Source: ForexYard

The euro saw upward movement against its main currency rivals yesterday, after the ECB announced that euro-zone interest rates would remain unchanged at 0.75%. Meanwhile, risk taking among investors helped the price of crude oil stage a minor upward correction after falling more than $4 earlier in the week. Today, traders can anticipate significant market volatility following the release of the all-important US Non-Farm Payrolls figure. Analysts are predicting the jobs report to come in above last month’s figure, which if true, could result in risk taking and further boost higher yielding assets like the euro and crude oil.

Economic News

USD – US Employment Data Set to Create Dollar Volatility

An increase in US unemployment claims from last week resulted in the US dollar falling against several of its main currency rivals yesterday. The unemployment figure resulted in slight pessimism among investors regarding the US economic recovery. Against the Swiss franc, the dollar fell more than 60 pips during European trading to reach as low as 0.9310. A minor upward correction brought the greenback to 0.9320 by the evening session. The USD/CAD sunk more 55 pips for the day, eventually trading as low as 0.9811.

Today, dollar traders will want to pay close attention to the US Non-Farm Employment Change figure, set to be released at 12:30 GMT. The figure is widely considered the most important event on the forex calendar and consistently leads to market volatility. At the moment, analysts are predicting that today’s news will come in at 115K, slightly higher than last month’s 96K. If the news comes in significantly below the expected level, investors may revert to safe-haven currencies, which could boost the dollar against higher-yielding assets like the euro and AUD.

EUR – ECB Press Conference Results in EUR Gains

The EUR received a boost against its main currency rivals yesterday, following a press conference in which ECB President Draghi vowed to preserve the euro. The common-currency shot up to a two-week high against both the USD and JPY during mid-day trading, as the news resulted in investors shifting their funds to higher yielding assets. The EUR/USD traded as high as 1.3011, up close to 90 pips for the day. The EUR/JPY advanced more than 50 pips during mid-day trading to reach as high as 102.13. A slight downward correction brought the pair to the 102.00 level by the beginning of evening trading.

Today, the main piece of economic news is guaranteed to be the US Non-Farm Payrolls figure, set to be released at 12:30 GMT. Euro traders should note that any better than expected news may result in additional risk taking among investors, which could boost higher-yielding assets like the euro before markets close for the weekend. At the same time, if the news disappoints, the euro could reverse some of yesterday’s gains against its safe-haven currency rivals.

Gold – Gold Hits Fresh 11-Month High

Risk taking among investors, following the ECB’s decision to leave euro-zone interest rates unchanged, helped the price of gold reach a fresh 11-month high during mid-day trading yesterday. Overall, the precious metal gained close to $14 an ounce to trade as high as $1794.51. A slight downward correction later in the day brought prices to the $1790 level.

Today, gold may be able to extend its upward momentum following the release of the US Non-Farm Payrolls report at 12:30 GMT. Any better than expected news could result in additional risk taking in the marketplace, which may send prices above the psychologically significant $1800 level.

Crude Oil – Risk Taking Helps Crude Oil Recoup Losses

After falling close to $4 a barrel earlier in the week, crude oil was able to recoup some of its losses yesterday after euro-zone news led to investor risk taking. Overall, the commodity gained close to $2 during European trading to reach as high as $90.33.

As markets get ready to close for the weekend, traders should note that crude oil may be able to extend yesterday’s gains after the release of the US Non-Farm Employment Change figure. Any better than expected news may signal to investors that demand for oil in the US will increase, which would result in higher prices.

Technical News

EUR/USD

The Williams Percent Range on the weekly chart is approaching the overbought zone, signaling that a downward correction could take place in the coming days. Additionally, a bearish cross has recently formed on the same chart’s Slow Stochastic. Going short may be the wise choice for this pair.

GBP/USD

The Bollinger Bands on the daily chart are narrowing, signaling that a price shift could occur in the near future. Furthermore, a bullish cross on the same chart’s Slow Stochastic appears to be forming. Traders may want to open long positions for this pair.

USD/JPY

Most long-term technical indicators show this pair range-trading, meaning that no defined trend can be determined at this time. Traders may want to take a wait and see approach, as a clearer picture is likely to present itself in the near future.

USD/CHF

The Bollinger Bands on the daily chart are narrowing, indicating that this pair could see a price shift in the near future. Additionally, the same chart’s Williams Percent Range is approaching the overbought zone, indicating that the price shift could be bearish. Going short may be the best choice for this pair.

The Wild Card

USD/PLN

The Williams Percent Range on the daily chart has fallen into oversold territory, signaling a possible upward correction in the near future. Additionally, the MACD/OsMA on the same chart has formed a bullish cross. Forex traders may want to open long positions for this pair.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Central Bank News
    The central bank of Russia held its refinancing rate unchanged, warning that inflation continues to rise and there is only a minor risk of economic slowdown from the tight monetary conditions.
    The Bank of Russia, which surprised markets last month by raising its key rate by 25 basis points to 8.25 percent, said higher prices in recent months were mainly due to higher food prices and increases in regulated prices and tariffs.
    “However, the continued increase in the core inflation rate implies that inflation is spreading to other consumer market segments, while, according to the Bank of Russia estimates, significant demand-pull pressures are absent,” the bank said after a meeting of its board of directors.
    Inflation rose to an annual rate of 6.6 percent in September, up from 5.9 percent in August, and above the bank’s medium-term target of 6.0 percent. Inflation has been rising the last four months.
    The Bank of Russia said data – such as industrial production, investment and consumer demand – pointed to a slowdown in economic activity in August, but employment and confidence have not deteriorated.

    “Labour market conditions together with credit expansion support robust domestic demand,” the bank said, adding that output is close to its potential level.
    “There are certain signs of the stabilization of banking credit growth. However, the Bank of Russia judges that currently the risks of a significant economic slowdown stemming from somewhat tighter monetary conditions are minor,” the bank said.
    Russia’s economy expanded by 4.0 percent in the second quarter, down from a 4.9 percent annual growth rate in the first quarter.
     www.CentralBankNews.info 

Source: ForexYard

The markets saw relatively little movement during Asian trading last night, as investors were hesitant to open new positions ahead of today’s all-important US Non-Farm Payrolls figure. The EUR/USD remained close to a 2-week high for most of the night, and the pair is currently trading just above the 1.3000 level. Gold hit a fresh 11-month high at $1795.72 before staging a slight downward correction and dropping to its current price of $1791.40.

Main News for Today

US Non-Farm Employment Change- 12:30 GMT
• Analysts are forecasting that the US added 114K jobs in September, which if true, would represent a slight increase over last month’s figure of 96K
• Should today’s indicator come in above expectations, investors may shift their funds to riskier assets, which could boost currencies like the EUR and AUD, as well as commodities like crude oil, gold, silver and platinum

Read more forex news on our forex blog

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Central Bank News
Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By Central Bank News
    The Bank of Japan (BOJ) held interest rates unchanged and maintained the size of its Asset Purchase Program, as expected, saying the country’s economy was currently leveling off but should return to moderate growth, helped by firm domestic demand and a gradual improvement in overseas economies.
    The BOJ, which last month expanded the size of its asset purchases by 10 trillion yen to 80 trillion, said it still faces the challenge of overcoming inflation and returning to sustainable growth and would “proceed with monetary easing in a continuous manner by steadily increasing the amount outstanding of the Asset Purchase Program.”
    The BOJ has held its overnight call rate unchanged at 0.10 percent since December 2008, and after inflation picked up in the first few months of the year, deflation has now returned.
    In August consumer prices fell by an annual rate of 0.4 percent, the same as in July, and the BOJ said it expects annual inflation of around zero percent for the time being.

    Japan’s economy had been resilient to Europe’s debt crises earlier, but it is now feeling the effects.
    “Japan’s economic activity is leveling off more or less. Exports and industrial production have been relatively weak as overseas economies have moved somewhat deeper into the deceleration phase,” the BOJ said in a statement following a two-day meeting of its policy board.
     Nevertheless, the bank said domestic demand remained resilient, supported by reconstruction following last year’s earthquake, public investment was still rising and housing investment was picking up.
     Although businesses have become somewhat cautious due to overseas weakness, fixed investment by business is on a moderately increasing trend and the employment picture is on an improving trend.
    In the second quarter, Japan’s economy expanded by a 3.2 percent annual rate, up from 2.9 percent in the first quarter, easily beating the pace of other advanced economies.
    “Regarding risks, there remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem, the momentum toward recovery for the U.S. economy, and the likelihood of emerging and commodity-exporting economies simultaneously achieving price stability and economic growth,” the bank added.
    The BOJ’s board will meet again on Oct. 30 when economists expect it to cut its growth forecasts and possibly increase its asset purchase program.
    www.CentralBankNews.info

By MoneyMorning.com.au

‘Give a man a fish and he wants chips. Teach a man to fish and he’ll complain about how boring fishing is. But build a fish trap and you can both laze about all day long in retirement.’

– Anonymous monk from Pembrokeshire

Those monks from St Dogmael’s Abbey understood wealth better than your financial advisor. They lived near the river Teifi in England 1000 years ago. And were faced with two problems. They had to feed a bunch of monks with fish, because that was the only meat they were allowed to eat. But they had better things to do than stand on the beach or river bank all day long. We’re not sure what they did spend their time doing, but the important thing is that they managed to do something other than desperately try and make ends meet.

So how did they do it? They built a giant fish trap. It’s more than 250 meters long and was discovered by Google Earth.

If that seems like an odd spot to put a fish trap, that’s because the river and coast have moved in the last 1000 years. Blame it on climate change.

Anyway, the point of this fish trap is that the owners could use its passive income to generate free time. Passive income is income you don’t have to earn with your labour. Picking up fish still takes a bit of work, but it beats other methods in terms of time.

Notice how the trap is V shaped? That’s so the fish would collect in the same spot and not all over the trap. It’s easier to pick up the fish when they’re all in the same spot. Crafty monks, weren’t they? If only you could hire them as your investment advisor today. Sadly, Henry the VIII’s thugs got there first.

Still, you can learn from the monks and their fish trap when it comes to paying for your retirement. Assuming you want to give up work in favour of leisure at some point, you have several options. Scrounge off your kids or the government (everyone else’s taxpaying kids). Slowly sell down your assets over time, gradually becoming poorer and more worried about whether your assets will last. Or, you can use the St Dogmael’s Abbey investment strategy: Generate enough passive income to pay for your retirement.

The Fish Trap is an Income Asset

The monks never hoped their fish trap would increase in value. . They just collected the fish. It was an income stream to them, not something they would sell to live off. Imagine what that did for their piece of mind. It would be difficult to pray while your tummy is rumbling and the monastery’s bank account is dwindling. But if you’ve got your trusty fish trap generating fish while you pray, it becomes much more enjoyable.

That’s the kind of retirement you want. The monks probably took to gardening with the free time their fish trap gave them. They did it out of need, but you might want to do the very same thing in your retirement. Or perhaps you could go travelling to Europe. It’s entirely up to you.

The key is to look for investments that generate income, not capital gains. If that doesn’t sound sexy enough for you, consider this:

Fish Traps Get the Girl

Back when Australia was the Unlucky Country, a convict escaped from his overseers. We don’t remember his name, just what the documentary said about how he survived. He spent a rather long time out in the bush as a loaner or tag-along of Aborigine tribes. During one of his stretches as a loaner he built a fish trap. Next thing he knew he was rather popular with the ladies. That’s because his wealth didn’t diminish as time went on. His fish trap just kept on giving.

It’s the same with certain types of investments. They don’t expire or disappear while they generate the cash you need. Even long after you’re gone, someone could be benefitting. That makes you rather attractive. It means a steady stream of new clothes, cars and holidays. Not the slowly worsening state of your lifestyle along with your finances.

That’s Capital

The Bonner Family Office is dedicated to the idea of keeping fish traps in the family. It advises members how to go about keeping and growing wealth that lasts for many generations. Here’s how they explain the point we’re trying to make:

‘What the Rich Have That Everyone Else Doesn’t…

‘Wednesday, October 3, 2012

‘Today, I want to return to a core family office concept: capital. Having capital — wealth that you don’t spend — is what distinguishes the rich from everyone else.

‘That might sound obvious. But having capital…especially family capital…is different from just having money. Money comes and goes. Money can be spent and wasted. Capital cannot.

‘You invest capital carefully, deliberately and as part of a larger plan. It’s deployed in ventures that have the highest chance of success — such as a family business ¬— where you have a clear competitive advantage and intimate knowledge of the business niche.’

You get capital by saving and investing. But the kind of investing you should be doing is very different to betting on the stock market going up. That’s an immediate gratification or loss. You don’t know which you’ll get. Instead, investing should be about steady investment in assets that provide a steady stream of income beginning at some point in the future. You’ve got to build a fish trap one rock at a time. Only when you’re done does it really work. Then you sit back and relax.

The Big Risks

Henry the VIII sent his thugs to St Dogmael’s Abbey many years ago. There’s not much left. And the fish trap is probably a home for fish these days. Nothing lasts forever. Either the government or mother nature will get you eventually.

But our bet is that the fish trap fed dozens of monks at a time for hundreds of years. Not bad for a pile of rocks.

So what’s the equivalent to a pile of rocks in the ocean in today’s term? How do you generate income that pays for retirement? There are a couple of options. We’ll be revealing how a $10,000 dollar investment became a $20,000 a year income stream when our newsletter hits the online presses. And that was off a household name business about a quarter of Australians use every day. Subscribers will find out which four investments might manage the same feat in the future. The trick is one page of paperwork.

Nick Hubble
Contributing Editor, Money Morning

From the Archives…

Why This Crisis Still Has a Long Way to Run
28-09-2012 – Kris Sayce

We Said This Four Years Ago, But Nobody Would Listen
27-09-2012 – Kris Sayce

The Grave Mistake of Telling the Truth
26-09-2012 – Murray Dawes

The Mission Creep Destroying Wealth Around the World
25-09-2012 – Tim Price

He Wobbles, He Flails, He Prints
24-09-2012 – Nick Hubble

Don’t Teach Your Man to Fish

Being contained by 1.0167 support, AUDUSD rebounds from 1.0181, suggesting that a cycle bottom is being formed on 4-hour chart. Range trading between 1.0181 and 1.0300 would likely be seen over the next several days. Key resistance is located at the downward trend line, as long as the trend line resistance holds, the rise from 1.0181 is treated as consolidation of the downtrend from 1.0624, and another fall to 1.0100 area to complete the downward move is possible, only a clear break above the trend line resistance could signal completion of the downtrend.

Forex Signals

By Central Bank News
    The central bank of Malawi held its benchmark Bank rate unchanged at 21.00 percent against a backdrop of rising inflation, weak growth prospects and growing economic risks.
    The Reserve Bank of Malawi, which has already raised interest rates twice this year for a total increase of 800 basis points, said economic growth was estimated to slow to a 1.6 percent rate this year and then rebound in 2013, helped by improvements the availability of foreign exchange and a recovery in the agricultural sector.
    “According to financial stability assessments, macroeconomic risks have increased following the lower growth prospects for 2012. The risks have been reinforced by higher inflation expectations,” the Reserve Bank said in a statement following a meeting of its Monetary Policy Committee on Oct. 3.
    Inflation rose to 25.5 percent in August from 21.7 percent in July, the bank said, due to higher food and non-food costs.
    It said that high lending rates, averaging 31.4 percent, had heightened credit risks as some portfolios ran the risk of being non-performing. The high rates on the money market was also leading to low trading on the stock exchange and monetary and financial conditions remain tight.
    www.CentralBankNews.info
   
   
     

By TraderVox.com

Tradervox.com (Dublin) – The Bank of England officials have voted to continue with the current round of stimulus as fears about the inflation risk surged. Officials are split on whether to make additional stimulus after the current stimulus is completed this month. The nine-member Monetary Policy Committee left the stimulus package unchanged at 375 billion pounds. The 50-billion-pound additional stimulus made in July will have been completed by the time they meet next month. The Policy Committee will be grappling with the decision on whether to make additional stimulus amid the rising commodity costs.

Ben Broadbent, a BOE policy maker, indicated that the capacity for the BOE to make additional quantitative easing is hindered by the faster-than-expected inflation. These comments seem to put weight to Spencer Dale’s comment that a prolonged loose monetary policy risked putting the economy in an inflation crisis. Dale is a Chief Economist in London. According to Philip Shaw, an Economist in London at Investec Securities, the next BOE meeting will be against a background that will make the Monetary Policy Committee to think a bit harder on whether more QE is necessary. He further projected that the MPC will make another 50-billion pound additional stimulus while admitting that the “decision could be a close call.”

The MPC seems split on whether the risk of more stimulus is worth taking, considering the continued pressure on prices.  In an interview last week, Deputy BOE Governor Paul Tucker questioned whether additional stimulus is necessary, saying while the QE works, it sometimes fails to produce the desired results as it used to. The minutes of today’s BOE meeting will be released on Oct 17, when we will know how each member of the MPC voted. UK inflation dropped in August to 2.5 percent with a forecast of 2.1 percent being expected by the BOE in the first quarter next year. The Bank expects to reach its goal of 2 percent by the end of next year.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By Central Bank News
    The European Central Bank (ECB) held its key interest rate unchanged as inflation is expected to remain broadly stable in the medium term despite downside risks to the euro area’s economic outlook.
    ECB President Mario Draghi also told a news conference in Brdo pro Kranju, Slovenia, that inflation rates are expected to remain above 2 percent through this year and then fall below that level during 2013 and remain in line with the bank’s target of inflation that is close to, but below 2 percent.
    Speaking a month after the ECB unveiled its long-awaited plan to purchase an unlimited amount of bonds from euro area nations if necessary, Draghi took aim at continued criticism of his plan, especially in Germany, saying the central bank was ready to proceed as long as all conditions had been met.

    “Let me repeat again what I have said in past months: we are strictly within our mandate to maintain price stability over the medium term; we act independently in determining monetary policy; and the euro is irreversible,” Draghi said, adding:

    “The Governing Council was firmly committed to preserving the singleness of its monetary policy and to ensuring the proper transmission of the policy stance to the real economy throughout the euro area.”
    The ECB held its refinancing rate steady at 0.75 percent after cutting it by 25 basis points in July.

    He said the ECB’s decision to undertake unlimited purchases of sovereign bonds if needed, under the Outright Monetary Transactions (OMTs) program, had helped alleviate tensions in financial markets.
    Draghi added that it was essential for governments to continue to reduce fiscal and structural imbalances and proceed with the restructuring of the euro area’s financial sector.
    Economic growth in the euro area is expected to remain weak in the near term and only recover gradually thereafter as activity is dampened by the reduction in budget deficits in both the financial and non-financial sector, high unemployment and an uneven global recovery, Draghi said.
    “The risks surrounding the economic outlook for the euro area continue to be on the downside,” Draghi said, adding: “They relate, in particular, to ongoing tensions in several euro area financial markets and the potential spillover to the euro area real economy. These risks should be contained by effective action by all policy-makers in the euro area.”
    In September the inflation rate in the 17-nation euro area inflation rose to 2.7 percent from 2.6 percent in August, a higher-than-expected rate, Draghi said, that mainly reflected past increases in indirect taxes and energy prices.

    “Over the policy-relevant horizon, in an environment of modest growth in the euro area and well-anchored long-term inflation expectations, underlying price pressures should remain moderate,” he added.
     Growth in the euro area remains very weak, with its Gross Domestic Product shrinking by 0.2 percent in the second quarter from the first following zero growth in the first quarter. On an annual basis, the economy was 0.5 percent smaller in the second quarter of this year compared with the same quarter in 2011.
   
    www.CentralBankNews.info