Forex Trading Blog

Unusually Uncertain!

By Mike Conlon | July 22, 2010

Those were the comments that were made by Fed Chairman Bernanke at yesterday’s testimony to Congress in describing his current view of the economy. This sent the market into a bit of tizzy, causing a sell-off in stocks and creating Dollar strength.

However this morning the markets are riding higher on the back of good US corporate earnings and better than expected European economic data. While stocks have been volatile lately, investors are starting to come around to realize that stocks may be the only chance they have to see gains in their portfolios as bonds are paying next to nothing.

That is investors who are unaware of the forex market. Those of you who have been following this blog know that the currency market offers added protection against downside risk and allows you to diversify into the economic story of other countries.

In Europe, stronger than expected PMI and industrial new orders data have helped the Euro rebound from yesterday’s lows. This all adds up to risk-taking in the market ahead of tomorrow’s release of the results of the European bank stress tests.

In the UK, retail sales figures came in better than expected and US jobless claims are due out at 8:30 AM EST.

In the forex market:

Aussie (AUD): The Aussie is higher on risk-taking despite the fact that business confidence figures declined for the third straight month.

Kiwi (NZD): The Kiwi is higher much like the Aussie but has the added benefits of comments from the finance Minister who stated that he is seeing signs of economic rebalancing. The tradables sector expanded 3.4%, negating declining consumer confidence figures which were down 5.2%.

Loonie (CAD): The Loonie is somewhat mixed today as oil is higher following risk taking themes. However the market is a tad hesitant as concerns over US growth could affect Canada more than the other commodity currencies. This is evidenced by Euro strength vs. the Loonie. BOC Governor Carney is due to speak today and there is some speculation that he may back away from the dovish comments which accompanied the most recent rate hike.

Euro (EUR): The Euro is higher this morning as better than expected industrial orders and PMI data show signs of economic growth. This comes a day in advance of the bank stress tests, which is currently expected to project further Euro strength and not weakness. Something interesting to note is that China has been European debt despite the risks which shows that perhaps they favor the European plan of austerity over the US plan of extend and pretend.

Pound (GBP): The Pound is trading as would be expected on a risk taking day. In addition, household spending figures showed an increase of .7% vs. the expectation of .5%, and retail sales ex auto came in at 1% vs. an expectation of .6%. This may cause the BOE to re-think policy if inflation does not fall back below 3%.

Dollar (USD): The Dollar is the whipping boy today as Bernanke basically told the world that the US economy stinks in no uncertain terms. This morning, jobless claims came in higher than expected at 464K vs. and expectation of 445K. Existing home sales and the house price index are due out later this morning but I don’t expect those figures to be encouraging either.

Yen (JPY): The Yen is mostly lower though trading higher against the Dollar, despite the fact that the rhetoric is starting to pick up from various ministers who are concerned about Yen strength. The Japanese are known to intervene in their currency but at this point the market does not care as the US dollar is clearly the least desirable currency.

Well short of calling Bernanke “Captain Obvious”; no kidding that US economic prospects are “uncertain”. However I don’t know why he thinks it is “unusual”. Let’s face it, Bernanke is more of a history buff than forward-thinker, and perhaps his reliance on his study of the Great Depression has led him astray.
World economies couldn’t be more different today than they were some 70 years ago. To think that because the economy is not behaving like you thought it would based on interpretation of an event that occurred so long ago is borderline stupidity.

Here’s some certainty for ya Ben: encourage this administration to stop the profligate spending! Economies around the globe have decided to cut the fat and take their medicine; it’s a shame that US politicians don’t have the same political backbone.

This is akin to saying that it is unhealthy for a person to lose 50 pounds. While this would be true for a 100 pound woman, it most certainly would NOT be for a woman who weighed twice that amount.

And that is the problem that we have in the US today folks—that when politicians look in the mirror, they can’t recognize that we are obese! It’s like reverse economic anorexia!

It’s time to cut the fat here in the US, starting with our politicians and this administration. Trying to maintain an unhealthy weight is, well unhealthy.

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, bank, Bernanke, blog, BOE, cad, canada, China, comments, commodity, course, currenc, currencies, currency, currency market, currency trading, data, depression, dollar, dow, economic, economy, EUR, Euro, Europe, existing, fed, forex, forex market, free, fx, fxedu, gbp, home, Il, index, interest, intervene, invest, investor, IRA, Japan, jpy, Kiwi, live, loonie, lower, market, mie, Mike Conlon, nzd, oil, pound, practice, practice account, rate, release, retail sales, RSI, short, ssi, stock, stocks, time, USD, Yen

Topics: What To Look At In The Market | No Comments »

Alert: NZD/JPY Breaks out Above 50! Next Stop 55-60!

By Sean Hyman | March 13, 2009

The Kiwi dollar has broken out agasint the Japanese yen on its daily chart. Get ready for another 500+ pips to come over the upcoming days to weeks. Click on the chart to enlarge it.

Get your practice account by clicking on the “Practice Trading” tab above. This way you can have FREE, real time access to the currency market to see what it is like or click here: http://www.fxedu.com/practice-forex-account

If you want to learn more about this market, go here to get the most knowledge for the least expense and most convenience: http://www.mywealth.com/currency-trading.php

For those of you who are at the point to where you are ready for a live account, start with a micro or mini account here: https://secure2.fxcorporate.com/fxtr/?plugin=0&locale=en_US_FX_EDU_LLC

Sean Hyman