Hello everyone,
I am going to pick GBP/USD as our subject of our quick look.
Attached chart is the GBP/USD Weekly chart. From a short term quick look, we can see that market is now having a breather. How far will this breather go? No one will know. Will the trend on the down side continue? That's an answer most people want to know.
For Samurai Brotherhood Traders, we see what is happening right now and decide. For now, with the use of Fibo Retracement, we can expect market to make a breather towards the 38.2% or the price line of 1.8475. If market can break above this price line, be prepared to see market having a peak between 38.2% - 50%. Unlikely market will break through the 50% Fibo or else, this trend on the downside will end.
With the confusion and raw situations happening in the USA, we can expect more market turmoil and be careful when placing your trades. A lot of emotions going on but clear and strong trade signals are always there. Opportunity never cease to surface in FX Market.
For now, do not be too eager to initiate a trade when in doubt. Be clear and confident. Remember, trading is not about gut feeling else it will be called gambling.
Peace and trade safely everyone...
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Thursday, September 18, 2008
GBP/USD (Quick Look)...
Wednesday, September 17, 2008
Stocks end higher after Fed keeps rates unchanged...
Source: Mail.com Wall Street ended another tumultuous session with a sizable gain Tuesday, partly recovering from its worst sell-off in years after the Federal Reserve said it was keeping interest rates steady. The central bank soothed fears of a worsening financial crisis even as the market waited to learn the fate of troubled insurer American International Group Inc. In a statement accompanying its decision, the Fed noted the growing strains in the financial markets a day after the Dow Jones industrials plunged 504 points in reaction to continuing turmoil in the financial sector. The Fed also noted the ongoing weakening of the labor market. But it also sought to give some reassurance by saying it expected its policy moves to foster moderate economic growth over time.
The Fed has cut its target federal funds rate by 3.25 percentage points to its current level of 2 percent over the past year. Many on Wall Street expected the Fed to keep rates steady but there was some hope that the central bank would try to calm uneasy financial markets with a rate cut.
Still, the fact that the Fed didn't lower rates was a sign that it doesn't believe the economy needs that type of stimulus. It reiterated that it believed its moves to inject more liquidity into the banking system to help struggling financial institutions would help them, and in turn the economy overall.
"This was the right thing to do," said Tom Higgins, chief economist at Payden & Rygel Investment Management in Los Angeles. "I just don't think the Fed should be responding to the financial market crisis at this stage."
He contends other moves, like broadening the type of collateral the Fed accepts from banks and adding money to the banking system are more effective at addressing credit troubles.
According to preliminary calculations, the Dow rose 141.51, or 1.30 percent, to 11,059.02, after falling about 100 points immediately after the Fed announcement. The Dow at turns rose and fell as much as 175 points in fractious trading; on Monday, it suffered its largest drop since the September 2001 terror attacks.
Broader stock indicators advanced. The Standard & Poor's 500 index rose 20.90, or 1.75 percent, to 1,213.60, and the Nasdaq composite index rose 27.99, or 1.28 percent, to 2,207.90.
On Monday, the Dow fell 4.4 percent, the S&P gave up 4.7 percent and the Nasdaq fell 3.6 percent.
Bond prices fell sharply Tuesday as investors turned away from the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.52 percent from 3.41 percent late Monday. The dollar was mixed against other major currencies, while gold prices fell.
Tuesday, September 16, 2008
Stocks extend slide on worries about health of AIG...
Source: Mail.com
Stocks extended their steep decline and bond prices jumped Tuesday, a day after Wall Street's worst session in years, as nervous investors grappled with concerns about insurer American International Group Inc. and awaited the Federal Reserve's decision on interest rates.
Worries about the well-being of AIG have intensified after the several ratings agencies reduced their ratings on the company. Lower ratings can add to the amount of money the already cash-strapped company has to set aside. Investors are fearful that a failure by the world's largest insurance company would touch off a wave of financial turmoil. AIG fell $3.09, or 65 percent, to $1.67 in early trading.
Comments from Goldman Sachs Group Inc. about the banking sector added to investors' glum mood.
Markets around the world were still reeling from the bankruptcy filing of Lehman Brothers Holdings Inc. and the quickly assembled weekend sale of Merrill Lynch & Co. to Bank of America Corp. Investors fear that tectonic shifts in the power structure of Wall Street signal that the financial sector's trouble with imperiled credit are far from over.
In the first half-hour of trading, the Dow fell 48.61, or 0.45 percent, to 10,868.90. The Dow fell as much as 175 in the opening minutes of the session; on Monday, the Dow lost 504 points, its largest drop since the September 2001 terror attacks.
Broader stock indicators also fell. The Standard & Poor's 500 index declined 11.59, or 0.97 percent, to 1,181.11, and the Nasdaq composite index fell 19.83, or 0.91 percent, to 2,160.08.
Bond prices jumped as investors sought the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.30 percent from 3.41 percent late Monday.
Monday, September 15, 2008
Lehman Brothers says it will file Chapter 11...
Source: Mail.com
Storied Wall Street firm Lehman Brothers Holdings Inc. says it intends to file for Chapter 11 bankruptcy protection.
The 158-year-old Lehman was crippled by $60 billion in soured real-estate holdings and unable to find an investment partner to throw it a lifeline.
Lehman said in a statement early Monday that none of its broker-dealer subsidiaries or other units would be included in the Chapter 11 filing in U.S. bankruptcy court in New York.
The investment bank said it is exploring the sale of its broker-dealer operations and is in "advanced discussions" to sell its investment management unit.
Stocks point sharply lower after tumultuous Sunday...
Source: Mail.com
U.S. stocks headed for a sharply lower open and Treasury bond prices soared Monday as investors reacted to a stunning reshaping of the landscape of Wall Street. A series of events took out two storied names Sunday: Lehman Brothers Holdings Inc. and Merrill Lynch & Co.
Stocks posted sharp losses in markets across much of the globe as investors absorbed a bankruptcy filing by Lehman and Merrill Lynch's forced sale to Bank of America for $50 billion in stock. And perhaps most ominously, American International Group Inc. is asking the Federal Reserve for emergency funding. The world's largest insurance company plans to announce a major restructuring Monday.
The swift developments are the biggest yet in the 14-month-old credit crises that stems from now toxic subprime mortgage debt.
Investors are worried that trouble at AIG and the bankruptcy filing by Lehman, felled by $60 billion in bad debt and a dearth of investor confidence, will touch off another series of troubles for banks and financial institutions. Wall Street had been hopeful six months ago that the collapse of Bear Stearns would mark the darkest day of the credit crisis.
But many market observers have said for months that a cathartic sell-off is necessary for Wall Street to purge its worries over bad debt and the tight credit conditions that have hobbled the economy. A scare and subsequent sell-off in the markets could establish conditions for a market bottom to form.
Dow Jones industrial average futures fell 372, or 3.3 percent, to 11,086. Standard & Poor's 500 index futures fell 48.00, or 3.81 percent, to 1,210.50. Nasdaq 100 index futures fell 49.25, or 2.8 percent, to 1,730.25.
Bond prices surged as investors fled to the security of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, plunged to 3.50 percent from 3.72 percent late Friday. The dollar was lower against other major currencies, while gold prices rose.
Markets in Tokyo and several other Asian money centers were closed for holidays. In afternoon trading, Britain's FTSE 100 fell 3.64 percent, Germany's DAX index fell 3.33 percent, and France's CAC-40 fell 4.37 percent. The European Central Bank, the Bank of England, and the Swiss central bank stepped in an attempt to calm markets by making more short-term credit available to banks.
Light, sweet crude dropped $4.43 to $96.75 in premarket electronic trading on the New York Mercantile Exchange after damage to Gulf of Mexico oil infrastructure from Hurricane Ike was less than Wall Street feared. Worries about a slower economy have also weighed on oil prices in recent weeks. Oil is down sharply from its mid-July highs when it hit a record over $147 a barrel.
But despite the pullback in oil, prices the gas pump rose above $5 per gallon in some parts of the country Sunday after Ike left some the nation's refining capacity inoperable.
The reduced headcount of Wall Street firms Monday left Goldman Sachs Group Inc. and Morgan Stanley as the remaining big, independent firms. The two are slated to report quarterly results Tuesday and Wednesday, respectively.
The shake up comes only a week after the government bailed out mortgage lenders Fannie Mae and Freddie Mac and ahead of big economic developments this week. The Federal Reserve is expected to make a decision on interest rates on Tuesday. Meanwhile, on Monday, Wall Street is also expecting a reading from the New York Fed on regional manufacturing gas well as a report on industrial production.
Sunday, September 14, 2008
Global Events Calendar [15-09-2008] - [19-09-2008]
*Time displayed is based on Singapore Time (GMT+8:00).
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Global Events Calendar [15-09-2008] - [19-09-2008]
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Monday [15-09-2008]
6:45am--------------NZD Manufacturing Sales q/q
[Whole Day Event]---JPY Holiday: Respect-for-the-Aged Day
9:30am--------------AUD Housing Starts q/q
3:15pm--------------CHF PPI m/m
3:15pm--------------CHF Retail Sales y/y
5:00pm--------------EUR ECB President Trichet Speaks
8:30pm--------------CAD New Motor Vehicle Sales m/m
8:30pm--------------USD Empire State Manufacturing Index
9:15pm--------------USD Capacity Utilization Rate
9:15pm--------------USD Industrial Production m/m
Tuesday [16-09-2008]
9:30am-----------AUD Monetary Policy Meeting Minutes
1:00pm-----------JPY Household Confidence
2:00pm-----------EUR German Final CPI m/m
3:15pm-----------CHF Industrial Production q/q
4:30pm-----------GBP CPI y/y
4:30pm-----------GBP Core CPI y/y
4:30pm-----------GBP DCLG HPI y/y
4:30pm-----------GBP RPI y/y
5:00pm-----------EUR CPI y/y
5:00pm-----------EUR ZEW Economic Sentiment
5:00pm-----------EUR Core CPI y/y
5:00pm-----------EUR German ZEW Economic Sentiment
[Time Unknown]---GBP BOE Inflation Letter
8:30pm-----------CAD Manufacturing Shipments m/m
8:30pm-----------USD Core CPI m/m
8:30pm-----------USD CPI m/m
9:00pm-----------USD TIC Net Long-Term Transactions
10:00pm----------USD Treasury Sec Paulson Speaks
11:00pm----------CHF Gov Board Member Hildebrand Speaks
Wednesday [17-09-2008]
1:00am-----------USD NAHB Housing Market Index
2:15am-----------USD FOMC Statement
2:15am-----------USD Federal Funds Rate
8:30am-----------AUD MI Leading Index m/m
[Time Unknown]---JPY Overnight Call Rate
11:20am-----------AUD RBA Governor Stevens Speaks
[Time Unknown]---JPY BOJ Press Conference
4:30pm-----------GBP Claimant Count Change
4:30pm-----------GBP MPC Meeting Minutes
4:30pm-----------GBP Average Earnings Index y/y
4:30pm-----------GBP Unemployment Rate
5:00pm-----------CHF ZEW Expectations
5:00pm-----------EUR Trade Balance
6:00pm-----------GBP CBI Industrial Trends Orders
8:30pm-----------CAD Foreign Securities Purchases
8:30pm-----------USD Building Permits
8:30pm-----------USD Current Account
8:30pm-----------USD Housing Starts
10:35pm----------USD Crude Oil Inventories
Thursday [18-09-2008]
7:50am---JPY Tertiary Industry Activity Index m/m
9:30am---AUD RBA Monthly Bulletin
1:00pm---JPY BOJ Monthly Report
2:00pm---JPY BOJ Governor Shirakawa Speaks
2:15pm---CHF Trade Balance
4:00pm---GBP MPC Member Dale Speaks
4:30pm---GBP Retail Sales m/m
4:30pm---GBP M4 Money Supply m/m
4:30pm---GBP Public Sector Net Borrowing
8:00pm---CHF Libor Rate
8:00pm---CHF Monetary Policy Assessment
8:30pm---CAD Wholesale Sales m/m
8:30pm---CAD Leading Index m/m
8:30pm---USD Unemployment Claims
10:00pm--USD Philly Fed Manufacturing Index
10:00pm--USD CB Leading Index m/m
10:35pm--USD Natural Gas Storage
Friday [19-09-2008]
6:45am---NZD Current Account
6:45am---NZD Visitor Arrivals m/m
8:15am---CAD Gov Council Member Murray Speaks
11:00am--NZD Credit Card Spending y/y
2:00pm---EUR German PPI m/m
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Monday, September 08, 2008
US stock futures surge on plan for mortgage giants
Source: Mail.com
U.S. stock futures pointed to a huge rally Monday as investors rushed to lay bets on a broad economic recovery following the weekend announcement that the U.S. government plans to bail out mortgage lenders Fannie Mae and Freddie Mac. Stock futures jumped more than 2 percent.
Meanwhile, bond prices fell sharply as emboldened investors looked for riskier but higher-yielding bets.
The announcement Sunday that the Treasury Department was seizing control of the companies, which own or back about half the nation's mortgage debt, brushed aside investors' persistent worries that the companies would be felled by a spike in bad mortgage debt.
The plan to inject up to $100 billion in each of the government-chartered mortgage giants could not only help lower mortgage rates but, some investors are hoping, buoy the overall economy. The plan could help banks feel more open to write new mortgages and to refinance existing mortgages at lower rates, offering a possible lifeline to consumers struggling with increasing payments.
The government's steadying hand for two institutions that many Wall Street observers had said were simply too big to let fail still might not alleviate troubles of some homeowners who have fallen behind on their mortgages.
Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York, said while the plan boosts confidence in sectors like financials and home builders, it doesn't immediately alleviate worries about other areas of the economy. Still, he said the move was far preferable to a collapse of Fannie Mae or Freddie Mac.
"It saves from Armageddon from happening," he said. "If you think about it this helps the financials, this helps the housing market. Tech took a huge hit last week. Does this really affect tech? I don't think so."
Dow Jones industrial average futures surged 263, or 2.34 percent, to 11,490. Standard & Poor's 500 index futures rose 39.30, or 3.17 percent, to 1,280.40. And Nasdaq composite index futures rose 39.25, or 2.22 percent, to 1,809.25. Stocks finished last week with steep losses amid worries about the overall economy and the financial sector.
Bond prices pulled back sharply Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.78 percent from 3.69 percent late Friday. The dollar was higher against other major currencies, while gold prices rose.
The U.S. government's plan touched off a global stock rally Monday even though common shareholders of the stock of Fannie Man and Freddie Mac will be virtually wiped out by the plan, which would balloon the shares of companies to give a nearly 80 percent stake to the government. The companies' shares had already logged huge declines in the last year so many shareholders have already endured the majority of their losses.
But foreign investors holding debt of the companies were relieved as were investors simply looking for stronger growth from the U.S. economy, particularly as many economies abroad give off signs they are slowing. Japan's Nikkei stock average jumped 3.4 percent and Hong Kong's Hang Seng index surged 4.3 percent. In afternoon trading, Britain's FTSE 100 jumped 3.81 percent, Germany's DAX index rose 3.50 percent, and France's CAC-40 surged 4.44 percent.
Investors appeared to look past a rise in oil, which logged steep declines last week as investors worried that a slowing global economy would hurt demand. Light, sweet crude rose $2.67 to $108.90 in premarket electronic trading on the New York Mercantile Exchange.
In corporate news, Washington Mutual Inc. said it has removed Kerry Killinger from the chief executive spot. The savings and loan is working to overhaul its business, which has been hurt by bad mortgage debt. Alan H. Fishman is replacing Killinger.
Altria Group Inc. announced it will buy UST, the maker of Skoal and Copenhagen smokeless tobacco, for nearly $10 billion. The maker of Marlboro cigarettes said it will pay $69.50 per share. UST shares jumped Friday to finish at $67.55 following a report of the deal.
OPEC 149th Meeting....
Today, Monday [08-09-2008], there will be an OPEC Meeting. This event will be carried out in Vienna, heart of Austria, for the next three days (European Business Hours).
What is OPEC?
The Organization of Petroleum Exporting Countries (OPEC) will begin their 149th meeting in Vienna to discuss a range of issues related to the oil markets, most importantly whether to not to adjust oil production by OPEC nations. OPEC members are expected to talk with the press throughout the 3-day meeting and a press conference is usually held at the conclusion. OPEC contributes 40% of the world's oil and their policies can have a dramatic effect on oil prices, which in turn can affect currency prices of most nations.
Sunday, September 07, 2008
Global Events Calendar [08-09-2008] - [12-09-2008]
*Time displayed is based on Singapore Time (GMT+8:00).
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Global Events Calendar [08-09-2008] - [12-09-2008]
----------------------------------------------------------------------------------
Monday [08-09-2008]
7:00am--------------AUD RBA Governor Stevens Speaks
7:50am--------------JPY M2 Money Stock y/y
1:00pm--------------JPY Economy Watchers Current Index
1:45pm--------------CHF Unemployment Rate
4:30pm--------------EUR Sentix Investor Confidence
4:30pm--------------GBP PPI Input m/m
4:30pm--------------GBP PPI Output m/m
[Whole Day Event]---ALL OPEC Meeting
8:30pm--------------CAD Building Permits m/m
Tuesday [09-09-2008]
1:00am--------------USD FOMC Member Fisher Speaks
3:00am--------------USD Consumer Credit m/m
7:01am--------------GBP BRC Retail Sales Monitor y/y
7:01am--------------GBP RICS House Price Balance
7:01am--------------GBP NIESR GDP Estimate
9:30am--------------AUD Home Loans m/m
9:30am--------------AUD Retail Sales m/m
9:30am--------------AUD NAB Business Confidence
2:00pm--------------EUR German Trade Balance
2:00pm--------------JPY Machine Tool Orders y/y
4:30pm--------------GBP Manufacturing Production m/m
4:30pm--------------GBP Industrial Production m/m
[Whole Day Event]---ALL OPEC Meeting
8:15pm--------------CAD Housing Starts
9:00pm--------------USD Fed Chairman Bernanke Speaks
10:00pm-------------USD Pending Home Sales m/m
10:00pm-------------USD IBD/TIPP Economic Optimism
10:00pm-------------USD Wholesale Inventories m/m
Wednesday [10-09-2008]
6:45am--------------NZD Overseas Trade Index q/q
7:50am--------------JPY CGPI y/y
7:50am--------------JPY Current Account
8:30am--------------AUD MI Consumer Sentiment m/m
1:00pm--------------JPY Leading Indicators
2:45pm--------------EUR French Industrial Production m/m
2:45pm--------------EUR French Trade Balance
3:00pm--------------EUR ECB President Trichet Speaks
4:30pm--------------GBP Trade Balance
[Whole Day Event]---ALL OPEC Meeting
6:15pm--------------CHF Gov Board Member Hildebrand Speaks
8:30pm--------------CAD Labor Productivity q/q
9:00pm--------------CHF Gov Board Member Jordan Speaks
10:30pm-------------GBP CB Leading Index m/m
10:35pm-------------USD Crude Oil Inventories
Thursday [11-09-2008]
5:00am---NZD Monetary Policy Statement
5:00am---NZD Official Cash Rate
6:45am---NZD FPI m/m
7:50am---JPY Core Machinery Orders m/m
8:00am---NZD Business NZ Manufacturing Index
9:00am---AUD MI Inflation Expectations
9:30am---AUD Employment Change
9:30am---AUD Unemployment Rate
2:00pm---EUR German WPI m/m
2:45pm---EUR French Final Non-Farm Payrolls q/q
4:00pm---EUR ECB Bulletin
4:30pm---GBP BOE Inflation Attitudes
4:45pm---GBP MPC Treasury Committee Hearings
8:30pm---CAD Trade Balance
8:30pm---CAD NHPI m/m
8:30pm---USD Trade Balance
8:30pm---USD Import Prices m/m
8:30pm---USD Unemployment Claims
10:35pm--USD Natural Gas Storage
Friday [12-09-2008]
2:00am---EUR ECB President Trichet Speaks
2:45am---USD FOMC Member Kohn Speaks
6:45am---NZD Core Retail Sales m/m
6:45am---NZD Retail Sales m/m
7:50am---JPY Final GDP q/q
7:50am---JPY Final GDP Price Index y/y
12:30pm--JPY Revised Industrial Production m/m
2:45pm---EUR French CPI m/m
4:00pm---EUR Italian Industrial Production m/m
5:00pm---EUR Industrial Production m/m
5:00pm---EUR Employment Change q/q
6:30pm---GBP MPC Member Tucker Speaks
8:30pm---CAD Capacity Utilization Rate
8:30pm---USD Core Retail Sales m/m
8:30pm---USD PPI m/m
8:30pm---USD Retail Sales m/m
8:30pm---USD Core PPI m/m
9:55pm---USD Prelim UoM Consumer Sentiment
9:55pm---USD Prelim UoM Inflation Expectations
10:00pm--USD Business Inventories m/m
11:00pm--CHF SNB Chairman Roth Speaks
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Saturday, September 06, 2008
Dollar and Yen Gain as Investors Liquidate Risky Assets
Source: CMS Forex
The dollar rose against most key currencies in volatile trading Friday despite the eight straight monthly job losses and unemployment rate at a 5-year high increasing risks of a worsening US economic slowdown. The dollar and yen were supported by sell-offs in asset and commodity markets as investors liquidated risky assets. The euro fell for a seventh consecutive day as Germany's industrial production declined more than expected. Sterling dropped a seventh week against the greenback. The Australian dollar fell as commodity prices continued their declines. The Canadian dollar rose on better-than-expected employment growth in Canada.
The USD/JPY touched a 7-week low on increased risk aversion as today's US employment report showed continuing weakness in the US labor market. The pair broke its 5-month uptrend but pared losses after oversold US stocks recovered earlier losses.
US nonfarm payrolls fell a more-than-forecast 84,000 in August, an eighth straight monthly drop, data from the Labor Department showed. Revisions to June and July subtracted 58,000 jobs, resulting in a net loss of 142,000. Private payrolls dropped 101,000 in August. The weakest job categories were manufacturing (down 61,000), temps (down 37,000), and retail (down 20,000). The strongest sector was education/health (up 55,000). The unemployment rate unexpectedly surged to 6.1% in August, the highest since 2003, following July's 5.7%. Average hourly earnings increased 0.4% m/m, to $18.14 in August, and rose 3.6% y/y, both higher than expected. The average workweek was flat at 33.7 hours. Today's grim employment figures, which included a modest increase in wages, suggest the Federal Reserve will hold its target for the federal funds rate steady at 2% at its September 16 meeting and at least through the end of the year.
The US economy is “stagnant,” Europe is heading to a recession, and central banks will not have much room to lower interest rates amid high inflation, the US Conference Board said. “This is a period of rolling adjustments, that goes from sector to sector, that will keep the U.S. growth rate low in the 1 percent-to-2 percent range for the foreseeable future,” said Gail D. Fosler, Conference Board president. “Europe is in somewhat more peril,” Fosler added. “The tech sector is beginning to weaken and the manufacturing sector, which has really held up, is likely to begin to weaken,” she said. “The U.S. is going to be in a relatively stagnant, relatively slow growth mode for the foreseeable future.”
Friday, September 05, 2008
Dollar Hits YTD Highs, Stocks Plunge, What Happened?
Source: Forex.com
Volatility has ripped through the financial markets with the Dow Jones Industrial Average plunging 344 points and the US dollar surging to a year to date high against the Euro.With the exception of the dollar's performance against the Japanese Yen, the greenback's strength has been universal.In yesterday's Daily Currency Focus, we said that the dollar could see a near term reversal.That happened briefly with the EUR/USD hitting an intraday high of 1.4545, but once the US stock market started falling, the dollar resumed its rise.Given the drop in equities and bond yields, the only explanation for the divergent move in the currency market is risk aversion.The dollar has once again received a flight to safety boost.The sharp sell-off in carry trades including USD/JPY provides further evidence that risk aversion is behind today's move.
Service sector ISM was stronger than expected, but the leading indicators for non-farm payrolls point to an ugly NFP number.Payroll provider ADP reported more private sector job losses, continuing claims hit a 5 year high while the employment component of service sector ISM sank deeper into contractionary territory.In our Non-Farm Payrolls Preview, we show the correlation between NFP and ISM and talk about why payrolls could have fallen by more than 100k in the month of August.Comments from Federal Reserve officials also gave stock traders further reasons to liquidate.San Francisco Fed President Yellen expects growth to be “subpar” and sluggish in the second half of the year while Dallas Fed President Fisher warned about the government's potential problems in paying retirees their Social Security and Medicare as the biggest threat to the US economy.If the US government does have problems making these payments, then Fisher is absolutely right and the US could be dealing with slower growth for longer than anticipated.
The market is currently expecting non-farm payrolls to drop by -75k and the unemployment rate to remain unchanged at 5.7 percent. Of the 76 economists surveyed by Bloomberg, only 11 expect non-farm payrolls to crack the -100k mark. For traders, this means that -100k is the make it or break it point for the US dollar. If less than -100k jobs were lost last month, the dollar could continue to rise. If more than -100k jobs were lost, expect a reversal in the US dollar.
Monday, September 01, 2008
Dollar Rise - Too Fast, Too Furious?
Source: Daily FX
The month of August is typically characterised by thin markets, rising volatility and quite sharp FX movements. Commercial clients are traditionally conspicuous by their absence at the beginning of the month and speculative clients have free hands.
This August has been no exception and has in fact been packed with rather large moves in major currencies: the USD has gained 5.4% against the EUR, JPY has advanced 4.6%, GBP has lost 2.2% and the AUD has dropped 2.8%. The appreciation of the USD against the EUR has - with good reason - received most attention over the month. In the first half of the month, EUR/USD ended the uptrend that started some six years ago. And it was indeed a sharp reversal.
Some forecasters warned investors "not to stand in the greenback's" way, but the dollar rush abated in the second half of the month with EUR/USD trading around 1.47, albeit surrounded by noticeable fluctuations.
British Pound Slips as U.K. Manufacturing Contracts...
Source: Daily FX
Fundamental Headlines
• Key Index May Overstate Mortgage-Debt Problems – Wall Street Journal
• The Fannie & Freddie Question – Wall Street Journal
• Atticus Hit Hard by Credit Crunch – Financial Times
• Oil Falls on Report Gustav Won’t Speed Up Before Striking Land – Bloomberg
• ECB May Keep Rates at 7-Year High as Recession Looms – Bloomberg
GBPUSD – Manufacturing activity in the U.K. contracted for the fourth consecutive month, heightening recessionary fears for Europe’s second largest economy. The index however, improved slightly to 45.9 from 44.1 in July, but may continue to face downside risks as global demands fade. In a separate report, U.K. mortgage approvals fell to a nine year low of 33K as home prices continued to tumble lower. Amid rampant inflation, instability in the housing and financial sector paired with stalled growth could forced the BoE to support economic activity as the U.K. economy is on the brink of a recession.
EURUSD – Retail sales in Germany fell for the second consecutive month as oil prices peaked to a record high of $147.27 in July. The monthly reading slipped to -1.5% from -1.4% in June, while the yearly figure was unchanged from the previous year. Manufacturing activity in Germany fell to a record low of 49.7 from 50.9, while the Euro-Zone manufacturing PMI contracted for the third consecutive month. The economic outlook for the 15 European nation continues to grow dim, and may lead the ECB to soften their hawkish outlook.
AUDUSD – Stalled growth in the Australian economy has helped to bring down inflation for the first time in a year as the inflation index fell to 4.2% from 4.6% in July. The unexpected fall should help to ease inflationary concerns for the $1 trillion economy, and would allow the RBA to lower the benchmark interest rate from the 12 year high. With the RBA scheduled to set rates tomorrow, market participants have already increased bets for a 25bp rate cut, which may spark increased volatility for the Australian dollar.
EUR/GBP Short-Term Technical Outlook...
Source: DailyFX
Currency Pair: EUR/GBP
Short-Term Bias: Long
Chart: 15 Min Charts
The EUR/GBP has peaked to 0.8136 earlier in the session, triggering an overbought RSI signal in the process. We expect the upward trend to continue this week, but may see the euro-pound fall back to trade within the channel over the next few trading session.
The EUR/GBP continues to hold above the channel, with the uptrend in the 120 SMA remaining intact. Price action looks to be holding range between 0.8130 and 0.8080, and may stay within range for till tomorrow as the US and Canada is offline for the holiday.
As volatility dries up in the US session, the euro-pound may continue to face congestion at its currently level. We expect price action to trade within in the channel over the next few trading session, and will continue to hold a bullish outlook for the pair. The euro may continue its rally to test 0.9200 for resistance, while our short-term outlook suggests that the pair should hold above 0.7750 over the next few months. However, the fundamental event risks scheduled for the next 24 hours may call for a change in our outlook.
Last week, the EUR/GBP gained momentum to break out of its previous range, with price action moving above 0.8000. After gapping earlier in the session, the pound continues to face heavy selling pressures, leading the pair to break above the channel.
The EUR/GBP has peaked to 0.8136 earlier in the session, triggering an overbought RSI signal in the process. We expect the upward trend to continue this week, but may see the euro-pound fall back to trade within the channel over the next few trading session. We will hold a bullish outlook for the pair as the 120 SMI continues to trend upwards, and expect the pair to test 0.8150 for resistance over the next few days. Be sure to check out Jamie’s Technical Outlook for additional information on the major currency pairs.
Ramadhan...
ForexNewsPaper.blogspot.com wishes all our Muslim readers and Muslims from all over the world a blessful and safe fasting in the Islamic month of Ramadhan. May Allah bless us with good health and unlimited fortune.
Pease and trade safely everyone...
Warmest Regards,
ForexNewsPaper.blogspot.com