go Away” — And don’t come back ’till St. Leger’s Day (September). If investors heeded this wisdom this year, they would have missed one of the strongest uptrends in stocks of the entire year from July to September.

“September Curse” — If you think October is supposed to be bad, September is widely assumed to take the financial killing cake. Yet this year, U.S. stocks enjoyed their strongest September in 71 years!

Bottom line: Don’t “buy” your trading strategy before the trend actually arrives. The choice comes down to old adages, or objective analysis. Pick the latter.

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By Chris Donnell – Trading Forex is an exciting activity. No where is there more promise of immediate fortune and unlimited potential than in the Forex market. The problem is that the vast and dynamic nature of Forex is the very thing that appeals so readily to the greed inherent in human beings and tends to lead unwitting traders into behavior unbecoming of a professional. Professionalism is just the thing that often escapes part-time amateur traders. There is no truer statement than Forex trading should be treated like a business. Furthermore, a business can hardly hope for success if it is not planned and managed in a professional manner. You’re Lemonade Stand couldn’t possibly expect to succeed if you did not control costs, operate properly and work efficiently. The same goes for Forex trading. Due to the informal nature of Forex trading, with most traders sitting at home, alone, making decisions with little or no scrutiny and/or open consideration nor contribution from others, often people are risking their personal fortunes with little regard for structured action or set parameters on their behavior. This is the fastest way to go broke trading Forex.

Often squeezing trading in between dinner, washing dishes or babysitting the kids, traders set themselves up for defeat because they don’t allocate adequate resources (in addition to money) to their efforts. Nearly as often, many traders take short cuts, base their decisions on unqualified opinions from others, random guesses or even treating the Forex like their own personal ATM or home casino. If you lay down a bet on the roulette table, black or red, you may very well win many times in a row. You could even gain a small fortune if the stars ‘fell in alignment’. However, trading Forex we are not leaving our hard-earned personal finances entirely up to chance at all. On the contrary, like scientists, we should evaluate the conditions, our tools and information so thoroughly that, while price is a beast we cannot nor will ever control, every single action and possible re-action is entirely mechanical. There is no place for fragile human emotion in the world of spot currency trading.

No matter what method you use to trade you should be completely familiar with every aspect of the strategy you employ. Approaching your trades in a cold robotic way is most ideal. Furthermore, you mustn’t let your human desire for personal fulfillment, achievement, accolades, or just plain entertainment have any part in your system. It is not uncommon for traders to want so bad to be correct about their trading decisions they will risk an exorbitant amount of capital just so that they can end the day saying “I made money”. Or equally loathsome, some traders will take on unsuitable risk in order to maintain a winning streak. These features are the product of vanity and ego which have no place in an investment of any kind. Just like one invests in mutual funds, bonds or buys stock in GE for example, they are merely deciding that prevailing factors are in their favor and the rest is left up to market forces which they duly forget about until 1, 3, 5, or dozens of years later when they must redeem their capital (or what is left of it) due to a pre-subscribed rule or condition (i.e., their retirement, et al). Just like Forex traders set a stop loss and a take profit, average investors set their limits, goals and settings as well.

Some of the best advice to new traders could simply be: treat your Forex trading like a business. You would never act in an irrational way to get new clients at your day job, or undermine the company’s budget just so you could claim success on a daily project, or even risk losing your job to soothe your own psychology. Yet, people do similar things in Forex all the time. It is that critical, without your job you may very well not be able to survive. Likewise, if you want to make an investment you usually go seek out an investment ‘professional’ typically equipped with MBAs, CFAs and licenses out their ears. If you squander your investment income you won’t have a retirement future. It is that simple. Take it seriously.

In life, everything comes with a price. Aside from winning the lottery, everything we do and everything we achieve is typically earned in some way or another. That is why we must treat Forex trading as a magnificent yet constantly evolving and advancing obsession. We will never totally master it, we can only hope to acquire the skills sufficient enough to succeed at it. And that effort, time, research and so on is the cost of that success. There are no easy paths nor shortcuts. If you get lucky and buy an EA (Forex robot) that actually works, then you may be fortunate for a time. But, in order to succeed completely and in the long run you will need to treat trading as no less than a career. With a career come significant responsibilities. Respect your career and live up to its responsibilities.

About the Author

Chris Donnell is CEO of TopGun Software, LLC and is both an active trader and developer of the most profitable Forex Trading System available to retail traders and free to traders at FXCM or FXCM.

By Sara Nunnally, Editor, Smart Investing Daily, TaipanPublishingGroup.com

Earlier this week, the Associated Press ran two very different stories about the Federal Reserve. In fact, these two stories ran side-by-side on Monday evening about two hours apart. Here are their titles:

“Fed boss: More securities buys could help economy”

“Fed boss: Threat from deficits ‘real and growing'”

Federal Reserve Chairman Ben Bernanke warns that if we can’t get our budget deficit under control, we’ll endanger our economy down the road. We’ll see higher interest rates and higher taxes, which will cause the American consumer to stop spending.

But while Bernanke is calling for reining in deficits, he’s also calling for an increase in deficits.

Here’s why… During the recession, the Federal Reserve purchased some $1.7 trillion in mortgage securities, corporate debt and government bonds. Now Bernanke is hinting at buying more government debt.

While buying bonds certainly helps the government pay for things in the near term, those bonds will eventually have to be paid back — with interest. It’s just a way of deferring debt for a period of time.

It therefore increases the amount of debt the government will have to pay back.

What that means for your portfolio is clear… It’s just a matter of timing.

Prepare for Inflation

There’s no doubt that debt has a huge impact on an economy, and on individual investors, particularly with the threat of inflation. Inflation is, in its simplest form, an excess of “dollars.” Too much money for too few goods produced means the value of a dollar is diminished.

Inflation eats away at your portfolio like a silent killer… even at low levels. A small gain in your retirement portfolio could be eroding as government debt continues to rise.

When the U.S. went into a recession in 2007, the government took on an unprecedented role in the economy. It increased spending drastically to make up for the falling private sector. It sold billions of dollars in Treasury bonds and flipped the switch on the printing press.

The U.S. government was printing money like mad… Anything to staunch the flow of the bleeding economy.

But this created an “oversupply” of U.S. dollars, and to top it off, the increase in the debt burden through issuing the Treasury bonds leaves less money to support the economy.

We have a massive mound of debt… about $8.5 trillion, or 58% of our entire economy. But some estimates put the numbers much higher. If you take away the Social Security trust fund surplus, you’ve got a figure of about $13 trillion, or 90% of the economy.

This makes a strong case for inflation down the road.

One of the ways to prepare your portfolio for inflation is to buy gold. We talked about gold on Monday, wondering if prices were too hot for investors. Turns out they aren’t, and futures for December topped $1,360 yesterday.

I said I like gold at nearly any price when you’re hedging your portfolio against inflation, and with the Fed talking about buying more government debt, I still like it.

(Want to get my articles on gold and other investing topic? Sign up for Smart Investing Daily and I’ll simplify the market with my easy-to-understand investment advice.)

Preparing for a Lower Dollar

But the heavy inflation that comes from such a large burden of debt might not get here for a while. Perhaps years… We will, however, see the dollar fall in the meantime.

On Monday, I showed you a chart of the U.S. Dollar Index, which compares the value of the dollar to a basket of other major currencies. Since mid-June the dollar has fallen from a reading of 89 to below 79 — a drop of more than 11%.

Now, in the currency market, when one currency goes down, another goes up. Everything is relative. When the U.S. dollar falls, a number of other currencies go up…

Take a look at the Australian dollar:

View Larger Chart

I’ve liked the Australian dollar for a long time. We even included it in the Ultra-Resource Basket CD that we constructed with EverBank a couple years ago.

Australia was the first to raise rates after the global financial crisis, and it’s incredibly resource-rich with gold, coal, uranium, natural gas and iron. Its proximity to China is also a benefit, as Australia has surely cashed in on China’s growth and near-insatiable need for commodities.

The Australian dollar could be a good way to play growing deficits now, before the true effects of full-blown inflation hit the greenback.

This chart is a one-year view of the CurrencyShares Australian Dollar Trust (FXA:NYSE). This trust tracks the movements of the Australian dollar by holding this currency in a deposit account and distributing interest to shareholders after all fees have been paid.

You could use this ETF and other currency ETFs to ride the fluctuations in the dollar.

Or you could go to the source, and there are a couple of ways to do that. You can buy Australian dollars, or futures on Australian dollars. It’s the sixth most-traded currency, and the Australian and U.S. dollar pair is the fourth most-traded currency pair.

You could also invest in EverBank’s Ultra-Resource Basket CD, which holds the Aussie dollar, along with a handful of other currencies.

Or you could open an EverBank account for just the Australian dollar, and reap the direct rewards from a rising currency.

All of these ideas, from ETFs to Forex, accounts come with risk, so talk to your broker about which method is best for you and your portfolio.

While holding gold in the long term is the purest way to protect your portfolio from inflation, playing currencies is an effective way to manage fluctuations in the dollar during economic turmoil.

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

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

By Rita Ruvinski – At the beginning of the week, USD/JPY still struggled with 83.16, but after the pair fell ‎below the previous 15 year low of 82.82. Dollar/Yen continued the fall and went as low ‎as 81.72 before closing at 81.90. ‎
However as seen is the USD/JPY chart below the pair maybe heading for a bullish ‎reversal. Technical ‎indicators show there are good chances the instrument will increase ‎further with a potential ‎price of $82.75 in sight. ‎

The chart below is the USD/JPY daily chart: The technical indicators used are the Slow ‎Stochastic, Relative Strength Index (RSI) and Bollinger Bands. ‎

Point 1: The Bollinger Bands have already begun to widen, indicating that a price shift is ‎likely to take place. As we can see, the price ticks are currently right along the lower band, ‎telling us that the price shift is likely to be upward.‎
Point 2: The Slow Stochastic indicates a bullish cross, signaling that the next move may ‎be in a downward direction.‎
‎• Point 3: The RSI signals that the price of this pair currently floats in the over-sold ‎territory, indicating an upward pressure.‎

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.

By Natalie R. – U.K. inflation exceeded the government’s 3% limit for a seventh month in September according to a CPI report released today. The rate is well above the 2% goal set by the Bank of England, adding to the debate over the future of the monetary policy as the country is attempting to recover from the recession.

The Central Bank has been debating expanding its 200 billion-pound ($318 billion) stimulus plan to stimulate growth as the government is expected to begin the drastic spending cuts in order to tackle the country’s enormous debt. The concern is that such drastic cuts will suppress consumer spending and therefore cause a double dip. Adding to this concern was the release of a highly disappointing Halifax HPI last Thursday, which showed that housing prices fell to a record low. However, with inflation already above comfortable levels, sanctioning more quantitative easing, namely pumping more money in to the economy, may prove difficult. Expanding the monetary easing programs will ultimately result in even higher inflation.

There is currently a split in the BOE regarding the future course of action. Bank of England officials are split over whether to raise interest rates to curb inflation or add stimulus to avert the threat of another slump. It seems unlikely, however, that any hikes in the interest rates will occur short term. With economic fundamentals in the U.K proving to be relatively weak, raising interest rates, and thus limiting liquidity in the markets will stifle consumer spending and ultimately the economic recovery. Consumer spending accounts for the bulk of the country’s economic activity.

This debate is particularly interesting ahead of Friday’s Inflation Report Hearing where the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee. With the necessity of spending cuts on the one hand, and uncomfortable levels of inflation on the other, it will be interesting to see how the BOE will decide to act. In any case, an exciting trading week is expected for the Pound.

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.