Greek Tragedy, Act II!
By Mike Conlon | April 8, 2010
Credit spreads are at the widest levels since the inception of the Euro as skepticism over Greek austerity is causing borrowing costs to skyrocket to the point where they may become unworkable. This has greatly heightened fears of Greek default, which in turn has put pressure on the Euro this morning.
In addition, the ECB predictably left interest rates unchanged at 1% in the wake of yesterday’s stagnating GDP report. ECB Prez Trichet is going to speak later and whether or not he dodges the Greek issue will be interesting to see.
In the UK, the BOE left both its asset purchase plan and interest rate unchanged going into the May elections as economic recovery is still on shaky ground and fears of the “double dip” persist.
All of this adds up to risk-aversion this morning and the different currency pairs are behaving as expected.
In the forex market:
Aussie (AUD): Australia added 19.6 K jobs last month and its unemployment rate held steady at 5.3%, almost half that of the US and Europe, giving support to the RBA decision to raise interest rates earlier this week. The economy appears to be chugging along in Australia as exports have been rising due to Chinese demand and the fact that Australia was largely able to sidestep the economic problems which are plaguing other world markets. Nevertheless, the Aussie is lower vs. Yen and USD on risk aversion.
Loonie (CAD): The Loonie is lower this morning as oil prices are lower as risk aversion is the theme of the morning. The Loonie is above parity with USD but still hovering. Canada will report its unemployment change tomorrow which if better than expected, could push the Loonie back to parity regardless of risk themes.
Kiwi (NZD): The Kiwi is just kicking about, trading lower on risk themes and commodity prices. No news on the Kiwi.
Euro (EUR): I feel like this story had been beaten to death already and without any positive news regarding backstops for Greece, the Euro will trade lower. A lower Euro is obviously good for exports (Germany), but default would be a catastrophe for the Euro which may bring structural issues to the forefront.
Pound (GBP): UK manufacturing surged to its highest level in almost 2 years, besting estimates two-fold. This is a good sign for the UK economy, which undoubtedly has benefited from a lower Pound. Despite this good news, the pound is lower as the BOE left the interest rate and QE program unchanged, and additional polls are showing that the Labor Party is gaining on the Conservative Party, which could lead to neither party holding a majority. It’s interesting to see that it is BAD news in the UK to have political gridlock, while it is actually favored here in the US. Go figure.
Dollar (USD): “Initial jobless claims increase unexpectedly” (AP). True headline. I mean really, is this really unexpected? We have a situation here in the US where Congress is spending like drunken sailors, our President is constantly speaking about everything under the sun EXCEPT jobs, and landmines keep trickling out of this new healthcare bill which shows that it will cost employers more and not less to implement. And people are “surprised” that jobless claims are higher? The Dollar is higher on risk-aversion. Nuff said!
Yen (JPY): Japanese machine orders fell vs. an expectation that there would be a gain as a result of increased overseas demand for Japanese exports. The Japanese are typically more cautious in their spending habits, so it may not be surprising that they are waiting to see more recovery in other global economies. So Japanese stocks are down and the Yen is higher as demand for Yen is higher due to risk-aversion and the un-wind of carry trades.
One of the great advantages to the forex market is that certain economic themes can play out over the course of a few days, thereby creating excellent short-term trends which can be played until the theme changes. This typically occurs by the reporting of some contrary news which causes the theme to reverse.
So at times I may seem like a broken record when news like the problems in Greece or UK elections are still in effect; but what that effectively does is drive that currency in the same direction until a situation is changed or some equal and opposite news outweighs the original driver of that currency.
This is the main reason why the forex market tends to trend better than all other markets, as governments cannot typically “turn on a dime” to reverse an undesirable trend.
So what are you waiting for?
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!
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Fundamentals Do Matter!
By Mike Conlon | March 10, 2010
Now that the fears of global collapse have abated—for now—the markets have returned to heavier scrutiny on the fundamental numbers being reported in various countries. It is times like these that remind traders that indeed the fundamentals do matter. The longer the global economy can sustain itself without Armageddon taking place, the more and more traders will focus on specific stories and not overall risk themes.
So, while one might look at this morning’s action and be inclined to say that today is risk-taking because commodity currencies are higher, a more appropriate reaction would be that are actually both good and bad stories out there which are driving individual currency pairs.
More specifically, in currencies:
Aussie (AUD): One of the good economic stories out there is coming out of Australia which has had good gains as of late. Tomorrow they will be reporting their employment figures, which are expected to gain for the sixth straight month. In fact, the economy is buzzing along so well there that there is no an expectation that they may raise the benchmark interest rate again next month. The Aussie is in a clear uptrend and I expect it to test 2010 highs very soon.
Kiwi (NZD): The Kiwi is also another good economic story, though not as strong as the Aussie. While the interest rate decision due out tomorrow is expected to be unchanged, overall Asian recovery will benefit the Kiwi. The most important take-away from the rate decision will be the language used to give a clue as to a timeframe for further hikes. And should they surprise the market with a rate hike (highly unlikely), then lookout above!
Loonie (CAD): The Loonie is just kind of hanging out today, with no real news on tap in Canada. Oil is higher so the Loonie is up; and also riding the coattails of the Aussie and Kiwi. The only anomaly is USD/CAD, as there is dollar strength this morning.
Euro (EUR): The Euro is mixed this morning. On the one hand, now that the risk of a Greek default is mitigated, the focus is back on the fundamentals in the Euro zone. On the other, news out of Germany is that German exports are down, but German CPI is up. Traders are using this opportunity to cover some EUR/USD shorts, but otherwise the Euro is down vs. the commodities and up vs. the rest. I expect EUR/USD to be range-bound for a bit.
Pound (GBP): Another tough day for the Pound, which would be down across the board if not for the Yen. The Industrial production figures and manufacturing came in negative, marking the first decline since last August. This is likely to keep rates low in the UK for an extended period. Meanwhile, the BOE’s Adam Posen stated that he hopes their bond purchase plan “has done it” with regard to stimulating the economy but he didn’t rule out further quantitative easing.
Dollar (USD): There’s a bit of optimism about the dollar this morning as economic recovery appears to be going faster in the US than in Europe and Japan. As risk of a global collapse is lessening, traders are looking more toward the fundamentals. So the expectation is that we may see a rate hike in the US sooner than in Europe or Japan. However, don’t be surprised to see Dollar weakness should commodity inflation pick up.
Yen (JPY): The Yen is down across the board this morning in advance of the Japanese GDP report due out tomorrow as fears of deflation are warranted. Combine this with good news from the commodity currencies, higher commodity prices, and “risk-taking” and you have a recipe for Yen weakness. Carry traders are gaining more confidence and the Yen is the funding currency of choice.
As you can see, when global economic conditions become more stable, market fundamentals return to center-stage. Under “normal” conditions, currencies from the best economies will flourish, while those not doing as well will be sold.
And that’s the basic idea behind forex trading; that you want to own the strong currencies and sell the weak ones, hopefully picking up interest along the way!
To learn more about how you can take advantage of world events through the currency market, be sure to check out our currency trading courses!
To follow these events live with a free, real-time practice account, click here! Don’t miss out on the world’s fastest growing market!
Tags: account, AUD, Aussie, Australia, cad, canada, carry trade, commodities, commodity, course, currenc, currencies, currency, currency market, currency pairs, currency trading, decision, dollar, dow, economic, economy, EUR, Euro, Europe, fear, forex, forex trading, fundamental, fx, fxedu, gbp, Il, interest, interest rate, Japan, jpy, Kiwi, live, loonie, market, Mike Conlon, news, nzd, oil, pair, pound, practice, practice account, rate decision, short, ssi, time, trade, trader, trend, uptrend, USD, Yen
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Yen: Good News/Bad News= No News
By Mike Conlon | November 16, 2009
There were a few reports coming out of Japan yesterday which could have seemingly moved the market, but the opposite effect has occurred. In this regard, the good news has negated the bad news and has caused the Japanese Yen (JPY) to trade in a tight range, though off slightly against other currencies.
The first bit of news was about the “horrific Japanese fiscal situation”, as reported by Bloomberg. This was the bad news.
The good news was that Japanese GDP came in at a surprising gain of 4.8%, ahead of all 20 analysts who had made projections on this figure. All told, this figure looms positive for the world’s second largest economy.
Also to note is that APEC, the Asia Pacific Economic Cooperation, pledged to maintain their stimulus measures until the recovery is on “solid footing”.
As a result, stocks and commodities are higher, and the Canadian dollar (CAD) is benefiting from this, +1.03% vs. USD and +.90% vs. JPY.
This also puts the risk-taking trade back in play.
I’m going to wait to see if the market decides to put any more emphasis on either of these news items and which way the market will move.
To follow this currency pairs in real-time, be sure to sign up for a free practice account!
Tags: account, cad, commodities, currenc, currencies, currency, currency pair, currency pairs, dollar, economic, economy, free, fxedu, Il, Japan, jpy, market, Mike Conlon, news, practice, practice account, stock, stocks, time, trade, USD, Yen
Topics: What To Look At In The Market | 1 Comment »
EUR/USD Breaks 1.50!
By Mike Conlon | October 22, 2009
From the “just a matter of time dept.”, the Euro reached 1.50 today against the dollar. The trend is clearly up for this pair, as US dollar weakness is no big secret. However, for as much complaining as you hear around the world regarding the weak dollar, the Euro-zone is perhaps that area that is the MOST adversely affected by it. (click chart to enlarge)
A note out of UBS today stated that, “If euro-dollar continues to gain in a volatile manner ahead of the November Group of 20, action at that meeting can be expected”. That action could be a concerted effort to weaken the EUR/USD.
So keep I’ll be keeping an eye on this pair to look for clues that would indicate that a reversal may be imminent. But for now, US dollar weakness rules “supreme”!
To follow this pair real-time, get a free practice account today!
To learn about how government actions cannot affect different currency pairs, check out our currency trading courses!
Tags: account, blog, course, currenc, currency, currency pair, currency pairs, currency trading, dollar, EUR, Euro, eurusd, forex, forextrading, free, fx, fxedu, Il, meeting, Mike Conlon, practice, practice account, time, trend, USD
Topics: What To Look At In The Market | 1 Comment »
The Swiss confirm that they are intervening when the Franc strengthens!
By Sean Hyman | July 10, 2009
The Swiss are intervening in their currency when they notice the franc’s strength. This is likely to continue until their economy no longer suffers from the franc’s appreciation OR until global economic growth is solidly underway to where traders are “franc sellers” once again as they seek out higher yielding currencies at that point. Here’s the Bloomberg article that confirms the Swiss actions: http://www.bloomberg.com/apps/news?pid=20601083&sid=ad95AZDGUM9s So while many pairs are falling lately, the Swiss are attempting to put a floor under EUR/CHF in particular. If they are successful, then one could pick up some meager rollover interest daily with minimal downside risks when compared with other currency pairs out there.
Want to learn more about fundamentals and technicals? Sign up for an inexpensive, only forex course today and we’ll show you how: http://www.mywealth.com/currency-trading.php
Also, get a free, real time demo trading station here: http://www.fxedu.com/practice-forex-account
Sean Hyman
Tags: account, article, blog, CHF, course, currencies, currency, currency pair, currency pairs, demo, demo trading, dow, economic, economy, EUR, forex, forextrading, franc, free, fundamental, fx, fxedu, Hyman, interest, mywealth, news, practice, real time, Sean, Sean Hyman, station, Swiss, technical, trade, trader, trading station
Topics: What To Look At In The Market | 1 Comment »
The dollar is on the fence. Could tip either way shortly!
By Sean Hyman | June 8, 2009
When you look to currency pairs like EUR/USD and USD/CHF, you’ll see that the dollar is right on the trend line on the daily chart. It’s threatening to break down on EUR/USD and break upward on USD/CHF…but the question is: Is it a fake out? Or will these recent trend changes stay intact? We’ll know shortly but we have to let the price “judge that” by what it does rather than “betting” ahead of time and gambling on which way we “think” it will go. Rather we should “follow” the way that it does end up going. Pros are trend followers. Novices are always trying to guess ahead of time on the near term trend. So see if “dollar strength” prevails or if it’s a fake out and the foreign currencies keep their recent uptrend against it. The verdict will be out shortly!
Tags: CHF, currencies, currency, currency pair, currency pairs, dollar, dow, EUR, fxedu, Hyman, lower, Sean, Sean Hyman, time, trend, uptrend, USD
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Know your Patterns!
By Mike Conlon | June 4, 2009
As currency traders, it is extremely important to know technical patterns. Especially if one plans to trade in shorter-term time-frames. Yesterday I wrote about looking at different time-frames and finding trades that I may not otherwise know existed. And this part of my daily routine. Allow me to explain.
Every morning when I begin my day, I look at all of the currency pairs I intend to trade in as many time-frames as possible. I am looking for discernible patterns that I recognize that will give me a clue as to which way a pair may be moving that day. Once I have a few patterns that I like, I then check for news or information which may give me a clue as to why a certain pattern is forming. Here’s one I found this morning:
(click chart to enlarge)
As I was flipping through my charts, I came upon EUR/USD and saw this beauty on a 3-hour chart. A near-perfect head and shoulders pattern! If you look at the chart, you can see both shoulders (marked by an ‘S’) and the head (marked by an ‘H’). This is a reversal pattern and tells me that if the BODY *note not the wick* breaks the neckline, then its going to be a pretty good short opportunity.
If the candle does not break the neckline, then I can consider getting long and using the neckline as support, placing my stop just below that area.
Upon checking out the news, I know that the ECB had a rate meeting and that ECB President Trichet made some comments. Now I’m not going to pretend to be able to know the effects of his comments or actually even what he said for that matter, but I will let the market tell me.
By using a technical set-up to get into a trade, I can sport low-risk entries for what I’m hoping will be profitable trades. To learn more about how you can spot patterns like this one, check out our currency course. Just think, if you learn just one set-up from our course and you make a profitable trade, then the course has paid for itself!
Tags: blog, charts, comments, course, currency, currency pair, currency pairs, EUR, explain, forex, forextrading, fx, fxedu, market, news, rate, spot, technical, time, trade, trader, trades, USD
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Trading in Different Time-Frames!
By Mike Conlon | June 3, 2009
When trading different currency pairs, it is important to be aware of the time-frames you are trading in so that you can take advantage of different moves. Today is a perfect example of this scenario. So far this AM’s biggest losers are the commodity currencies. The Aussie dollar (AUD), Canadian dollar(CAD), and New Zealand dollar (NZD) are all losing ground against the US dollar (USD) and the Japanese Yen (JPY).Does this mean it is time to get short? Not so fast. In previous articles Sean Hyman has made a great case for these currencies and frankly the charts don’t lie! The uptrends on the commodity currencies have been going up steadily and the fundamentals are in place for their rally to continue. But what to do about a day like today?This is where looking at different time-frames can help you. Take a look at the charts below. The first chart is a 5-minute chart of the AUD/USD pair. The lines drawn on the chart represent short-term resistance, so trades entered on the short side near those resistance points would provide low-risk entries for a short position.(click on charts to enlarge thumbnail)
The chart on the right side is the daily chart of the AUD/USD pair. As you can see, the trend is clearly up. Which means that you want to be long, and brings us to the theme of the day, that you can be in opposite positions on the same pair at the same time! This is known as “hedging”, and can really help add to your profits and help limit your losses.
Recently the NFA (National Futures Association) outlawed this practice here in the US, but this is still allowable abroad. If you would like to learn more about hedging or how you can open a hedging trading account with a broker abroad, email us at: sales@fxedu.com.
Tags: article, AUD, Aussie, blog, cad, charts, commodity, currencies, currency, currency pair, currency pairs, dollar, forex, forextrading, fundamental, hedging, Japan, jpy, new zealand, new zealand dollar, nzd, spot, ssi, time, trend, uptrend, USD, Yen
Topics: What To Look At In The Market | 1 Comment »
Dollar Sells off Hard…Oil - Above $61!
By Sean Hyman | May 20, 2009
The dollar is breaking lower…oil heading higher (hit $61 a barrel so far). The EUR/USD and AUD/USD are soaring while USD/CHF is tanking hard.
We have a broad “dollar sell off” underway so far this morning.
For Americans, this is bitter-sweet. This could help their stock and commodity investments but will kill them at the gas pump, at the grocery store and when they purchase other goods (commodities). So their purchasing power from their paycheck erodes.
How can you fight this off? Buy EUR/USD and AUD/USD. The euro is the “anti-dollar” and the Aussie does well when commodities do well.
So being “long” these currency pairs will help you fend off the effects of a falling dollar.
Get a demo or live account, here today: http://www.fxedu.com/
Just click on “Practice Account” or “Live Trading Account”.
Happy Trading!
Sean Hyman
www.forextradingblog.com
Tags: account, AUD, Aussie, blog, CHF, commodities, commodity, currency, currency pair, currency pairs, demo, dollar, EUR, Euro, forex, forextrading, fx, fxedu, invest, live, lower, oil, practice, practice account, Sean Hyman, ssi, stock, USD
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Low Momentum Begets High Momentum!
By Sean Hyman | May 7, 2009
Yesterday was the “ho-hum” day for intra-day traders. However, low volatility begets high volatility. It doesn’t have to occur the very next day…but one thing’s for certain…if there’s low volatility for a period of time, your “radar” should be on alert for the breakout because it will usually be powerful and directional.
Today is that day. The yen is tanking against the commodity currencies the most (NZD/JPY, AUD/JPY) but also is tanking vs. the euro too (EUR/JPY). So all of these pairs have bolted higher to the top of the percentage gainers on the list.
That means that “today”, big traders are “risk seekers” and have their offensive team out on the field. They’re buying commodity currencies predominately.
NZD/JPY is up a whopping 3.29% so far on the day and AUD/JPY is right behind it at 2.39%.
Also, as I’m writing, AUD/USD and NZD/USD are working their way up the lists. So they’re now buying up these currencies vs. the buck too.
So the theme of the day so far is yen and dollar selling (selling defensive currencies) and buying commodity currencies.
Also, I hope you noticed last night that Australia ADDED JOBS rather than lost jobs in their latest employment report. Their unemployment rate DECREASED.
Australia, in my opinion, has the strongest fundamentals of all major currencies out there right now. Therefore, if you agree, you’d want to look to AUD/USD, AUD/JPY, AUD/CHF, etc. for “long” opportunities as they arise and take them over other currency pairs that have buy signals with “lesser fundamentals”. Get started with a demo account today: http://www.fxedu.com/practice-forex-account
Sean Hyman
www.forextradingblog.com
Tags: alert, AUD, blog, breakout, buck, CHF, commodity, currencies, currency, currency pair, currency pairs, dollar, EUR, Euro, forex, forextrading, fundamental, jpy, nzd, rate, Sean Hyman, time, trade, trader, unemployment, USD, Yen
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