InvestMacro FX

This morning’s ZEW economic sentiment reports out of Germany and the broader euro zone came in below expectations, but so far the news has had little effect on the value of the EUR.

Traders had turned their attention on the interest rate differential between the euro zone and the United States yesterday following the publication of solid CPI figures in Europe and soft investment data in the US. The result had been for the EUR/USD to move back into a bullish posture from last week’s downturn.

So far this week, the EUR/USD pair has shifted from its recent low of 1.4050 to its current price of 1.4205. The EUR/GBP has witnessed similar behavior, with the pair shifting back into a minor bullish uptick from 0.8670 to its current value near 0.8740.

The ZEW reports are leading indicators of economic health. They are based on a diffusion index of surveyed analysts and investors across the region. The number released in the report is a gauge of consumer sentiment. Above 0.0 represents optimism, below that mark represents pessimism.

While the report showed continuation of optimism in Germany and the euro zone, the number is rapidly approaching the zero mark. Debt woes from Greece and Portugal have been striking front page headlines these past several weeks and many investors have shown a tendency to move into the safer USD and Swiss franc (CHF) as a hedge against uncertainty.

The EUR does not appear to have been affected too strongly by this shift in sentiment, though the release of afternoon data from the United States could be enough. Forex traders will definitely want to be active on their trading platforms today.

Read more forex trading news on our forex blog.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The euro zone published its consumer price index (CPI) reports yesterday which showed solid, stable inflationary growth, year-on-year. The core data also showed better growth than was expected. This data generated a heightened intrigue in the comparative interest rates between America and Europe as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday’s session, driving the EUR higher versus the USD.

Economic News

USD – US Dollar Slides After Day of Soft Data

The US dollar opened this week moderately stronger versus the euro yesterday as traders continued last week’s shift into safer assets. As of late trading yesterday, however, the EUR/USD pair seems to have shifted back into a bullish posture as traders return to interest rate differentials between the Atlantic rivals. After briefly touching 1.4050, the pair found support and is currently moving towards 1.4175.

Soft economic data out of the American economy yesterday had many investors seeking market direction elsewhere. TIC long-term purchases for April came in much lower than expectations and the NAHB housing indicator was in just below forecasts. The Empire State manufacturing index also fell to 11.9 from last month’s 21.7. Alternately, CPI figures from the euro zone showed stable growth. This data together helped turn many investors’ attention back towards the interest rate differentials in the US and Europe, which caused a shift away from the greenback.

As for today, the euro zone will be absent as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. The US, on the other hand, is scheduled to release several housing and industrial reports. If forex traders witness another day of soft data, the weakness of the USD in recent trading may become exacerbated as more traders shift into the higher yielding euro.

EUR – EUR Gains as Investors Turn Gaze to Interest Rate Differentials

The euro rose versus the US dollar yesterday during New York trading hours, with the pair’s price reaching near 1.4160 as of this morning. Soft data out of the American economy yesterday forced a reevaluation by many investors who went long on the USD following the European Central Bank’s (ECB) cloudy rate statement two weeks back.

Yesterday’s significantly weaker fundamentals out of the American economy were only one part of the story, however. The euro zone published its consumer price index (CPI) inflationary reports which showed solid, stable growth, year-on-year. The core data also showed better growth than was expected. This combination of data from these two economic rivals generated a heightened intrigue in the comparative interest rates as risk sentiment got shifted. The result was for the interest rate bulls to outpace the debt woe bears in yesterday’s session, driving the EUR higher versus the USD.

As for today, the euro zone will be absent from the calendar as its ministers congregate for another meeting of the Economic and Financial Affairs Council (ECOFIN) in order to discuss the region’s finances. Hawkish statements could hint towards a tightening monetary policy in the near future, but traders should be wary of a return to risk aversion should the meeting produce less-than-stellar commentary. In the latter case, the EUR could see its bearishness return, especially since it has yet to outpace the strength of its regional rival, the Swiss franc (CHF).

JPY – JPY Returns to Uncertain Growth as Consolidation Patterns Form

The Japanese yen (JPY) has been trading with somewhat mixed results since early last week, with gains made against several currencies and losses elsewhere. After a week of ups and downs, the Japanese yen appears set to make gains today as investors seek safety from recent turmoil and as the Bank of Japan (BOJ) published several reports yesterday morning which could help the island economy make gains. The dominant stance of risk aversion overarching last week’s trading environment has many traders moving towards the yen against the higher yielding currencies like the euro and British pound.

The USD/JPY was seen trading somewhat higher this morning, finding support near 80.70 and moving up towards 80.90 at today’s opening Asian sessions. Japan’s core machinery orders report was published this morning and revealed a modest uptick which may help the island currency in today’s market hours. Market news released out of the US today will likely be the driving force behind JPY values, though, and traders would be wise to watch the US industrial production figure since it has a strong correlation with Japanese growth.

Crude Oil – Crude Oil Prices Surprisingly Fall on Sudden EUR Surge

Oil prices fell below $98 a barrel this morning, surprisingly after the euro took off against its primary rival, the US dollar. US oil stockpiles rose over 3 million barrels for the second week in a row last week, which had harangued the price of oil in last week’s later sessions. The sudden plummeting value of the dollar had many analysts assuming that oil would find support in this morning’s trading, but that seems to not be the case.

With this morning’s downward movement there is a chance that yesterday’s decision point was reached today and oil bears are winning out. Whether oil traders decide to lift oil prices back from this recent plunge is yet to be determined, especially considering the strangeness of the inverse relationship to the USD yesterday. The greenback’s decline may have a delayed effect today and oil traders may see the price bouncing back if that is the case.

Technical News

EUR/USD

The EUR/USD cross has experienced a bearish trend for the past week. However, it seems that this trend may be coming to an end. The RSI of the daily chart shows the pair floating in the over-sold territory, indicating that an upward correction will happen anytime soon. Going long with tight stops might be a wise choice.

GBP/USD

The hourly 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.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The USD/CHF has gone increasingly bearish yesterday, and currently stands at the 0.8845 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 2-hour chart’s RSI signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

The Wild Card

Crude oil

Crude oil prices have dropped significantly yesterday and peaked at $97.24 a barrel. However, on the daily chart RSI is floating in an oversold territory suggests that a bullish correction is impending. This might be a great opportunity for forex traders to enter the trend at a very early stage.

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.

Philex Mining Corporation (PX) was one of the main guys in today’s top gainers list with a significant amount of volume traded along with Lepanto Consolidated Mining Corporation (LC) and Manila Mining Corporation (MA). These 3 companies were suspended in the Philippine Stock Exchange yesterday because of the agreement for the exploration and joint development of the “Kalayaan” mining site but resumed trading a while ago. The PX stocks dipped by more than 3% in the first few minutes right after the suspension was lifted when weak hands exited. Fortunately, as the market came to an end, it recovered and even rose by 6.5% to PHP19.72.

Chart-wise, PX had awesome technical setups when it was still around PHP14.00 like the 7-month symmetrical triangle when it was still consolidating (kindly check here). At the same time, this happens to be the “handle” of the 1-year cup and handle pattern. Within a month, it flew. It formed a bullish pennant (kindly check here) then broke out once more all the way to its current price of PHP19.72. Since my PHP19.00 target price for the symmetrical triangle has been achieved earlier, our next target could be PHP23.00 which I got by adding the size of the “cup” to the breakout point. But before it reaches that level, it first needs to clear out the PHP20.00 all-time high where some selling pressure could be experienced. On the downside, the immediate support could be the 1-month uptrend. If that breaks, the next support could be the 7-month uptrend.

More on LaidTrades.com …

Looking over the fundamentals tells the story of an ascendant Scandinavia in the currency world. The Swedish krona (SEK) and Norwegian krone (NOK) are among the globe’s highest yielding currencies from a fundamental standpoint. But why then does the technical data read differently? Are we witnessing the wind being taken out of the sails of the Norwegian and Swedish kroner?

Against the US dollar, both the SEK and NOK have pushed strongly bullish to the point of record highs. Several analyses herald the Swedish krona in particular as being among the top performers in the forex market since early 2010. The Riksbank is even on schedule to lift its short-term lending rate at each policy meeting this year.

Norges Bank is also considering monetary policy tightening in 2011, though it has been far more reluctant than its Swedish neighbor in doing so. Growth in Norway has been only mildly limited in comparison but by no means insufficient for such a move by its central bank.

The linkage of the NOK to Crude Oil prices may also have something to do with recent stagnation in the Scandinavian currency as oil has been trading flat within a tight range recently.

Technical Data Supporting Reversal?

Regardless of this fundamental data supporting a strengthening SEK and NOK, on the technical charts what we see is a consolidation on both pairs against the USD and a heavy push-back by the greenback.

According to reports from several currency strategists, a material base may be forming just above the 6.20 level on the USD/SEK, with a confirmation of a trend reversal potentially found slightly above 6.50. The USD/NOK is forming a similar base near 5.45 with a confirmation point found a similar distance near 5.73.

If the pairs move above their confirmation point, as opposed to dropping back within their heavily bearish trend, there is a chance the market will adjust its sentiment and begin shorting the Scandinavian currencies in expectations for a mid-year flop. Both pairs are approaching a decision point and it will be interesting to watch their next move unwind.

Being contained by the resistance of the upper border of the price channel on 4-hour chart, USDCHF pulled back from 0.8945. Key support is now at 0.8795, a break below this level will indicate that the uptrend from 0.8553 had completed at 0.8945 already, then deeper decline towards 0.8553 previous low could be seen. However, as long as 0.8795 support holds, the fall from 0.8945 could possibly be consolidation of uptrend, one more rise towards 0.9000 is still possible after consolidation.

Forex Signals

The markets started the day lower and rallied sharply higher as the Dollar fell. However, continued fear over Europe and the global economy has sent many buyers into hiding.

By EarlyToRise

Recovered memory syndrome (RMS) is a phenomenon whereby a questioner “helps” someone remember events that may be fictional by asking leading questions. The reason such questioning works – in bogus molestation cases, for example – is because the mind is very susceptible to suggestion.

But RMS is just one aspect of a much broader problem – the consequences that tend to flow from any kind of false perception of reality, no matter what the cause. False perceptions brought about by RMS are the result of what we commonly refer to as “brainwashing” or “the power of suggestion.”

Interestingly, good advertising and good salesmanship use this same tool to try to guide consumers’ perception of reality. If successful, it can result in sales, to be sure. But it also can result in dissatisfied customers if such customers later believe they were misled.

Action is the starting point of all progress. But an accurate perception of reality is the foundation upon which a successful person bases his actions. A false perception of reality leads to false premises. Which, in turn, leads to false assumptions. Which, in turn, leads to false conclusions. Which, ultimately, leads to negative results.

If, for example, a batter perceives that the pitcher has just released a fastball, but in fact the pitch is a curve, there’s a high probability he’s going to swing and miss.

The point is that the roots of success are planted in one’s perception of the world.

The late conservative economist Henry Hazlitt once wrote that an entrepreneur’s success is to a great degree dependent upon how accurately he can predict the future. And, though the entrepreneur may not consciously think about it, those predictions are based on his perception of reality.

I’ve seen one case after another of a person having a warped perception of what he brings to the negotiating table, which usually results in his walking away empty-handed. Homeowners are often guilty of this kind of self-delusion when they harbor an inflated perception of the value of their houses.

False perceptions also run rampant in the publishing business. First-time authors usually believe that a publisher will heavily promote their books. Unfortunately, such a perception is pure fantasy. Publishers do not promote books. They print and distribute them.

On the other side of this coin, most first-time authors also tend to believe that they’ve written War and Peace and that their masterpiece will sell quickly through word of mouth. Again, such perceptions are pure fantasy. An author has a better chance of winning the lottery.

The inaccurate perceptions one can harbor in business dealings are literally infinite. But there is one that is probably more costly than any other. I am referring to what occurs when you become involved in a business deal with someone who is clearly unethical.

An acquaintance of mine had an uncanny knack for becoming entangled with dishonest people. His problem was that he was a romantic. He simply couldn’t stop himself from becoming enamored with every guy who crossed his path wearing a fake Rolex. And the more such an all-show-and-no-dough person boasted about his accomplishments, the more mesmerized he became. As you might have guessed, he spent more time in court than he did working on his business.

I can’t give you a surefire formula for being able to differentiate between honorable and disreputable people, because I myself still manage to get my body parts caught in the wrong place from time to time. Happily, however, I have noticed two changes in my life with regard to this problem.

First, it happens to me much less frequently. And that tells me that I’ve improved my perception of people. Second, when I do find myself involved with someone with questionable ethics, I make it a point to exit quickly – even if I have to do so at a loss.

While I said that I can’t give you a surefire formula for being able to differentiate between honorable and disreputable people, I can tell you how to increase your odds of becoming involved with an unethical individual. All you need to do to accomplish such a masochistic feat is carelessly confuse your wishes with reality.

This emotional mistake happens most often when your desire to do a deal is so great that you ignore the neon sign on the other person’s forehead that reads: “LSCD” – Lie, Steal, Cheat, Deceive. The only antidote I know for avoiding this mistake is to be relentlessly vigilant when it comes to not allowing your desires to override what your eyes, ears, and gut tell you.

All this may seem far removed from the phenomenon of recovered memory syndrome, but it’s not. RMS is often nothing more than a false perception of reality brought about by the power of suggestion. And that same power of suggestion, whether it comes from someone else or is self-administered, can lead to false perceptions in any area of life.

Which is why it’s incumbent upon you to become adept at distinguishing between reality and illusion. A false perception of reality – regardless of the cause – automatically leads to failure. An accurate perception of reality doesn’t guarantee success, but it’s an excellent first step in the right direction.

You can’t put too much conscious effort into sharpening your perception of reality. It’s mentally hard work, but everything worthwhile is hard. The more you’re willing to pay the price of vigilance in this area, the more often you’ll find yourself enjoying the benefits.

[Ed. Note: If you’re ready for a treasure chest of proven ideas, strategies, and techniques that are guaranteed to dramatically improve your dealmaking skills – and, in the process, increase your income many times over – you won’t want to miss Robert Ringer’s bestselling audio series, A Dealmaker’s Dream.

Robert Ringer is a New York Times #1 bestselling author and host of the highly acclaimed Liberty Education Interview Series, which features interviews with top political, economic, and social leaders. His recently released work, Restoring the American Dream: The Defining Voice in the Movement for Liberty, is a clarion call to liberty-loving citizens to take back the country. Ringer has appeared on numerous national talk shows and has been the subject of feature articles in such major publications as Time, People, The Wall Street Journal, Fortune, Barron’s, and The New York Times. To sign up for his e-letter, A Voice of Sanity in an Insane World, visit www.robertringer.com.]

This article appears courtesy of Early To Rise, a free newsletter dedicated to creating wealth and success through inspiration and practical, proven advice. For a complimentary subscription, visit http://www.earlytorise.com.

By Ulli G. Niemann

How many times has this happened to you? You’re at a social function and the conversation turns to investing. Pretty soon, people are comparing how well their investments are doing. As you might imagine, being an investment advisor this happens to me a lot. However, I recently had an experience with it that startled me.

Bob, one of the guys I was chatting with at a party, asked what kind of returns I had made for my clients with my methodical no load mutual fund strategy during the past year. I replied that they had unrealized gains of slightly over 29%, after management fees, for the 8 months that we were invested.

Bob countered with a smirk that he had made a 40% return. I raised my eyebrows and told him that was darn good-and suggested that maybe he ought to be managing my money. At that point we were interrupted and, as the evening went on, I began to wonder exactly how Bob had gotten his great return.

I cornered him a little later on and, upon digging a little deeper, the story looked somewhat different. Yes, he had made a 40% return on a mutual fund he had some money invested in, however, we were comparing apples and bananas.

He had a total portfolio of $100k. Being cautious, he had invested only $10k into a mutual fund, from which he profited $4k after he sold it. The balance of his portfolio ($90k) was sitting in a money market fund earning some 0.35% per year.

So, while he had made 40% on 10% of his investment, he had only made 4.35% on his whole portfolio. My methodology was also focused on protecting my clients’ investments and it had increased their entire portfolio 29% (unrealized). That would be an apple to apple comparison when measuring my returns against his. Bob’s one fund realized 40% return. However, had I approached it the same way Bob had, I could have described one of the funds I used that had realized over 49% for the same period.

Actually, Bob’s not-so-good-news story didn’t stop there. Bob admitted to having followed the losing Buy and Hope strategy through the bear market of 2000 and had finally sold out at a 50% loss a year ago, before committing $10k to a mutual fund investment.

I was pleased to be able to tell him that my methodology had gotten my clients out of the market before the bear took his big bite, and they suffered only minimal losses before finding safety in money markets accounts. And when my trend tracking figures directed us to move back into the market, they still had most of their money poised to start earning for them again-which it did and very nicely, thank you.

The moral of the story is to look past the surface and don’t take any numbers thrown at you at face value. Remember, most people returning from a weekend in Las Vegas will shout about their winnings and mumble about their losses.

Panama City, Panama: The truth is, there is no reason not to begin planning today to launch your new life overseas. Here are the nine most commonly offered reasons for not retiring overseas…and why they don’t matter.

Also This Week: Own On Panama’s Most Beautiful Pacific Beach For As Little As US$35,000, Zero Down, Zero Percent Interest…Paris Versus Panama City, Three Years On…The One Think You Need To Know About Kyiv…Irresistibly Exotic…

Dear Overseas Opportunity Letter Reader,

Reason Not To Retire Overseas #1: “I can’t afford it.”

Your nest egg has been marginalized in recent years, and you’re thinking that there’s no way at this point that you can afford to entertain these notions of living or retiring overseas.

Here’s the truth: You can’t afford not to. I mean this both literally and figuratively.

You could take my advice and launch a more comfortable, more interesting, safe, pleasant, even adventure-filled life in a number of places around the world that I introduce to you in these dispatches on a budget of as little as US$1,200 per month or less. In some parts of Panama, Colombia, Thailand, and Ecuador, for example, you could live comfortably on a budget of less than US$1,000 per month. I’d be surprised if you can’t afford that.

But here’s the real point: You owe it to yourself to go find out for yourself just how affordable and, more important, just how fun and adventure-filled a new life in a new country can be. I say again that, cost of living aside, you can’t afford not to do this.

Reason Not To Retire Overseas #2: “It’s not the right time.”

There is no right time.

Sure, it’d be easier to stay put and do nothing. But where would that leave you at the end of your days? What stories would you have to tell? What adventures to remember?

Years ago, I met a gentleman from Tennessee who explained that he had been researching the idea of retiring to the Dominican Republic for two years. “I’m convinced the DR is a place I want to be,” he told me, “but I’m just not sure the timing is right…”

“Have you considered other options?” I asked.

“Well, before I started looking closely at the Dominican Republic, I researched Costa Rica for four years.”

“What did you end up doing there?”

“Oh, I never did anything. After four years of looking, prices had risen so high that I figured it no longer made sense.”

“Ready, fire, aim,” I say. You can plan to reinvent your life in retirement overseas…or you can launch a new life overseas and then make some plans.

Reason Not To Retire Overseas #3: “I don’t want to leave my home and family for good.”

So don’t. The real beauty of reinventing your life in a new country today is that it is an infinitely customizable idea. Keep your home in the States if you want and spend part of your time, as your comfort level allows, somewhere exotic and sunny. Establish a second base somewhere foreign…or try out a different overseas locale each year. Come and go as you like, as often as you like, knowing that you’ve always got a safety net “back home.” There is no right or wrong strategy for how to retire overseas.

Reason Not To Retire Overseas #4: “I need to earn a living.”

In today’s world, with a little imagination and self-confidence, you can earn a living anywhere. In fact, it can be easier today for an American to earn an independent living in a foreign country than in the United States, because you have knowledge, experience, skills, and connections that the locals don’t.

Reason Not To Retire Overseas #5: “I don’t have enough capital to make an international move like this.”

You need precious little. In my new “52 Days To Your New Live Overseas,” I walk my retire-overseas students through a getting-started budget. Take my word for it: If you want to do this, you can pull together the capital you need to make it happen…because, seriously, you don’t need a lot.

Reason Not To Retire Overseas #6: “I don’t speak the language.”

I’m not a linguist. And I understand–it gets harder to learn a language as you get older. That’s why you’re lucky. You speak English, and English is the world’s language. Across much of this planet, anyone who is anyone (that is, anyone you might want to communicate or do business with), as well as any school kid, speaks English.

That said, it’s worth noting that learning a new language is one of the best ways to keep your brain limber as you age.

Reason Not To Retire Overseas #7: “I’m too old.”

Are you dead? If not, then you’re not too old.

Yes, it’s easier and might seem more sensible to take a seat on the front porch and await the arrival of the Grim Reaper. Or maybe your life is already so exciting and wonderful that you can’t handle a little change?

If that’s not the case, then I’d recommend that you take a cue from my friend Jules, who is 88-years-old and making plans right now for his move from Florida to Belize. Even after a lifetime of adventure, traveling the world with the U.S. Navy, Jules is up for another change and a new start.

Reason Not To Retire Overseas #8: “I’m too young.”

As I said, in today’s world, if you’ve got a laptop and an Internet connection, you can earn an income anywhere…and concern over making a living is the only objection I can imagine someone younger than retirement age could possibly suggest for why he (or she) isn’t jumping at a the idea of launching a new life in some sunny, sexy foreign locale.

I promise you that, no matter how old you are right now, if you make this move, you won’t regret a day that follows. If you don’t, eventually, you’ll grow to regret every day of adventure that you missed.

Reason Not To Retire Overseas #9: “I’ve got to wait for my children to finish their schooling.”

Why? Speaking as a mom who has spent the last 13 years raising two children (the second, my son, born in Ireland) across four countries, I can tell you with confidence that a life abroad is one of the greatest gifts you can give your kids. They might object at first (my daughter, born in Baltimore, cried her way through our entire first year living overseas, in Ireland), but, in time, they’ll grow to love the life and to appreciate the effort you’ve made providing it for them. Stay put “for the sake of the kids,” and, when they’re grown and discover what they missed out on, they won’t forgive you.

Kathleen Peddicord

Founder and Publisher Live and Invest Overseas

http://www.liveandinvestoverseas.com

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See More of Kathleen’s Special Reports:

• Live & Invest in Panama
  
• Around Asia
  
• The Argentine Vineyard Buyer’s Guide
  
• Panama Without The Sugar Coating
  
• Belize Report & The Belize Starter Kit
  
• Top Health Insurance Options For The Retiree Abroad