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!
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Risky Business!
By Mike Conlon | March 9, 2010
From an outside perspective, some might be shocked at how quickly the market can flip-flop from market euphoria to fear on what seems almost like a daily occurrence. It’s like John Kerry on steroids! I kid, I kid. But on a more serious note, the market can wipe out days of gains in a single session as risk aversion can pop up for any number of reasons. Sometimes it’s justified; at other times it isn’t.
Case in point: this morning. The market had been moving along nicely then all of a sudden decides there’s too much risk in the world economy and then wham!—you get a market sell-off! What has changed so much from last Friday, to yesterday, to today?
Frankly, not much. You see, the financial markets are much like an expedition, venturing slowly into the unknown and then quick to retreat at the first sign of trouble. So what is that trouble today?
Damned if I know. Part of the role of market pundits is to “make sense of the chaos”. Most of the time I find these attempts to be lazy and disingenuous. So the top 5 I’ve heard this morning are (in no particular order): Greece, lower stock earnings, US healthcare legislation, the push for Chinese Yuan appreciation, and UK elections. And if you don’t believe any of these, I’ve got one of my own for you: it’s a technical pullback.
So be wary of attempting to try to “figure” the market out, and be sure to trade what you see and not what you think you know.
In currencies:
Aussie (AUD): The Aussie has pulled back from near its 2010 highs as risk aversion is dominating the morning market action today. However, the sell-off is not as bad as reports came in that Australian businesses are actively looking to hire and the business confidence index came in higher, prompting the market to believe that yet another rate hike may be coming next month.
Kiwi (NZD): The Kiwi isn’t faring as well as the Aussie, as yesterday’s big winner is now one of today’s bigger losers. Tomorrow’s rate decision and language may prove to be more exciting than previously expected, as the expectation is that it is the slimmest of slim chances that they will raise rates.
Loonie (CAD): The Loonie is lower this morning primarily on lower oil prices that are down roughly 1.5%. This snaps 7 days of gains, in what can be viewed as a welcome pause. This appears to be mild risk aversion so the Loonie is mixed.
Euro (EUR): The Euro is lower this morning across the board as stock earnings are lower and the ECB is saying that it potentially could accept lower rated bonds as collateral against new loans. Also the call for regulation on credit default swaps (CDS) and the news of the “lender of last resort” card being played all highlight the problems for the Euro zone. Notice I didn’t say Greece once—oops! Just did.
Pound (GBP): The Pound is lower this morning as reports came in that the UK housing market may be slowing as fewer price gains occurred than what was expected. This comes in advance of the UK GDP estimates due out tomorrow which could set the tone for UK rate policy going forward.
Dollar (USD): The Dollar is higher this morning on risk themes as stock market futures appear to set to open lower, though it not a certainty that they will remain that way all day. Look for some volatility as the markets trade back and forth, and definitely do not a rule out a reversal to the upside for equities which could be dollar-negative.
Yen (JPY): The yen is higher this morning on general risk themes and speculation that Japanese companies are repatriating profits before the end of the Japan fiscal year which is in April. This essentially means that demand for yen is higher as companies sell foreign currencies to buy yen, thereby increasing demand. This could be the reason why the market perceives that today is a risk-aversion day.
As you can see, there can be many reasons why currencies move outside of the normal risk themes which can disguise what may be really going on in the marketplace. When traders see these anomalies, they should be prepared to react. It would not surprise me today to see US dollar weakness, even though then yen may stay strong. Whether or not that is enough to push the US stock market and commodities higher remains to be seen.
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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Australia Hikes!
By Mike Conlon | March 2, 2010
Aussie Rate Hike, Canada to Follow?
As expected, the RBA raised interest rates today .25% to 4%, as the economy there has been humming along. More hikes are expected throughout the year. Later this morning, the Canadian interest rate decision is due out. And while it is not expected that the rate will change, the Bank of Canada may provide clues as to when this may happen.
That’s the good. As for the bad, there’s no shortage of negative news coming out of the Euro zone and the UK. Potential political gridlock in the UK and the Greek debacle are weighing heavily on the Pound and the Euro. Commodities are also higher in what can be deemed mild risk-taking.
In currencies:
Aussie (AUD): The Aussie is higher this morning as the RBA did the expected and raised rates to 4% as economic recovery is more advanced than anywhere else on the planet. Having just reported a surge in business confidence and explosive jobs growth, there could be up to another 1% in rate hikes as the year moves forward, depending upon whether or not inflation picks up. As of right now, inflation appears to be within the targeted range, which could suggest a slowing of rate increases which is dovish. This is why the Aussie is showing modest gains today and not explosive ones.
Kiwi (NZD): Surprisingly, the Kiwi is down this morning as there are dovish outlooks on economic recovery and inflation appears to be muted. So while Australia is raising rates; New Zealand could be at a standstill for some time.
Loonie (CAD): The Bank of Canada rate decision is due out later this morning and though the market is predicting no change, there may be some language hinting of future rate hikes which may come sooner than expected. Fourth quarter GDP came in at 5% vs. and expectation of 3.3%, showing much faster growth. Inflation is also very close to the target rate which could cause earlier than expected action. The Loonie is the best performer this morning, higher against all heavily traded currencies. Because the forex market is forward-looking, potential rate hikes usually trump actual ones. This is why the Loonie is higher vs. the Aussie.
Euro (EUR): The Euro is mixed this morning, trading lower vs. the commodity currencies but higher against the rest. Germany is putting immense pressure on Greece to cut its deficit and is basically in charge of the Greek bond offering which makes them the “holder of the purse-strings”. These austerity measures aren’t going over too well in Greece, as strikes are scheduled which usually lead to some sort of rioting. Greece has a tough pill to swallow and the citizens there don’t want to take their medicine. Stay tuned!
Pound (GBP): The political wrangling is heating up in the UK as fears that a “hung Parliament” may prevent the UK from tackling their economic deficit. With elections coming in a few months, the speculation that there will be no majority party could induce political grid-lock which will prevent anything from getting done. Does this sound familiar? It will be interesting to see the outcome of these elections, and whether the British actually vote to have the punch bowl removed from the party. The Pound is down across the board. Again.
Dollar (USD): USD is down against all but the Pound, as the big news in the US is going to be Friday’s Non-Farm Payrolls report. Expect the Dollar to trade on risk themes until then.
Yen (JPY): Japanese yen is higher this morning as unemployment fell unexpectedly to 4.9% and household spending increased for the sixth straight month, showing signs that domestic demand may be improving. However, yen strength is negative for exports and at this point it doesn’t seem like further expansion is in the cards. Let’s see if they decide to rein in government spending to tackle further debt, or provide quantitative easing to try to keep yen low.
As you can see, some economies are doing much better than others and those that look to decrease their debt and may be targeted lower in the short-term, but may reap the benefits in the long-term. Right now, look for the commodity currencies to lead the pack provided there is no global shock to the system.
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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Greek Comedy or Tragedy?
By Mike Conlon | February 25, 2010
Overnight, the ratings agencies added fuel to the fire in the Euro zone by claiming that further downgrades of Greek debt could be forthcoming. In addition, the market is catching on to the fact that in the UK, the debt situation is on par with that of Greece, making it vulnerable as well. Because the UK is not governed by Euro zone policy, they have been flying under the debt radar as there are no other member states to complain about their economy.
Combine this with disappointing European consumer confidence figures and rising unemployment in Germany, and you have a potentially explosive situation.
What this all adds up to is risk-aversion, which means that we’re seeing Japanese yen and US dollar strength, to go commodity currency weakness. Equity markets are lower across the globe and both gold and oil are trading lower.
In the currency market:
Aussie (AUD): The Aussie is down this morning on risk-aversion despite the fact that business investment rose 5.5% on China demand. This bodes well for the Australian economy and has increased the chances that the RBA will hike rates again next week, marking the fourth time in 6 months they have raised. However, global risk themes are heavy today and the un-wind of carry trades has the Aussie down 2.5% vs. the Japanese yen.
Kiwi (NZD): The Kiwi is down today as well on risk even though business confidence surged to a 10-year high in February, further fueling economic recovery. Now either residents of New Zealand are completely “off their rockers” or there actually is a good growth and recovery story going on there. I’m going to go with the former. As long as the entire global financial system doesn’t collapse, I’m looking to buy Kiwi on pullbacks. It will however be a challenge to overcome global risk themes.
Loonie (CAD): Well I guess everyone’s not quite as enamored with the Loonie as I am as futures trades are indicating that the Bank of Canada may be less aggressive with its interest rate policy in light of the weakening global recovery. In addition, the Olympics end this weekend and there is usually an “economic hangover” as the stimulus provided by this one-time event is effectively removed from the Canadian economy. With oil prices lower and general risk-aversion, the Loonie is now at a two-week low. I still like the Loonie to strengthen later in the year, but we may need to deal with some global risk first. Today the Loonie buys 93.5 US cents.
Euro (EUR): The Euro is down today on German unemployment and economic sentiment, yet is higher against the commodity currencies as risk-aversion is dominating the market today. We know about Greece and I mentioned the possible downgrades above which could move them closer to default, if the Euro zone actually allows that to happen. The Euro is fast approaching 1.34 vs. USD.
Pound (GBP): The Pound is lower this morning, as deficit fears and political uncertainty are shedding light on the dire economic situation in the UK. The delicate balance between reigning in spending and stunting economic growth may too much handle going into upcoming elections. The Pound is at a 9-month low to the Dollar trading at 1.5275. There was a note out yesterday that the Pound could reach parity with the Euro if economic conditions worsen.
Dollar (USD): Thank you risk-aversion is what the US dollar is saying this morning, as unemployment came in higher than expected. The durable goods numbers came in higher, which is positive for manufacturing. However, the economic picture is still not rosy here in the US. The Dollar is higher against all but the Yen.
Yen (JPY): Demand for Yen is much higher today as carry trades are un-wound due to global fears about economic recovery. The Yen has been strengthening as of late, and it will be interesting to see what the Bank of Japan does to prevent this from getting out of hand. The Japanese are no strangers to intervention in their currency; and they will not be making any moves on interest rates anytime soon. A strong yen hurts Japanese exports, which in turn will hurt economic recovery.
Stock markets are down across the globe, gold is trading at 1093 and oil to 77.75, down roughly 2.75%.
It was only a matter of time before all of the risky elements floating around the market converged and today might be that day. While there is definite fear in the marketplace, there are some growth stories out there. So be patient, and remember that in general, you want to own the currencies of strong economies, and sell those of weaker ones.
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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Carnage to Continue?
By Mike Conlon | February 5, 2010
In the wake of yesterday’s market carnage, all eyes were on this morning’s US Non-Farm Payrolls (NFP) report. The market was praying for a decent number to justify a move to the upside, as yesterday was the biggest one day drop we’ve seen in some time. World markets got crushed to the tune of 2.5% on average, and commodities sold off as well. As I correctly called yesterday morning, “Ugly with a capital U”.
So the markets were grasping for any positive news to reverse this down-trend and they “may” have found it in this morning’s NFP report. The NFP, which measures job loss, came in at -20K. Expectations for this number were all over the place but the fact that there wasn’t job growth would normally be seen as negative. However, the ray of hope in this report is that the unemployment rate dropped to 9.7% for the month, down from 10%. Now I’m no mathematician, but it seems highly suspect to me that the unemployment rate can go down, even as we see continued job losses. But whatever, in early trading it looks the market is going to “take the ball and run with it” as futures have bounced off of their lows. It would not shock me to see the market wake up at some point and realize it didn’t get what it is looking for. Today may be a continuation of Thursday’s bloodbath.
Here’s how the currencies are doing this morning:
Aussie (AUD): The Aussie was up in early action this morning paring back some of yesterday’s losses, as the initial reaction to the NFP was positive, encouraging some risk-taking. Whether this can hold throughout the day is another story. With all of the fear and uncertainty out there, investors may flee to safety over the weekend. Contributing to Aussie strength was the RBA’s Quarterly Monetary Policy Statement that stated that “economic growth will continue to accelerate, even if the policymakers are forced to raise the benchmark interest rate by ¾ of a point.
Kiwi (NZD): The Kiwi is up this morning vs. the Dollar and Yen, as mild risk-taking is still the theme at this point in the morning. No major news out of New Zealand.
Loonie (CAD): It’s a good morning in Canada today, as the Canadian economy gained 43K jobs last month, reducing the unemployment rate to 8.3%. This makes the Canadian dollar this morning’s big winner, as it is also benefiting from mild risk-taking and the bounce in oil. It is up across the board this morning, most notably against the Japanese yen.
Euro (EUR): Yesterday was a tough day for the Euro, as the flight to safety trade sent the common currency to a 6-month low near 1.365 vs. the dollar. The Euro is also known as the “anti-dollar”, so it gets hit particularly hard when there is major risk aversion. Throw in the problems with the PIIGS countries, and it’s no wonder ECB President Trichet was out this morning trying to defend the Euro and instill confidence that the potential contagion from the Greek “tragedy” will not spread throughout the region. It looks like the Euro may re-test that low as it currently sits near that low.
Pound (GBP): The pound is down this morning against all but the yen on the risk aversion theme.
Dollar (USD): The dollar had a huge rally yesterday and is mixed this morning, down against the commodity currencies but up against the Euro, Pound, and Yen. We could continue to see some near-term dollar strength, as heightened sensitivity to risk is occurring around the globe and market trends are pointing in that direction.
Yen (JPY): The yen is also mixed this morning, following the same themes as the US dollar, though down against USD.
In world markets, the Asian stock market got clobbered and closed down.
European stock indices are currently down as are the US markets, although it looks like we may have a reversal here in the US as the media monkeys try to put as much lipstick as possible on that NFP pig!
Gold and oil are flat, waiting for stocks to decide which way they want to go. Commodities were down roughly 3% yesterday.
As you can see, there still is MAJOR fear out there as economic recovery is not taking place as quickly as anyone would like. What I really want to stress here is that on a day like yesterday, when nearly EVERYTHING was down, the only 2 places to park your money that went up were in the currency market. If you had bought dollars or yen yesterday, you were a happy camper while everyone else was crying in their coffee.
Isn’t it time you see what this market is all about?
To learn more about how you can make gains even when nearly EVERYTHING is going down, be sure to check out our affordable currency trading courses.
To follow world 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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Fastest Growth since 2003!
By Mike Conlon | January 29, 2010
This morning, the US Q4 GDP figures came in at a better than expected 5.7%, the fastest growth since 2003. While this is seemingly good news for the US economy as it marks the 2nd straight quarter of growth providing further evidence that we moved forward from recession.
However, we’re not out of the woods just yet. There are still global concerns weighing heavily upon the markets, such as the Greek debt problem in the Euro Zone, as well as China’s restrictions on lending.
This morning’s currency action is rather neutral, as it can’t be described as either risk-taking or risk-aversion.
Here’s how world currencies are trading this morning:
Aussie (AUD): Gains in the Aussie have slowed down as the global slowdown, particularly in China, is expected to slow growth in Australia. This morning is a mixed bag for the Aussie, as it’s higher vs. the Japanese yen and British pound, but down vs. the US dollar and Euro.
Kiwi (NZD): The Kiwi is trading higher across the board and is showing the highest percent gain vs. the yen this morning, up 1%. They just reported a budget deficit for the first time in 9 years, as tax receipts have slowed and government spending picked up last year.
Loonie (CAD): Canadian GDP came in this morning at .4%, a smidge higher than expectations. Canada is showing slow but steady growth, which is a positive for the economy. The Loonie has been weakening against the US dollar as global risk appetite has abated and oil prices are down almost $6 this year.
Euro (EUR): The Euro is trading higher against the yen and the pound, but down against the rest this morning. Consumer prices rose 1% showing that inflation is starting to pick up in the region. Also to note is that fears over the Greek debt crisis are weakening as region considers all of its options.
Pound (GBP): The pound is down this morning against all but the yen, experiencing a technical pull back from its recent strength. Housing prices were up the most in 5 months and consumer confidence is improving. BOE policy-maker Andrew Sentance cautioned that the recovery can continue, “especially if interest rates remain low.”
Dollar (USD): The dollar is showing strength today after the GDP figures that were reported this morning. The fastest growth since 2003 is stoking thoughts that inflation may be closer than the Fed thinks.
Yen (JPY): The Japanese yen is down across the board today as the CPI index showed that deflation is still very prevalent in the Japanese economy. Finance Minister Kan called for the Bank of Japan to take a powerful approach to combat falling prices and a strengthen yen.
The stock markets closed down in Asia, but are currently higher in Europe and the US. Gold is down slightly and oil is up this morning.
So today is a bit of a mixed bag. Keep an eye on the correlations to watch for break-downs or irregularities to see if there are reversals or reversion to mean. Today seems like it will be a range-bound day going into the weekend.
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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Obama Spooks the Markets!
By Mike Conlon | January 22, 2010
In what can only be described as adding insult to injury, President Obama announced yesterday his plan for regulating the too-big-to-fail banks and bring back some provisions of the Glass-Steagall Act. Now don’t get me wrong, I think these banks should be reigned in and be subject to stricter regulation, but man, his timing couldn’t have been worse.
After the employment figures came out yesterday and the Philly Fed announcement, the stock market began to tank and we saw a rapid shift to risk-aversion. Combine that with the uncertainty created by Obama and we saw a volatile confluence of events. The sad part of all of this is blame game going on between Washington DC and Wall St.
The American people responded in Massachusetts by pushing back against the political machine and its a shame that the administration feels the need to pile on with the timing of this proposal. The “be careful what you wish for” line of thinking in Washington is disgusting, and the fear and bully tactics won’t gain them any political goodwill.
In general, I can’t stand politics but unfortunately this needed to be addressed as government actions can have a MAJOR effect on the market place.
This morning, I’m seeing a brief respite from yesterdays move but that doesn’t mean it won’t continue. Japanese yen (JPY) is strong this morning and the US dollar (USD) is weak.
Also this morning there was weaker than expected retail sales figures coming from both Canada and the UK. Both the Loonie (CAD) and the British pound (GBP) are down this morning. The Loonie is seeing added weakness as the price of oil has pulled back to around $76 on weak demand.
So if you’re an investor, I would lighten up on the risk-taking and keep an eye on news coming out of Washington DC. Either way expect market volatility to pick up.
To learn more about how politics and your investments are intertwined, be sure to check out our forex trading courses!
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Canada CPI, Risk Aversion Rule!
By Mike Conlon | January 20, 2010
This morning, Canada reported its CPI number which came in at -.3% for December and the year over year number at 1.3%, both of which were less than expected. This is significant because the CPI is a measure of inflation, and this number is much less than the Bank of Canada’s inflation target of 2%.
What this means is that it is highly doubtful that that the Bank of Canada will raise rates anytime soon. As I mentioned yesterday, this all but takes a rate hike off of the table until at least the second half of the year. As a result, the Canadian dollar (CAD) is down the most today, especially against the US dollar (USD) and the Japanese yen (JPY) -1.7% and 1.3% respectively.
Also to note is that today is a risk-aversion day. News out of China that they are going to restrict bank lending is a sign that they may be trying to slow down growth and are growing concerned about a potential real estate bubble. As a result, both the Aussie (AUD) and the Kiwi (NZD) are down as well.
The US stock market is also down on China fears, as is both oil and gold. So the Loonie is getting hit with the “triple whammy” today between risk aversion AND CPI numbers.
To learn more about how world events and economic figure can affect the forex market and how you can PROFIT from it, please check out our currency trading courses!
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NFP Surprise!
By Mike Conlon | December 4, 2009
This morning, the always-sure-to-generate-volatility Non-Farm Payrolls came in at a “shocking” -11,000, vs. analyst expectations of -130,000. This comes on the heels of the Obama jobs summit, and certainly is good news for the economy.
If you believe it. And I’m not sure that the market does.
Let’s take a look at a chart of AUD/USD to see what I mean: (click chart to enlarge)
The reason we are looking at this chart is because the AUD/USD pair typifies the risk trade. When things in the economy are seemingly good, risk appetite increases and investors seek out higher yield. And that looks like what happened right out of the gate this morning when the number was announced.
But then, the pair proceeded to sell off. There are 2 reasons I can think of for this happening:
1. The market perceives that the economy is improving more rapidly than expected and therefore Bernanke and the Fed are going to be able to raise rates MUCH sooner than expected.
2. No one believes the numbers are real. This brings a heightened sense of fear to the markets. Not to mention that the BLS (Bureau of Labor Statistics) revised their figure way down from last month. (190K to 111K)
Right now USD is up against AUD, NZD, EUR. The anomalies today are JPY and CAD. The former I have spoken about at length about why the Japanese are trying to weaken the yen. CAD is experiencing strength due to its status as a “commodity currency’ and is benefiting from rising gold prices. In addition and more importantly, the Canadian economy actually added jobs vs. a loss last month. Good news for CAD.
Does that mean that this we’re going to stay this way all day?
Check back later to find out!!!
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Tags: account, AUD, Bernanke, blog, cad, commodity, currenc, currency, dow, economy, EUR, fear, fed, forex, forextrading, fx, fxedu, gold, Il, invest, investor, Japan, jpy, market, Mike Conlon, news, nzd, pair, payrolls, practice, practice account, rate, time, trade, USD, Yen
Topics: What To Look At In The Market | No Comments »
USD to Strengthen on Double Dip Concerns?
By Mike Conlon | November 12, 2009
So I’ve kind of been looking around a bit for some sort of technical confirmation that something big may happen in USD to support a “hunch” that I have that the dollar may strengthen. Not seeing anything yet. And this is good. Because its usually opposite of how I tend to trade.
Readers of this blog know that I tend use a combination of fundamental and technical analysis, but normally I’ll find a technical set-up that I like and then do some research to see if there are any possible fundamental reasons that support my conclusions. Well now I’m searching high and low (pun intended) to find a technical set-up to support a hunch.
Not seeing the set-ups that I like. The nice thing about technical analysis is that you can ALWAYS find some sort of pattern or indicator that will confirm one direction or another, but its more important to have the patterns that you KNOW work time and time again.
We all know about the Fed’s commitment to keep rates low and therefore depressing the dollar, but the dollar could benefit from the risk-aversion trade if worries about falling into the dreaded double-dip recession ramp up. One of the main reasons why this fear may pick up is because of the removal of the stimulus programs and the pull back in quantitative easing.
In other words, the economy is going to have to stand on its own two feet. Much like a baby who’s taking his first steps, you’re always concerned about the inevitable fall. And with all of the fear out there, a fall is inevitable. How bad it is going to be is anyone’s guess.
I’ll be watching closely for technical set-ups in the dollar that may foreshadow this move, but will not be acting on the hunch. So, check back to see if I find any, and if you see your own, well you know what to do.
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Tags: account, analysis, blog, course, dollar, dow, economy, fear, fed, forex, fundamental, fx, fxedu, Il, Mike Conlon, rate, recession, RSI, ssi, technical, time, trade, USD
Topics: Ideas | No Comments »