Ban The Shorts!
By Mike Conlon | June 9, 2010
Both France and Germany have called on the EU to ban short-selling on certain stocks and government bonds with the intention to curb speculation in the market. While I am never a fan of this type of regulation, there does need to be some sort of “fix” for the market as speculation has gotten a little out of hand.
However, there are always unintended consequences to this type of action, and this could end up hurting their ability to raise capital. This could also hurt the forex market, as Euro-related pairs lack the volume to trade orderly. Nevertheless, there still is a ton of risk related to the Euro, with sovereign debt defaults the primary driver.
In addition, ECB President Trichet helped push the Euro higher with comments on the state of the Euro. As I mentioned yesterday, expect the game of “show and tell” to pick up, with officials telling us how great everything is but showing us little.
Also today, the US Fed Beige Book report comes out, with Bernanke expected to echo his comments from the other night.
In the forex market:
Aussie (AUD): Consumer confidence fell for the 3rd straight month down under, nevertheless the Aussie is higher on risk appetite. Fears of a global slowdown (particularly in China) and the raising of interest rates have added to the sentiment that the economy will slow in Australia.
Loonie (CAD): The Loonie is also higher this morning as oil prices have bounced higher and equity futures are set to open higher on risk-taking in the market.
Kiwi (NZD): The Kiwi is higher ahead of its interest rate policy meeting tomorrow, where the market is anticipating a 75% chance that the RBNZ will raise rates 25bp to 2.75%. Put me in the camp that is betting against the rate hike, as I feel the NZ economy rides on the coattails of Australia, and that the risk in the market may be too great to warrant a hike just yet.
Euro (EUR): The Euro is mixed this morning, trading higher against the safe-haven currencies, but lower against the commodity currencies. Comments from the ECB have helped push the Euro higher slightly, but let’s not forget about the huge risk the Euro poses as they struggle to get their fiscal houses in order.
Pound (GBP): The Pound has a bid this morning after a 4-day decline as investors seems more confident in the UK’s ability to combat their fiscal woes, much more so than the EU. The UK trade balance missed estimates, but narrowed from last month’s reading.
Dollar (USD): Today we get “Fedspeak”, as Bernanke gives his beige book report to Congress. I do not expect any change in language from the Fed Chief, and at this point I’m guessing that we will not see a rate hike this year. The Dollar has been higher this year on the flight to safety trade, and at this point I believe that inflation is a non-issue.
Yen (JPY): The Yen is lower this morning as risk-taking inspired carry trades are taking place ahead of the New Zealand rate decision. Japan will report its own GDP figures tomorrow, which are expected to show moderate but steady growth. In addition, new Finance Minister Noda said he would like to see price gains above 1%, but didn’t make that an “official” inflation target. Japanese deflation has plagued its economy for some time.
As I mentioned yesterday, this is “cheer-leading” week for the various markets, as the lack of hard economic data is supplanted by discussions of various economic situations.
I am always skeptical when it comes to government announcements and prefer to analyze the hard data myself. But with that in mind, you have to pay attention to what they are saying.
As a trader, it is important to trade what you see and not what you think should happen. If Bernanke wants the market to go up, you should play along even if you think the fundamentals don’t match. However, be sure to exit quickly at the first sign of market sentiment change as the market is always right, regardless of what is said.
So pay close attention to the technicals as the various market participants digest the rhetoric.
Do you have a strong grasp of technical analysis?
If not, be sure to check out our affordable 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, analysis, AUD, Aussie, Australia, Bernanke, cad, carr, carry trade, China, comments, commodity, course, currenc, currencies, currency, currency trading, data, decision, dollar, dow, ECB, economic, economy, EUR, Euro, fear, fed, forex, forex market, franc, free, fundamental, fx, fxedu, gbp, Il, interest, interest rate, interest rates, invest, investor, Japan, jpy, Kiwi, live, loonie, lower, market, meeting, Mike Conlon, new zealand, nzd, oil, pair, pairs, pound, practice, practice account, rate decision, sentiment, short, ssi, stock, stocks, technical, time, trade, trader, trades, Trichet, USD, volume, Yen
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Summer Upon Us!
By Mike Conlon | May 28, 2010
For now, the Euro zone debt crisis appears to have been averted. For now. The Euro is higher for the second straight day as short-covering is taking place. As I’ve repeatedly mentioned, every day that the Euro can get by without negative news is a positive for world markets in general. As a result, we’ve seen recent gains in world equity markets and commodities as they rebound from 9-month lows.
However, don’t be lulled into a false sense of confidence as there still is major work ahead for the Euro. The trend is still clearly down, and there is possible resistance in the 1.245 & 1.26 ranges.
This morning, consumer spending figures in the US came in worse than expected, exhibiting signs that the consumer-led recovery may have stalled. Heading into the long weekend here in the US, expect volume to be light as the “summer slowdown” officially kicks off.
So this morning started off as a mild risk-taking day, which could flip to risk-aversion as the market hasn’t forgotten the economic challenges that lie ahead.
In the forex market:
Aussie (AUD): The Aussie is lower this morning as profit-taking and mild risk-aversion appears to be creeping back into the marketplace. The Aussie had a nice pop off its lows just below .81 vs. USD.
Loonie (CAD): The Loonie is also turning lower as the consumer spending figures have helped risk-aversion return before the long weekend. Oil is higher is back to roughly 74.5, after eclipsing 75 in yesterdays run-up.
Kiwi (NZD): The Kiwi is lower as well, taking cues from risk themes. Yesterday’s IMF report that the Kiwi may be overvalued is contributing to the selling, despite the fact that home-building approvals jumped to 8.5%, a two-month high.
Euro (EUR): The Euro had a bid earlier and tested resistance at 1.245 vs. USD, but selling is now taking place as traders clear their books for the long-weekend. Short-covering had pushed the Euro higher earlier, but bear in mind that the likelihood of any ECB action has been greatly reduced as activity in the common currency appears to have stabilized.
Pound (GBP): Consumer confidence in the UK fell to a 5-month low, as the “political honeymoon” may be about to end. Budget cuts in the UK intended to help with the fiscal deficit may mean that the UK is in for protracted growth going forward. The Pound is lower across the board.
Dollar (USD): The dollar is meandering around as consumer spending numbers came in less than expected causing it to receive a bid from mild risk aversion. The Michigan Confidence survey is due out at 10AM, which could help the Dollar find direction.
Yen (JPY): The Yen is lower this morning although mild risk aversion is driving market direction. Overnight, Japan reported an increase in its jobless rate indicating that the export-led recovery may not be translating over as business is still cautious about future global demand. In addition, deflation continued to plague the economy as consumer prices fell 1.6% which means that BOJ will most likely continue accommodative monetary policy as heightened government pressure to do so will like increase.
The return to fundamentals in the market may be increasing as risk drivers abate with every passing day that the Euro doesn’t implode. And while there is still considerable risk in the marketplace, expect today to be a lighter trading day as traders square their books for the long weekend holiday here in the US.
Going forward, as world economies appear to be committed to deficit reduction, expect economic slowdowns to occur in addition to the normal seasonal patterns. The challenge will be trying to contain global deflation, which could bring about another set up problem.
But until that happens, I’m going to be happy to get some sun this weekend and officially kick off summer. It’s been a crazy month, so I advise you to do the same!
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, cad, commodities, course, crisis, currenc, currency, currency market, currency trading, dollar, dow, ECB, economic, economy, EUR, Euro, forex, forex market, free, fundamental, fx, fxedu, gbp, holiday, home, Il, Japan, jpy, Kiwi, live, loonie, lower, market, mie, Mike Conlon, news, nzd, oil, pound, practice, practice account, rate, RSI, short, ssi, time, trade, trader, trend, USD, volume, Yen
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Holiday Hangover?
By Mike Conlon | April 6, 2010
Yours truly wasn’t the only one feeling the ill-effects of the Easter holiday, as both European and Australian markets were closed yesterday. However, with the holidays behind us, the forex market has wasted no time in digesting news which has sent the market into risk-aversion mode.
We did start the morning higher as the RBA raised rates in Australia to 4.25% for the fifth time in six months. And earlier this morning, the Loonie reached parity with the US dollar before pulling back. Last Friday’s NFP report was sort of a dud, as the closure of stock markets helped to reduce volume. While the number of jobs gained is encouraging, the US government still has a long way to go as the fiscal stimulus is over and the jobs “created” by the census are short-term in nature.
Meanwhile, oil and gold have traded higher to 86.5 and 1127 respectively, showing signs that commodity inflation may be ready for another run if US rates continue to stay extraordinarily low. The Dow Jones came close to breaching 11K, only to be turned back 25 points short.
And lastly, the continued news out of Europe and the UK has caused weakness in their respective currencies and will continue to weigh heavily until there is resolution.
In the forex market:
Aussie (AUD): The Kiwi is higher this morning against all but the Yen which is showing technical strength despite the risk-aversion mood the market is in this morning. The RBA raised rates to 4.25%, as they feel that both housing and commodity inflation is starting to rise. The return to “normal levels” is tantamount to the RBA as Australia is showing a balanced economy despite the ongoing worries of a slow US economic recovery and a potential China slowdown.
Loonie (CAD): For those who have followed this blog closely, you will notice that I have replaced the Kiwi with the Loonie in the “ladder of strength” as I believe the Loonie is set to further out-perform the Kiwi in the near future. Earlier this morning, the Loonie reached parity with USD as oil prices advanced beyond 86.5 and as Australian rates were hiked. The only news of significance for the Loonie this week is Friday’s unemployment report.
Kiwi (NZD): The Kiwi got bumped down a notch as they could only ride the Aussie’s coattails for so long. Business confidence has slowed in New Zealand as weak consumer demand has reduced hiring and curbed corporate profits. New Zealand appears to be in no rush to raise rates, which could hold steady well into the second half of the year.
Euro (EUR): The Euro is lower this morning as renewed fears over Greece’s ability to raise enough capital to service its debt have arisen again. In addition, tomorrow the Euro zone will report its GDP figures and will have its rate policy meeting on Thursday which is expected to remain unchanged.
Pound (GBP): The pound is lower this morning as the date for the spring election has been set for May 6th, and renewed fears of a “hung Parliament” have resurfaced as uncertainty over whether or not a political majority will be elected. It is widely feared that a hung Parliament will not have the political will to reduce UK deficits which have been weighing heavily on UK economic recovery. In addition, the UK will have its GDP estimates on Thursday, as well as the BOE interest rate policy meeting which is expected to leave rates unchanged.
Dollar (USD): The dollar is showing some strength this morning as risk-aversion plays and European weakness are dominating the morning. This week are going to get a lot of Fed chatter, as the FOMC policy meeting minutes are due out today, followed by a bevy of speeches from various Fed governors on Wednesday. This could give some insight into “Fed logic”, which many liken to “jumbo shrimp”– that is—an oxymoron. But don’t count on it.
Yen (JPY): The yen is higher across the board this morning as it is pulling back from recent weakness as risk-aversion is slowing the market. The Japanese interest rate decision is due out tomorrow and is all but certain to remain unchanged. However, signs that economic recovery is taking place are overshadowed by rampant deflation, and the ongoing battle between the BOJ and the government is bound to produce no “winners”.
Outside of the Aussie rate hike, not much to get excited about today as far as economic news is concerned. There is still considerable risk in the market place and now politics is starting to really become a drag on individual economies.
Those economies that have the political will necessary to take appropriate actions will be rewarded, and those who let politics gets in the way of returning to sound fiscal and monetary policy will be punished. Because at the end of the day, it is fiscal policy that can be controlled; more so than monetary policy.
As a result of the economic crisis, monetary policy has become reactive as opposed to proactive as the whims of politicians may have been toxic. Only time will tell who are the winners and losers. Until that picture becomes clearer, I am inclined to err of the side of caution.
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, blog, BOE, cad, China, closed, commodity, course, crisis, currenc, currencies, currency, currency market, currency trading, decision, dollar, dow, easter, economic, economy, EUR, Euro, Europe, fear, fed, forex, forex market, free, fx, fxedu, gbp, gold, holiday, Il, interest, interest rate, Japan, jpy, Kiwi, live, loonie, lot, lower, market, meeting, mie, Mike Conlon, minutes, new zealand, news, nfp, nzd, oil, pound, practice, practice account, rate decision, RSI, short, ssi, stock, technical, time, trade, unemployment, USD, volume, Yen
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Quiet Day Today!
By Mike Conlon | January 18, 2010
Without the benefit of the US stock market trading today, the currency market is meandering around, trying to decide which way it wants to go. It appears as though there is slight risk-taking, with the commodity currencies up vs. the US dollar (USD) as traders re-establish positions that they had taken off for the long weekend. The Euro is also weak, but up marginally against USD.
While there appears to be heightened risk in the world markets, the dollar is not responding that way– yet. This week all eyes will be on the quality of US earnings reports, as well as any news out of the Euro Zone in regards to the mounting situation in Greece.
This week is somewhat quiet as far as news events go, with the Bank of England policy meeting minutes, Canadian CPI, and the US Philly Fed highlighting the potential market movers.
When the US markets reopen tomorrow, I expect to see risk-taking trends continue unless/until some news hits the tape. But without decent volume today, I’m on the sidelines.
I’m actually going to do some testing of some automated trading systems we are going to be offering so stay tuned for teh results!
To learn more about the forex markets, be sure to check out our currency trading courses!
Tags: bank, commodities, commodity, course, currenc, currencies, currency, currency market, currency trading, dollar, EUR, Euro, fed, forex, forex market, fx, fxedu, Il, meeting, Mike Conlon, minutes, news, stock, trade, trader, trend, USD, volume
Topics: What To Look At In The Market | 1 Comment »
End of the Year Blowout Sale!
By Mike Conlon | December 28, 2009
END OF THE YEAR BLOWOUT SALE! OVER 55% OFF!
As we come to the end of 2009, now is the time to look back and reflect upon this past year and to think about making changes going forward. 2009 was a “roller coaster” of a year for investors and many were left wondering what to do when the markets were collapsing and then missed the rally back.
However, one group of investors was able to navigate the treacherous waters of 2009 with relative ease and was able to turn market panic into profits! You may be asking yourself where these investors found these opportunities…..
In the Currency Market!
MAKE YOUR #1 NEW YEAR’S RESOLUTION TO GET EDUCATED!
Did you know that the currency market is the largest financial market in the world with over $3 trillion traded every day and is 30 times larger than the daily trading volume of NYSE and NASDAQ put together?
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We want to help savvy investors who are looking for sound trading opportunities by offering them education, tools and resources to capitalize on this lucrative market.
We realize that many of our subscribers are novices to the currency market and that is why we are offering our subscribers from now until the end of 2009 our most complete and thorough currency trading program — ALL 3 COURSES — at over 55% off the regular price!
The FXEDU currency trading course bundle, valued at $1397, can now be yours for only $625!
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You will have over 6 months to complete the courses and will have 24-hour/day access to our instructors and course materials for one full year to continue your training throughout the year!
Don’t repeat the past mistakes of 2009 this year! Make this year’s resolution one you will remember for the rest of your life!
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Tags: account, charts, comments, course, currenc, currencies, currency, currency market, currency trading, data, dow, financial, fx, fxedu, Il, instructor, invest, pair, pairs, rate, spot, Swiss, time, trade, trend, volume
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Yen Weakness and Canadian dollar Strength Abounds this Morning!
By Sean Hyman | July 1, 2009
The theme for today so far is “yen weakness” particularly vs. the Canadian dollar (CAD). This has pushed CAD/JPY up about 1.53% so far this morning. However, many other yen crosses are trailing behind it: CHF/JPY, EUR/JPY, AUD/JPY, etc.
The worst performers this morning? USD/CAD and AUD/CAD. So since CAD/JPY is the strongest and these others are the weakest…it shows that there is CAD strength across the board this morning, dominating many currencies out there.
The unusual thing about this? Canadian banks are closed today for a holiday. Normally that makes a currency very “dull” more times than not. So in this case, there must be enough speculative volume out there to push this currency around in the absence of the big bank volume. Interesting!
U.S. ISM Manufacturing will be out shortly this morning. So be on the look out for that and what it comes out at. You can get that info at www.dailyfx.com .
Sean Hyman
www.forextradingblog.com
Tags: AUD, bank, blog, cad, CHF, closed, currencies, currency, dailyfx, dollar, EUR, forex, forextrading, holiday, Hyman, interest, ISM, jpy, Sean, Sean Hyman, short, time, U.S., USD, volume, Yen
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What is the biggest “market moving event” of the month typically?
By Sean Hyman | June 5, 2009
NFP: Non-Farm Payrolls in the U.S.
This event draws traders like bugs to a light.
However, it’s not always the most prudent thing to trade, especially for newer traders. Why? The volume can be thin before and during the event and even up to about 30 minutes to an hour or so afterwards.
You see, the big banks usually stop making new trades in the marker WELL BEFORE the NFP announcement because they don’t want to put on their huge trades (usually a billion units or more, no lie) right before an “unknown” like this. The pros aren’t much on gambling on what they don’t know and can’t quantify.
No, they want to know what they are facing before placing trades. So since the “big boys” are out of the picture, so is a lot of the “huge” fx volume that we’re all so accustomed to most of the time.
Why the huge draw to NFP? Because, since the volume is thin and the numbers can routinely come out well off of expectations, it set up an environment for huge pip moves. Take a look at the last NFP for EUR/USD. This pair normally moves an average of 180 pips over 24 hours right now. However, upon the NFP announcement, it moved well over 215 pips.
If you dare to trade this event…be aware that you should trade FAR FEWER lots than you normally trade…and stops would have to be wide. Be comfortable with the potential dollar loss that could happen and make sure it is no more than 5% OR LESS of your account equity. Get a demo to trade, here: http://www.fxedu.com/practice-forex-account
Tags: account, bank, blog, demo, dollar, EUR, forex, forextrading, fx, fxedu, Hyman, lot, minutes, nfp, pair, payrolls, pip, pips, practice, Sean, Sean Hyman, time, trade, trader, trades, U.S., USD, volume
Topics: What To Look At In The Market | 1 Comment »
Coming from Stocks…here’s what I appreciate about the Forex Market.
By Sean Hyman | May 8, 2009
My original background was in stocks. I thought it was the greatest market in the world…and still have long term investments there. However, if you’ve started there, you have a HUGE appreciation for the Forex market.
Why?
Because you’re able to trade 24 hours a day, not just 6 1/2 hours (during hours when most of the U.S. is at work doing their “day job”.
Because there are NO commissions, only a spread to pay (which stocks have also).
Because the volume is so huge that fills are so much better and slippage is reduced (even on market orders). Place a market order in stocks and place one in forex and you’ll immediately appreciate the difference.
Because data is based off of a country’s fundamentals and not a CFO’s version of how they’d like their books to read. So fundamentals are much more “sound” in forex, in my opinion.
I can get far more “technical signals” and entry opportunities because of the 24 hour a day market.
Because real time charts are free, real time quotes are free and I can get free research…even before I have a live account.
Because I can demo trade off of LIVE data and not a simulator.
Because I can demo trade and get used to the “mechanics” of a trading platform before risking live money in it.
Because I can start with a relatively small balance vs. stocks.
Because I can trade several times in a day and I”m not considered a “pattern day trader” and forced to carry a balance no lower than $25,000 (like in stocks).
Because I can earn DAILY interest, not just quarterly…like in stocks.
These are all some of the top reasons why I became a forex trader. So from the view point of a former stock trader, I figured that any of you that came from the same background could appreciate it AND any of you who didn’t might know that forex could be a better place to start for your “trading”. Get a free practice account here…so you too, can see why I love this market so much: http://www.fxedu.com/practice-forex-account
Sean Hyman
Tags: account, charts, data, demo, forex, forex market, free, fundamental, interest, invest, live, lower, money, quotes, real time, Sean Hyman, ssi, stock, stocks, technical, trade, trader, trading, trading platform, U.S., volume
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Get Ready to Trade today’s NFP Numbers. Also, Canada ADDED Jobs!
By Sean Hyman | May 8, 2009
Don’t forget that Non-Farm Payrolls comes out this morning at 8:30am EST. Previously, the numbers came in at -663,000 and it’s expected to improve to -600,000 this time.
Unemployment, however, is expected to rise from 8.5% to 8.9% this time.
Also worthy of noting…Canada just ADDED jobs as their report came out this morning…and their unemployment held steady with no increase.
Only one other country has ADDED jobs recently and that’s Australia.
So chalk one up for the “Commodity Currencies”.
Remember, the retail speculator feels the “need” to be the first one into the NFP trade. However, the pro waits 30 minutes to an hour or so and actually reads the report. Then they place their trades once they make their assessment and the huge volumes return to the market by then.
This is when big reversals can occur to the original move and sometimes be even larger than the initial spike move. So keep that in mind.
Get your free demo here and get ready to trade today’s NFP report: http://www.fxedu.com/practice-forex-account
Sean Hyman
www.forextradingblog.com
Tags: account, blog, canada, commodity, currencies, demo, forex, forextrading, free, fx, fxedu, market, nfp, payrolls, practice, Sean Hyman, time, trade, trades, unemployment, volume
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Don’t forget about Friday!
By Sean Hyman | April 7, 2009
Many banks will be closed for Good Friday. So it’s not just the U.S. banks closed. This will produce very light volume on this day and would be advisable not to trade in times like that. Click on the image to enlarge it. 
Tags: bank, bank holiday, blog, closed, easter, forex, forextrading, good friday, holiday, Sean Hyman, time, trade, U.S., volume
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