Month: February 2014

By HY Markets Forex Blog

Forex trading caused the USD/JPY to rise modestly on Feb. 11, after global market participants reacted to the testimony that Janet Yellen provided when speaking with Washington lawmakers.

The greenback rose to as much as 102.71 yen during the session, according to Reuters. This figure compared to the exchange rate of 102.33 that was obtained the day before.

Labor market challenges noted

The new chair of the Federal Reserve, who officially took the helm of the central bank earlier this month, testified before the House Committee on Financial Services. She emphasized that while the labor market has done some mending over the last several years, there is a lot of work left to do.

Yellen also noted the key role that inflation plays in the policy decisions of the Federal Open Market Committee. She emphasized that the schedule that will be harnessed to taper quantitative easing is certainly not written in stone.

Continued use of easing expected
One market expert told Bloomberg that the comments of the Fed chair indicate a plan to maintain the use of bond purchases.

“Her message was continuity of policy and, matching that with continuity of outlook, suggests they remain on the same course,” Keith Hembre, who currently serves as chief economist for Minneapolis-based Nuveen Asset Management LLC and previously worked as a Fed researcher, told the media outlet.

Regardless, one market expert emphasized that the new chair of the Fed is perceived by many as being a major supporter of easy money policy, according to MarketWatch. Greg Anderson, who works for BMO Capital Markets as global head of foreign-exchange strategy, said that the statements made by Yellen did not lean in any particular direction.

“The underlying presumption is that she’s a megadove. So anything that doesn’t jive with that is a surprise,” he told the news source.

Shaun Osborne, who works for TD Securities in Toronto as chief foreign exchange strategist, provided his interpretation of Yellen’s comments to Reuters, which is that economic conditions will need to improve significantly before she lowers the monthly bond purchases.

“The clear message here is that the bar to doing less tapering is very high,” he told the media outlet.

Market experts are weighing in on the future of QE at a time when the Federal Reserve’s balance sheet has risen to more than $4 trillion over the last several years. Some have voiced concerns that the policies of the central bank will cause inflation to flare up.

Fortunately, these worries have not been realized, and Yellen even mentioned that the price level has been growing more slowly than the Fed would like.

Forex trading and QE

What might be far more relevant to those who engage in forex trading is the impact that the central bank’s bond purchases could have on the value of the greenback relative to other currencies.

Every time the Fed buys more bonds, it is causing the U.S. money supply to increase in scope. If the pace of QE is reduced, that means that the total amount of money circulating in the U.S. economy is growing at a slower rate.

Since Yellen is seen by many as being very dovish and a substantial advocate of bond purchases, the neutral tone of her statements helped the greenback to enjoy a brief spike, according to MarketWatch. The dollar has been thought of as being pushed lower as a result of the Fed’s use of stimulus.

Jobs data and Fed stimulus

One major concern that could have an impact on the pace that the FOMC uses in reducing its stimulus is how strong job creation is in the coming months.

The data released by the U.S. Department of Labor for December and January has been lackluster, and has shown only a minor improvement in the job market, the media outlet reported. Yellen said that the figures provided by the government agency for these two months were somewhat shocking to her. However, she emphasized that Fed policymakers will have time to figure out the pace of tapering.

The FOMC announced plans to reduce its current pace of bond purchases at the conclusion of the policy meetings it held in January and December. At the end of the former event, the Fed indicated its plans to reduce its transactions to $75 billion per month.

Then, at the conclusion of the second meeting, the FOMC indicated that beginning this February, it would purchase $65 billion worth of debt-based securities every month. These figures compare to the $85 billion that the Fed had been purchasing each month since late in 2012. During the time when the central bank was conducted these transactions, Ben Bernanke, who was chair of the Fed at the time, stated multiple times that the regimen of bond purchases could be tapered soon.

If economic conditions give the central bank enough reason to taper QE more quickly, such a situation could impact forex trading and motivate those involved to push the U.S. dollar higher relative to other currencies.

The post Forex trading pushes USD/JPY higher after Yellen testimony appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By CentralBankNews.info
    South Korea’s central bank maintained its base rate at 2.50 percent, as expected, saying the economic recovery is continuing and inflation will remain low for the being, due to stable international commodity prices, but eventually rise.
    The Bank of Korea (BOK), which cut its rate by 25 basis points in 2013, also said it expects the global economy to sustain its “modest” recovery going forward but it could be affected by changes in global financial market conditions from the U.S. Federal Reserve’s tapering of quantitative easing and weaker growth in some emerging markets.
    Some of the indicators related to domestic demand in Korea have recently slumped, the BOK said, but exports continue to rise, sustaining the overall economic expansion.
    Korea’s Gross Domestic Product expanded by an annual 3.9 percent in the fourth quarter of last year, up from 3.3 percent in the third quarter, for average 2013 growth of 2.8 percent, up from 2.0 percent in 2012, and the strongest growth in two years.
    “The Committee expects that the domestic economy will maintain a negative output gap for the time being going forward, although it forecasts that the gap will gradually narrow,” the BOK said.

    Last month the BOK forecast that Korea’s economy would expand by 3.8 percent in 2014 and then accelerate to 4.0 percent in 2015.
    Korea’s inflation rate averaged 1.3 percent in 2013, far below the BOK’s target range of 2.5-3.5 percent, but in its latest forecast the bank expects inflation this year to rise to 2.3 percent and then to 2.8 percent in 2015.
    In the first half  of this year inflation is expected to remain below the bank’s target range but then rise in the second half.
    In January, Korea’s headline inflation rate was steady at 1.1 percent from December.
    The BOK said Korean stock prices had recently rebounded and the won appreciated, reversing a depreciation of the won and lower stock prices due to the instability of international financial markets and outflows of foreigners’ stock investment funds.
    Against the U.S. dollar, the won depreciated in the first half of 2013 before rebounding in the second half to end the year only 0.7 percent firmer. Since the start of the year, the won has eased 0.6 percent, trading at 1062.4 to the dollar today.
    Against the Japanese yen, the won has been rising since October 2011 when it hit a low of 15.6 and declined to 10 to the yen around the end of 2013, a rise of almost 36 percent. Since the start of this year, the won has eased slightly but was still trading at 10.36 today.
    Last month the governor of the BOK, Kim Choongsoo said the rapid depreciation of the yen against the won over the last year has hurt the South Korean industries that compete directly with Japan – such as steel, autos, machinery and electrical appliances – and any further depreciation of the yen would cause widespread pain to South Korea’s exporters.
     However, he also ruled out a competitive devaluation of the won.

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EURUSD failed to break above the upper line of the price channel on 4-hour chart, and pulled back from 1.3682, suggesting that the upward movement from 1.3477 is complete. Further decline could be expected in a couple of days, and next target would be at 1.3500 area. Key resistance is now at 1.3682, only break above this level will indicate that the longer term downtrend from 1.3892 (Dec 27, 2013 high) had completed at 1.3477 already, then the following upward movement could bring price to 1.4000 zone.

Provided by ForexCycle.com

By MoneyMorning.com.au

What a ‘nice’ lady.

She’s even nicer than the ‘nice’ man before her.

She sits at a table, with the eyes of the world upon her.

The world waits. What will she say?

She says exactly what the world wants to hear, and the stock market goes up.

Thank you very much Dr Janet Yellen…

Yesterday was the new US Federal Reserve chairman’s first testimony to the US Congress as chairman. It was the first time she faced Congress after taking over from the ‘nice’ man (for stocks) Dr Ben S Bernanke.

The cross-examinations by the congress take forever. The problem is that rather than just asking questions the pollies insist on making long-winded statements first.

They do that so their local news networks can carry the footage of their ‘hard working’ representative grilling the bureaucracy.

But despite how long these things take, there was only one sentence investors wanted to hear. The rest was surplus to requirements.

Recession Ahead: Stocks Rise

This is the only thing the markets wanted to hear from Dr Yellen:

‘That said, [bond] purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.‘

That’s all. Nothing else really mattered. All the markets want to know is that, if the US or global economy goes a bit wobbly this year, the Fed will keep up its bond-buying program.

Dr Yellen confirmed as much with the comment that the program isn’t on a ‘preset course‘. Stocks loved it.

US stocks loved it. Aussie stocks loved it.

And when news broke that the US House of Representatives had agreed to extend the Debt Ceiling through to March next year, stocks loved it even more.

The S&P/ASX 200 index gained 55.6 points yesterday, meaning that it’s now only down 0.79% for the year.

But hang on a minute. Didn’t Toyota [NYSE:TM] this week announce it planned to stop making cars in Australia in 2017?

Isn’t that only a few months after General Motors [NYSE:GM] and Ford [NYSE:F] announced the same thing?

Doesn’t this mean that 200,000-plus people will be out of work, dragging down the Aussie economy, and pushing it into recession?

If so, that would be the first time in 22 years that the Aussie economy has gone backwards. Troubling times.

But if things are potentially that bad, why on earth would stocks keep going up? The Aussie market has gained nearly 100 points since Toyota’s apparently disastrous decision.

What explains it?

Looking One Step Ahead

You can never be 100% certain about what drives a market higher or lower. Commentators and analysts will try to give explanations, but it’s mostly guesswork.

And you can put your editor in with the guessers too.

We’ve got an idea why Aussie stocks are going higher, but we don’t know for certain.

The important thing is to remember what we’ve mentioned before. It’s that investors are always looking ahead. One possible reason why Aussie stocks didn’t do as well as US, UK or Japanese stocks in 2013 is that investors were worried about a slower Aussie economy and the prospects of a lower Aussie dollar.

Put simply, foreign investors were reluctant to invest in Aussie assets because they thought the Aussie dollar could fall. That’s because when they came to change back to their domestic currency the lower Aussie dollar would buy less of their domestic currency, which would mean a losing trade.

However, now the Aussie dollar has fallen, and now there is an immediate – but not long-term – negative view of the Aussie economy, investors are starting to look past the short term and think about the long term.

In other words, investors have already priced in the negative news about the Aussie economy. Now they’re figuring out which investments to buy before the economy starts to boom again.

A New 34-year Boom?

Now, that doesn’t mean we’re right.

It’s only guesswork. But it’s a circumstance we’ve seen many times before over the past 20 years.

It’s usually the main reason why most investors miss out on stock rallies. They read the news about recessions and job losses, and that keeps them away from investing.

Meanwhile, the investing pros have already factored in a slower economy and are looking further ahead to the time when the economy recovers.

That’s what we’re doing now. We’re looking ahead. And boy, do we like what we see in terms of long term investment opportunities.

We like the tech outlook. We like the resources outlook. We like the emerging markets outlook. Heck, if we’re honest, we like the broader global economic outlook.

Make no mistake. We’re not saying things are perfect. And we’re not saying the central banks have fixed things after the 2008 meltdown. Far from it. In fact, our view is that economically things are worse.

But there’s no doubt that governments and central banks have put the ‘inflation train’ back on the rails. That means more stimulus and money printing for years to come.

That means you could see a repeat of the period from 1974 through to 2008. That was a time when the Dow Jones Industrial Average gained 1,614%.

Just be aware: the Day of Reckoning will arrive one day. But not today. And until it does, investors have a great opportunity to make the most of some potentially spectacular returns.

Cheers,
Kris+

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By MoneyMorning.com.au

By MoneyMorning.com.au

It is with some caution that I write today about the future of space exploration because it is something I could easily become emotionally attached.

I am not a devout follower of Star Trek in all its variations. Nor am I much of a science fiction reader (I prefer science fact to science fantasy). But I have seen the movie Gravity three times, and I’ve read just about everything Arthur C. Clarke wrote, including his extraordinarily predictive (so far) novels 2001, 2010, 2061 and 3001. I consider Clarke’s works to be carefully based on science fact.

I am one of those people who believe that humans have an essential role in space exploration and that they can achieve knowledge that robots roving around moons and planets cannot. I believe that exploration is built into our DNA. And I know for a fact that Earth will one day be consumed by its own sun, and thus, if humans are to survive as a species, they will have to find their way to another liveable world.

Private Rocket Companies Blast off for Profits

Until now, rockets, space travel and exploration beyond Earth’s atmosphere have been almost exclusively financed by military forces and governments.

In the United States, civilian space exploration is administered through the National Aeronautics and Space Administration (NASA). Although space, and especially the space in which humans place machines in orbit around Earth, has become internationalised, the United States has overwhelmed the world in rocketry and exploratory technologies and satellites.

Although the Chinese will walk on the moon more than half a century after Neil Armstrong did in 1968, the Russians never have. Although even the Indians joined the ‘big five’ (US, Russia, the European Space Agency, France and Japan) space adventures as early as 1980, the efforts of the other four space-faring countries put together cannot match what NASA has achieved, much less what the Defense Department, the CIA and who knows what other government agencies have achieved.

But in recent years, NASA’s budgets have been cut and it has fallen to a plague of bureaucratic inefficiency. Its Mars manned missions have been devastated, and it doesn’t even have a spaceship that can ferry astronauts into space. We rely primarily on the Russian Soyuz to do that for us – at $63 million per seat per flight now and $70 million per seat after 2015.

Wide-eyed space fans like me feel that the promise that grew out of the Apollo space program in the 1960s has been shattered.

But hold on! In 2013, the Earth moved.

A quiet revolution that has been both slowly and suddenly developing in places like Dulles, Va., and Hawthorne, Calif., is changing everything.

Dulles is the headquarters of Orbital Sciences…and Hawthorne is the headquarters of Space Exploration Technologies Corp., or SpaceX.

Both were, at their inception, a laughable concept – private rocket companies.

You’ve probably heard of SpaceX because it is founded and guided by one of the greatest entrepreneurial minds of our age, Elon Musk.

SpaceX is truly remarkable. In less than a decade, it has come from a dream in Musk’s mind to developing a successful rocket – the Falcon 9 – and a successful spacecraft – the Dragon – that can deliver payloads to the International Space Station.

A mission like that used to cost NASA about half a billion dollars every time it launched the Space Shuttle. Now the cost is 50% of that, thanks to these two private rocket companies.

SpaceX’s Falcon/Dragon technology successfully docked with the Space Station in May 2012. Then it repeated the feat in October 2012, delivering 800 pounds of supplies, including ice cream and Silly Putty. It made huge headlines. And last March, SpaceX delivered 1,200 pounds of supplies to the Space Station after some scary hours when the Dragon spacecraft’s thrusters failed following separation from the Falcon 9 rocket.

The Space Story Nobody is Telling

What didn’t make headlines much at all was the same mission last September by Orbital Sciences. Its brand-new rocket, Antares, took its brand-new spacecraft, Cygnus, and docked with the Space Station too – flawlessly.

Orbital delivered about 1,300 pounds of food, clothing and material to the Space Station in a demonstration run. Then the spacecraft was filled with trash and sent into a destructive orbit that vaporized it about 46 miles over New Zealand.

Afterward, NASA Administrator Charles Bolden said,

‘We are delighted to now have two American companies able to resupply the station. U.S. innovation and inspiration have once again shown their great strength in the design and operation of a new generation of vehicles to carry cargo to our laboratory in space. Orbital’s success today is helping make NASA’s future exploration to farther destinations possible.‘

When Orbital recently announced its third-quarter financial results, CEO David W. Thompson said that in 2013, Orbital Sciences would average one space mission or one product delivery every week.

As it turns out, this quiet company that has been in the space business since 1982 – against all odds and despite legions of naysayers who have claimed that private rocket companies just can’t compete in this arena – is so busy designing rockets, building spacecraft, designing and building satellites and launching them into space that it actually needs SpaceX to help deliver some of its goods.

Into The Future

In a period of less than 18 months, these two private rocket companies have demonstrated that they can do the basic stuff of getting things into space that only governments used to be able to do. This is so revolutionary it is difficult to overstate its importance. And in that same time period, both companies have become so successful at the technologies involved that they are making headlines within the space community every week.

For purposes of this article, there’s one key factor that separates the two – Orbital is a publicly held company. Its stock trades on the New York Stock Exchange as ORB, and there is about $1.5 billion worth of shares out there.

Although there are constant rumors about SpaceX going public even as early as this year, last July, Elon Musk wrote that SpaceX would not go public before it landed a spaceship on Mars. Musk passionately believes humans should colonise Mars, and when he passionately believes something (for example, that people should drive electric cars like his Tesla), he sets out to make it happen.

Stephen Petranek,
Contributing Editor, Money Morning

Ed note: The above article was originally published in The Daily Reckoning US.

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By MoneyMorning.com.au

With the ever increasing popularity of binary options trading it is now more important than ever to have the necessary knowledge about binary options terminology.  Binary options are one of the more simple asset class products that are traded the one still needs to be familiar with the terms that are used when trading binary options.

Binary Options– Binary options are also known as the fixed return options. It is really quite basic these options can have one of two outcomes either a win or a loss. Some trading systems allow for a draw or when the price is the same from origination this means that the client does not win or lose any money.

Asset Class– The asset class it or also known as the underlying asset is the product that the binary option is representing. In many cases this would mean the particular currency pair that is represented by the binary option but its other cases it could also mean a stock a commodity or a particular index.

Expiry Time– The expiry time refers to the length of time that the option is open at the end of the expiry time the result of the option is then determined. With binary options expiry times can range from as short as one minute to as long as one day.

In the Money and Out of the Money– If a binary option is in the money it is then in a positive direction for the traitor if a binary option is out of the money then it is going against the binary option trader.

Investment amount– The amount of money that is placed on a particular binary options trade.

To learn more please visit www.clmforex.com

Disclaimer: Trading of foreign exchange contracts, contracts for difference, derivatives and other investment products which are leveraged, can carry a high level of risk. These products may not be suitable for all investors. It is possible to lose more than your initial investment. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. A Product Disclosure Statement (PDS) is available from the company website. Please read and consider the PDS before making any decision to trade Core Liquidity Markets’ products. The risks must be understood prior to trading. Core Liquidity Markets refers to Core Liquidity Markets Pty Ltd. Core Liquidity Markets is an Australian company which is registered with ASIC, ACN 164 994 049. Core Liquidity Markets is an authorized representative of Direct FX Trading Pty Ltd (AFSL) Number 305539, which is the authorizing Licensee and Principal

Article by Investazor.com

The candlestick chart is one of the most used charts in trading nowadays. It is thought to have been developed in the 18^th century by a Japanese rice trader Munhisa Homma. He discovered that by drawing the price movements as a “candlestick” he will have more information that can be used in trading. In time analysts and statisticians have discovered patterns which indicates with a certain probability a continuation or a reversal in the price action of a certain instrument.

Let us see how a candle is formed and what its characteristics are:

A bar shows the open price, for a specific time frame, the high and the low of the session and the closing price of that time interval. In the image you can see that the open price is on the left and close price on the right. Because the close price is higher than the open price we consider it to be an ascending candle.

If we are to draw a right horizontal line at the open price and a left horizontal line at the close price, like in the example above, afterwards fill the section with green we will have an ascending candlestick. This type of representation it is considered to offer more information about what happened in the trading session. A candlestick is formed of a body and upper/lower wick or shadow. The body is a specific element very important for traders.

In the current examples I have used the custom colors for showing ascending and descending colors. Green usually represents a rise in the price, while red represents a fall and characterizes the bears. Don’t be limited to these colors. You will find that white (rise) and black (fall) are also used, or you can even customize them to fit your character and needs.

If the candle’s body has a specific shape it could tell the trader how powerful bulls or bears are. I will bring up several types of candles that usually show the market direction and determination.

Marubozu – It is showing the direction of the market and which traders, bulls or bears are in control. It is formed only by a body with no shadow. It show that the market has strength in one of the directions. This interpretation can be applied also at candles with long bodies and very short wicks.

Spinning Tops – They show a balance between buyers and sellers and it is interpreted as indecision, a market pause. This candle is characterized by a small body and the upper and lower shadow almost equal. Indifferent the color they have it means the same thing.

Doji – It shows indecision and balance and it has the same interpretation as the Spinning Top but this one is characterized by the fact the opening price is as same as the closing price and the wicks are almost equal.

It is important to understand these basic elements about the candlesticks to be able to use them at their full potential. It is not enough to just take them as they are and hope for the best. In time strategies and patterns have emerged which rises the probability for a winning trade based on this type of chart. In our next article about candlestick we will talk about these patterns and discuss strategies that can be used in day to day trading on the Forex market or any other financial instrument.

The post Candlesticks In Day To Day Trading appeared first on investazor.com.

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• Several high-probability Elliott wave trade setups in EUR/USD and USD/JPY
• The emerging currency crisis and its implications
• The new Fed chief and potential changes to the QE

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Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

By CentralBankNews.info
    Mozambique’s central bank maintained its benchmark standing facility rate at 8.25 percent, saying the decision reflected the current conditions in the foreign exchange market and the need to preserve stability in light of the international, regional and domestic risks.
    The Bank of Mozambique, which cut its rate by 125 basis points in 2013, also said it would ensure that the monetary base does not exceed 44.884 billion meticais in February, down from the target of 45.892 billion in January and 47.493 in December.
    Mozambique’s inflation rate eased to 3.16 percent in January from 3.54 percent in December, well below the 2014 inflation target of 5.6 percent.
    After a stable 2013, Mozambique’s metical currency has weakened sharply since mid-January, down 3.2 percent to 31 meticais to the U.S. dollar today from the end of 2013. The central bank said Reserves International Net (RIL) fell by US$ 90.5 to $2.9051 billion in January, with the fall in net reserves mainly reflecting the central bank’s interventions in the foreign exchange market. The bank sold $120.5 million, of which $85.7 million was for imported fuels and $49.1 million for potential foreign exchange losses.
    “The Monetary Policy Committee took note of the strengthening of the dollar in the international market that was reflected in the current conditions in the domestic foreign exchange market, compounded by the seasonal characteristics of higher demand for foreign exchange,” the bank said.
    Last week the bank’s governor said in Kenya that Mozambique’s economy was expected to expand by 8.1 percent in 2014 and 8.0 percent in 2015, with aging railways limiting mining projects and thus economic growth.
    Mozambique’s Gross Domestic Product expanded by 1.4 percent in the third quarter from the second quarter for annual growth of 8.1 percent, down from 8.4 percent in the second quarter.
    The governor also said that average inflation of 4.2 percent in 2013 was likely to increase in 2014, but still remain in line with the bank’s target.

    http://ift.tt/1iP0FNb

By investment-guru.com

Candlestick patterns are a visual of the movement of the price rate of a certain underlying asset. The most common type of candlesticks are the Japanese Candlesticks.

We have already explained candlesticks are movement indicators, an index or a currency and to use them in the stock market to draw graphics. The candlestick or candlestick form consists of a central body, which represents the amount of movement and two lines, an above and one below the body (also called shadow) and represent the maximum or minimum point the body. Candlesticks can be optimistic (green or white) or pessimistic (red or black colour).

Types of Candlesticks

These are five different types of candlesticks:

1. Long candlestick: highlights the development tendency of the title or index in a single direction. A candle is seen as one long candle, if her body the body of the previous candles to a two or three times greater than.
2. Small candlestick: this also shows a development in the direction indicated, but less strongly. If this candlestick occurs after a long candle then it could mean that the displayed direction is exhausted.
3. Candlestick with a strong upper shadow: this represents a strong signal of alarm for a gloomy market. In other words you can see a body that is pressed then to fall very upward.
4. Candlestick with strong under the shadow: on the contrary a strong price bending signal is, in fact, the body is first violently pushed down and rises again.
5. Candlestick without central body: this is the con position to a long candlestick and a crossroads of the market indicates where the direction in which it will move is still uncertain.

Candlesticks and Indicators

Reading candlesticks is not the only way to predict the rate movement. Together with indicators like Bollinger Bands, ADX or Alligator (free indicators ebook!) the candlesticks are best used.