DailyFX Forex Radio - US Dollar Indecisive following FOMC, Canadian Dollar Shows Signs of Weakness
By DailyFX Radio | October 9, 2007
· US dollar rate cut expectations drop significantly
· However, EUR/USD may still go on to target 1.4157
· Be sure to view the rest of the week’s event risk on the DailyFX Weekly Calendar
To discuss these or any other FX topics with the DailyFX analysts, check out the Forum
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Tags: dailyfx, dollar, rate cut
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Forex - Risk of Bank of England Rate Cut?
By DailyFX Updates | October 3, 2007
Like the European Central Bank, the Bank of England is expected to leave interest rates unchanged. Typically they do not release a statement when rates are not altered, but last month they took the unusual step of doing so. Aside from that time, a statement was only released on two other occasions since the BoE became independent 10 years ago. This was in 1999 and 1998 and on both occasions, interest rates were cut the following month. Therefore even though no one is talking about it, there is a strong chance that the BoE could surprise with an interest rate cut. Even if they don’t, they may release another statement because not doing so would risk sending a hawkish message to the market. As recently as yesterday, the BoE has taken measures to increase its flexibility in the transactions that it conducts with commercial banks which is a signal that credit conditions remains a concern for the central bank.
Tags: currency market, interest rates, rate cut
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EUR/USD: The Beginnings of a Turn in Sentiment
By DailyFX Updates | September 24, 2007
Our Currency Analyst David Rodriguez picked this up. We are discussing this on the DailyFX Forum
This from IFR:
EUR/USD: Big Picture - Global Investor Sentiment Shifts
24/09/2007 20:22:00
New York, September 24. Two proprietary flow reports that came across our desks this morning reveal a slowly shifting sentiment by the global investment community in the wake of the Fed 50bp rate cut.
According to a very large European bank that manages significant equity flows, their client base witnessed a flow of $1.76bn into US equities last week, whilst the EZ experienced an outflow of $2.35bn (equivalent). Flows into the US from the UK equaled $0.56bn, and from Switzerland $0.38bn; however there were modest outflows to Japan, $360mn, and Asia Pacific (ex-Japan) $370mn. Foreign clients continued to sell Swiss equities to the tune of USD 1.41bn.
According to EPFR on their weekly “global news release” they witnessed similar flows in the funds they monitor. They noted a global shift of some $10bn out of money market funds into equities; GEM (global equity market) Funds, picked up $1.78bn in flows, and are back in positive territory y-t-d. According to EPFR, both Latin America and EMEA Equity Funds posted modest outflows despite collective performance gains of 6.93% and 4.37% respectively; however all Emerging Market Equity Funds combined (tracked by EPFR Global) had net inflows of $2.5bn during the week; their fourth straight week of inflows.
European Equity Funds were hit with “sizable redemptions” for the eighth time in the past nine weeks as y-t-d outflows broke $13bn. According to EPFR, slower growth, earnings downgrades and fears over the fallout from the US sub- prime crisis are draining sentiment towards the region. There is particular concern over the impact of the weak dollar on both European and Japanese exporters according to EPBR. Given these global “real money” shifts, it seems understandable that traders are getting gun shy now that EUR/USD is losing momentum, another week of similar flows and EUR/USD could start looking heavy. Spot last traded at 1.4080.
Tags: dailyfx, dollar, dow, fed, rate cut
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Trading the Fed Rate Cut Announcement
By Laetitia Vaval | September 19, 2007
Yesterday was pretty exciting since the Fed was set to announce whether they were cutting interests rates and if yes, by how much (25bps or 50bps). Opinions were mainly divided between a 25bp or a 50 bp rate cut. Before, the announcement at 2:15, I prepped myself by planning out the trades I would place for each scenario.
A 25bps cut would have been bullish for the dollar whereas a 50bps would have been bearish. I decided to trade the currencies I was most familiar with — that is the EURUSD and the GBPUSD.
At 2:15pm EST, the Fed announced that they were in fact cutting rates by half a point. The reaction in the US Dollar was immediate as you can see on the 5-minute charts above (EURUSD and GBPUSD). In the case of a 50 bp cut, my plan was to get long the Euro and the Pound as soon as possible right after the announcement.
The morning of the announcement I got long the EURUSD at 1.38818. The pair did not move much until the announcement in the afternoon. Within 5 mins the EUR jumped to 1.3965 - more than an 80pips. However, soon after the pair reversed and traded down. I got out of my position at the top of the wick of the next 5-minute (red) candle at 1.3936. I made $542 on that trade. OF course, the reversal was only temporary and a few minutes later the Euro continued trading up and at 14:40 hit 1.3980, and a few hours later hit a high of 1.3987. Had i held onto my trade longer my profits could have been doubled.
My second trade involved the GBPUSD. I also got long the pound in light of the half point rate cut. I actually ended up buying 2 lots of the GBP. I bought lot #1 at 2.00419 and sold it for 2.00670 ( a 25.1 pip gain). I bought lot #2 at 2.00528 and sold it at 2.00650. Looking at the 5 minute chart from yesterday, it is easy to see that I only captured a fraction of the profits that could have been made on this explosive upmove. As you can tell from the 2nd chart above, the GBP kept trading up to hit a high of 2.0150 about 35 minutes later. Same problem here as in the EURUSD, and many of my previous trades as you can see in my past postings — I exit my trades way to early and then they keep trading my favor.
About 15 minutes after the announcement I placed a few smaller trades on the USDCAD (got long at 1.0178) and re-entered a long position in the EURUSD at 1.3960. I exited those trades a few pips higher and made some minor profits — about $100.
I really enjoy trading the news. It’s very fast paced and there is a potential to make a lot of money. However, unfortunately market moving news like the fed rate cut do not happen everyday and in the meantime, I have to make some trades in the “slower” in between phases. Today, I’m going to focus on trying to find a few range-trading currencies.
Will update on that this afternoon.
Tags: dollar, dow, eurusd, forex, forextrading, pips, rate cut, trades, wall street warrior
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Fed Rate Decision: Greater Chance of a 50bp Cut?
By DailyFX Updates | September 17, 2007
With the clock ticking until the all-important Federal Reserve decision at 14:00 EST on September 18th, traders are quickly upping the ante and betting that central bank will indeed cut rates. Currently, Fed fund futures are pricing in a 54 percent chance of a 50bp cut against a 46 percent chance of a 25bp cut. On the other hand, compared to when we originally published this report on September 12th, the percentage of economists polled by Bloomberg expecting a 25bp cut has jumped to 78 percent from 69 percent, while only 18 percent expect a 50bp cut, down from 21 percent last week. So who will be proved correct: the markets or economists? More importantly, is there a chance that the Fed will actually do the unexpected and leave rates unchanged?Join our debate on the Fed rate decision at the DailyFX Forum
Learn How to Trade the FOMC Decision through the EUR/USD
Tags: dailyfx, dow, fed, rate cut
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DailyFX Forex Radio - US Dollar Loses On Mounting Fed Cut Expectations - Are They Overdone?
By DailyFX Radio | September 11, 2007
· US Dollar continues to lose as markets bet on a Fed rate cut - will it be by 25 or 50bps?
· British pound gains have slowed, but UK data could send GBPUSD above 2.0400
· Be sure to view the rest of the week’s event risk on the DailyFX Weekly Calendar
To discuss these or any other FX topics with the DailyFX analysts, check out the Forum
Click Link to Listen to our Evening DailyFX Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM091107.mp3
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Tags: dailyfx, dollar, fed, forex, forex trading, forex trading blog, gbp, rate cut
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