Month: March 2009

By Donald Ogilve

Forex trading can be a very profitable business in today’s world, provided you know what you are doing. Like anything worthwhile, it involves some pain. You will almost certainly lose money in the early stages. In fact, you will continue to have losses even when you are an expert. A successful Forex trader is one for whom the total amount of profit eventually outweighs the amount of loss. At the end of the day, Forex trading is based on speculation, which always involves some amount of risk. The key is to ensure that you control those losses. Below, I have discussed 4 tips to become a successful Forex trader.

Having enough capital

Only a small percentage of Forex Traders are actually successful. The exact figure might be difficult to ascertain, but think along the lines of 1 in 10. The successful ones avoid some mistakes that other Forex traders make and try to follow some basic rules. One very important rule you need to remember is to have enough capital in your account when you start trading. Also, it would be wise not to invest money that you cannot afford to lose. There’s no point risking your life savings, if you have them, in trading Forex. On a smaller scale, don’t risk your rent or grocery money. Remember, at the start the chances of some losses are high. Take that into account when funding your account.

Choosing the appropriate currency pairs

Selecting the appropriate Currency Pair to trade is also crucial for a successful Forex trader. Some currency pairs are more volatile in certain conditions while others are stable. Select a pair that is in line with your trading strategy, long term or short term. If your strategy calls for a short-term investment, then you can try more volatile pairs. However, if you are in it for the long haul, or are uncomfortable with rapid changes in prices, then you can choose a pair that is relatively stable. You have to do some research on Currency pairs and their performances in various climates to help make this choice.

Having entry and exit strategies

Every Forex Trading Operation has basic components: the selected currency pair you wish to trade, the required period, an entry point, and exit point. Your Forex Plan should include sound entry and exit strategies in order to minimize the losses and maximize your return on investment. You could also learn to use stop loss and take profit orders placed to your broker as your exit points.

A stop loss is an excellent exit strategy in case the market moves against you. Stop loss orders are placed to the brokers by the Forex traders to withdraw from the market if the market moves against them and they stand to lose a specific amount of money. A stop loss order protects you from huge losses in case something goes wrong. Similarly, in case of a take profit, you will exit the market after making a certain amount of profit. Both of these involve you as a trader setting a target and sticking with it. Sometimes, when in an actual trade, it might be difficult for you to make the required exit from a trade, even when your target has been met. Emotions could come into play, or you might even suddenly have trouble accessing your Software. Pre-setting Stop losses and take Profit orders allow and even force you to keep to your plan.

Sticking to your own strategy

There are numerous articles, e-books, trading systems available in the market that will claim to make you rich, almost overnight. Most of them sound extremely convincing and will tell you that you can make a lot of money using their strategies without taking any risk at all. While a few of them may be genuinely good, most of these strategies will only confuse you initially. So, before you try any out on your Account, do the smart thing: test it on a demo account. Be sure of it. Then you can trade with it. Remember, there is no simple short-cut to becoming a successful Forex trader.

About the Author

Donald Ogilve is a Part-Time Forex Trader. To learn more about making money Forex Trading an hour a day visit Donald Ogilve’s Blog at ForexInitiate.com.

By Leroy Rushing

Candlesticks fit into the overall technical picture, but it should be known that candlestick chart patterns are just one part of a wide array of studies that fit into technical analysis. Technical analysis spans all chart analysis, and it is even applied to some fundamental analysis statistics.

Candlesticks are usually traded actively or passively, but few traders deny their influence, especially those that use technical analysis in favor of traditional investing. Some traders like to use candlesticks as the sole buying and selling signals, while others blend them in with a few other technical indicators to refine their trading. Day traders and swing traders are much more likely to use candlestick patterns than investors, but that is due largely because of the difference in investing ideologies.

The passive view

Passive candlestick traders are more familiar with and typically favor other methods of technical analysis than chart patterns. This group of investors is made up of those who prefer computer generated technical analysis to the 18th century style of candlestick trading. The passive candlestick trader is usually an active, professional trader with a more complex trading style than most. This group is made up of people who trade candlesticks casually while putting more influence on other indicators.

The active view

The active candlestick trader keeps a close tab on each developing chart. Bottoms and tops are marked by candlestick patterns rather than their price. Active candlestick traders are willing to take even the short term charts and trades that may not go entirely with the “candlestick creed.� Little confirmation is needed for these traders who like the simplicity to the more complex forms of technical analysis.

The overall picture

Whether you are a candlestick purist or technical analyst, there is something in candlestick charts for everyone. Full-time day trading requires a full arsenal of trading tools and information, thus adding candlesticks can bring some benefits. Some use candlesticks to trade opening gaps or the late day breakouts, but all investors can agree that they do play some role in predicting future prices.

Keeping a balance

Balancing candlesticks and other forms of technical analysis is a solid way to produce consistent profits. A professional trader is likely to favor either candlesticks to the bulk of technical analysis or vice versa, but usually picks up the second place preference as a critical confirmation. A comprehensive trading plan should outline the roles of both forms of analysis and give preference to one. Your plan should act as your own screener, finding the good trades and leaving the bad. No matter the type of trader, there is plenty to benefit in learning a new indicator.

About the Author

Learn how to master day trading by downloading two of Trading EveryDay’s FREE products: Tools of the Trade eBook and a Trading Plan Planner. Dedicated to helping people become profitable traders, Leroy Rushing, a professional day trader, trading coach, and author, is the CEO of Trading Ever.

By GCI Fx Research

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The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2480 level and was capped around the $1.2665 level.   As expected, the European Central Bank voted to decrease its main refinancing rate target by 50bps to 1.50% from 2.00%, the lowest level in the ECB’s ten-year history.  At the same time, the ECB released a grim set of economic forecasts.  The ECB now sees inflation remaining below the ECB’s target for the next eighteen months and this suggests more rate cuts will follow.  There is also a significant chance the ECB will have to follow the Fed’s and BoE’s lead by conducting massive asset-purchasing programs to steer market rates towards 0%.  One major difficulty the ECB will face is the lack of a single eurozone-wide bond market.  ECB policymakers who will conduct the probable massive credit easing or quantitative easing operation must decide which countries’ assets to purchase in the primary and secondary markets, a decision that will invariably lead to criticism.  Some eurozone countries have recently had their credit ratings downgraded and this will render the ECB’s operations that much more difficult.  ECB President Trichet today report EMU-16 gross domestic product may contract in 2010.  Data released in the eurozone today saw EMU-15 gross domestic product tumble 1.5% q/q and 1.3% y/y.  Additionally, French January producer price inflation was off 2.0% m/m and 2.7% y/y.  Moreover, German January retail sales fell 0.6% m/m and 1.3% y/y. In U.S. news, data released in the U.S. today saw weekly initial jobless claims decline 31,000 to 639,000 last week while continuing jobless claims were off 14,000 to 5.106 million.  All eyes will be focused on tomorrow’s U.S. February non-farm payrolls report with most economists preparing for a very weak report, especially after ADP reported 697,000 private sector job losses last month.  Other data released today saw Q4 non-farm productivity off 0.4% from +2.2% in Q3 while unit labour costs grew 5.7% from 3.5% in Q3.  Nonetheless, productivity had its best annual result in four years last year.  The Federal Reserve released its Beige Book yesterday and it indicated the economic contraction worsened in January and March with no improvement expected in the short-term.  Euro bids are cited around the US$ 1.2385 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.40 level and was capped around the ¥99.65 level.  Data released in Japan overnight saw business investment off 17.3% y/y in Q4 2008, the seventh consecutive quarterly decline.  These data will likely cause a downward revision to Q4 gross domestic product data that recently evidenced a provisional 12.7% annualized contraction.  Revised GDP data will be released on 12 March.  The Nikkei 225 stock index climbed 1.95% to close at ¥7,433.49.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥123.00 figure and was capped around the ¥125.75 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥138.55 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.35 level.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8409 in the over-the-counter market, down from CNY 6.8434.  Traders are speculating the Chinese government will announced an additional stimulus plan to maintain at least an 8% growth rate in 2009.

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4035 level and was capped around the $1.4230 level.  As expected, Bank of England’s Monetary Policy Committee reduced its key interest rate by 50bps to 0.50%.  More importantly, however, Bank of England reported the U.K. Treasury will permit the central bank to purchase up to ₤150 billion in assets to grow the money supply.  Chancellor of the Exchequer Darling indicated at least ₤50 billion must be utilized to purchase private-sector assets.  This amounts to a de facto quantitative easing policy and the BoE will purchase up to ₤75 billion in gilts over the next three months.  Notably, Darling also said the government won’t use the BoE’s operations as an excuse to issue more debt and make long-term financing needs less manageable.  Data released in the U.K. today saw Halifax January house prices declined 2.3% m/m and 17.7% y/y.  Cable bids are cited around the US$ 1.3740 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8850 level and was capped around the ₤0.8940 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

The Bank of England announced the decision to cut its interest rate by 50 basis points today to bring the rate to its lowest standing in history. The rate reduction brings the interest rate to 0.50 percent from 1.00 percent as widely expected by market forecasts. The BOE had last reduced its interest rate by 50 basis points on February 5th and also cut its rate by the same amount in January.

The BOE statement on the rate cut commented on the current difficult economic environment, “World activity continued to weaken, reflecting both depressed confidence and the persistent problems in international credit markets.  In the United Kingdom, output dropped sharply in the fourth quarter of 2008.  That reflected lower consumer spending, a further fall in business investment and a rapid run-down in stocks, in part offset by stronger net exports as the past depreciation of sterling began to take effect.”

Meanwhile, the European Central Bank also cut its interest rate today to its lowest standing in the banks history.  The ECB reduced its interest rate by 50 basis points from 2.00 percent to 1.50 percent as expected. The ECB had decided to keep its rate unchanged at its last meeting in February after reducing the rate by 50 basis points in January. The ECB now has slashed 275 basis points off the interest rate since October 2008.

Today’s rate decision followed the news release from earlier today that the Eurozone Gross Domestic Product declined by 1.5 percent in the fourth quarter of 2008.  The Eurozone has been officially in recession since the third quarter GDP marked the second consecutive quarterly decline in GDP.  The fourth quarter’s GDP decrease far surpassed the  contractions in the second and third quarters which had declines of 0.3 percent and 0.2 percent, respectively.

Jean-Claude Trichet, the President of the ECB, commented in his press conference today that, “Reflecting the impact of the financial market turmoil, the world economy has weakened substantially in recent months, affecting increasingly also emerging market economies. In a climate of heightened uncertainty, a severe fall in world trade volumes has been accompanied by a pronounced decline in domestic demand in the euro area. As a consequence, euro area real GDP contracted markedly in the fourth quarter of 2008, by 1.5% on a quarterly basis, according to Eurostat’s first estimate.”

Trichet did not rule out any further rate reductions so we may look forward to more easing in the ECB rate.

Pound, Euro fall verses Dollar and Yen in Forex Trading.

The euro has fallen today in forex trading against currency rivals, the U.S. dollar and Japanese yen. The EUR/USD has fallen from its opening rate of 1.2616 as the pair trades under 1.2740 today at 3:06pm EST. The euro has declined today more than 150 pips versus the yen as the EUR/JPY trades at 123.29 after opening the day at 125.12. The euro has also seen declines today versus the Swiss franc while gaining against the Australian dollar and the New Zealand dollar.

The British pound has declined against the U.S. dollar as the GBP/USD has fallen to trading at 1.4119 after opening the day at 1.4156. Against the Japanese yen, the pound has fallen from its 140.40 opening rate today as the GBP/JPY trades around the 138.74 level. Against the euro, the pound has gained ground by approximately 20 pips today as the EUR/GBP pair trades at 0.8889.

Today’s Chart

EUR/GBP – The European Euro falls against the British Pound today in forex trading on a day that the European Central Bank and Bank of England both reduced their interest rates by 50 basis points.  The euro has fallen steadily versus the pound since making a new all-time high at the end of December(Daily Chart).

Source: ForexYard

One of the most important events for forex traders is a decision on short-term interest rates by central banks. Today, not 1, but 2 central banks are set to decrease interest rates by 50 basis points. The European Central Bank (ECB) and Bank of England (BoE) will likely decrease their rates around noon today (GMT), leading to depreciation across the boards for the EUR and GBP. This will no doubt be today’s market mover.

Economic News

USD – Dollar Plunges as Wall Street Rallies

The Dollar fell against most of its major currency pairs in yesterday’s trading. The Dow Jones ended up 150 points or 2.5%. The stock market rally in the U.S. was spurred by positive news from China that economic stimulus will be dramatically increased. Stocks also moved on Crude Oil Inventory data showing that U.S. Crude Oil storage decreased by 700,000 barrels, rather than the forecasted increase of 1 million barrels. Additionally, the U.S. reported an increase in demand for Oil, helping increase investors’ confidence.

Adding to this positive news, the Treasury Department revealed details of President Obama’s housing stimulus plan. To put it bluntly, it seems that investors took Obama’s advice and bought some undervalued stocks. This move away from the safe-haven Dollar to riskier assets led to a dramatic decline in the greenback yesterday.

The Dollar fell by over 120 points versus the EUR ahead of today’s expected rate cut by the European Central Bank (ECB). The British Pound also recorded some strong gains against the Dollar, with the Pound climbing about 140 points to 1.4155 against the Dollar. This is also ahead of a possible rate cut by the Bank of England (BoE) later today. Against the Japanese Yen, the Dollar actually rose by an impressive 70 points to 99.16, as Japanese investors also flocked to riskier assets yesterday, leading to their stock market to rally as well.

Looking ahead to today, there is a lot of economic news coming out of the U.S. which traders should pay close attention to. Traders are also advised to follow the Interest Rate decisions coming out of Britain and the European Union (EU) around midday as these will no doubt be the market drivers during today’s trading.

EUR – EUR Jumps Ahead of Today’s Rate Cut Decision

The European currency went bullish against its major currency crosses in Wednesday’s trading. This was largely due to the knock-on effects from Wall Street, which saw the American stock market climb by several percentage points. This also led to rallies in Europe. The stock market rallies in both Europe and the U.S. were initiated by a decrease in U.S. Crude Oil inventories, high hopes for China’s economy, Obama unveiling a new housing plan, and investors buying undervalued stocks. This in turn led investors to drop the safe-haven U.S. Dollar, and to buy-up riskier currencies such as the EUR and GBP.

The EUR made notable gains against a number of its most important currency pairs in Wednesday’s trading. The European currency rose by 130 points to close at 1.2615 vs. the USD. It also rose by an impressive 220 points vs. the JPY to 125.12. The EUR/GBP currency pair ended yesterday’s trading virtually unchanged ahead of today’s rate cut decision in both Britain and the Euro-Zone and closed at 0.8910. The Pound also made similar gains vs. the USD and JPY. If the media responds positively to the bullish European currencies in early morning news, then the GBP and EUR may further their gains against their main currency pairs and crosses.

Today, there are very important economic news events coming out of Britain and the Euro-Zone. These include the British and Euro-Zone Interest Rate decisions by the Bank of England (BoE) and the European Central Bank (ECB) at 12:00 GMT and 12:45 GMT respectively. British rates are expected to be cut by 50 basis points to 0.50%, whereas Euro-Zone rates are expected to be cut by 50 basis points to 1.50%. If either the Euro-Zone or Britain decides not to cut their respective Interest Rates, then this may help their respective currencies to make significant gains against their main currency crosses within a 3-4 hour period after the announcement.

JPY – JPY Sinks as Safe-Haven Currency Ditched

Forex traders ditched the JPY yesterday as they looked for short-term riskier assets. The Japanese Stock market made massive gains, largely influenced by Chinese Premier Wen Jiabao revealing that China will make drastic moves to push China’s economic growth to 8%, rather than the forecasted 6%. This will include possibly doubling the 4 trillion Yuan ($600 billion) stimulus plan. As a result, stocks climbed yesterday. This came about as the weaker Japanese Yen encouraged confidence on stocks that were highly correlated with exports. The JPY’s bearish behavior yesterday actually came as a relief for the Japanese government, as the Yen has gone from strength to strength against its major currency counterparts since the beginning of the global financial crisis, which has hurt Japanese exports.

The Yen fell by 70 points against the Dollar to close at 99.16. Against the EUR, the Yen plummeted by a dramatic 220 points to close at 125.12. Japan’s currency also declined vs. the Pound by a massive 240 points to close at 140.39. The JPY may slide further today, owing to negative economic data that came from Japan last night revealing that Capital Spending declined more than forecast to -17.3%. This may push forex traders away from the Yen, and to other currencies, as Japan’s economy worsens.

Oil – Crude Oil Soars to $45 a Barrel

Crude Oil prices soared by an impressive 9% in yesterday’s trading to close at $44.90 a barrel. This advance in the black gold’s price came about as U.S. Crude Oil Inventory figures, which were released yesterday, showed that storage decreased by 700,000 barrels rather than the forecasted 1 million barrel increase. In addition, Crude prices were also helped by reports that demand from the U.S. for oil increased as of late. This led many investors to the conclusion that the U.S. may already be starting to recover from recession. This comes about as the U.S. showed some mixed figures yesterday.

The other factor which helped spur the Crude prices yesterday was positive news coming from China that they may double their stimulus plan and increase investments in infrastructure and manufacturing. The result of this was a dramatic increase of commodity prices, such as Crude Oil. Only time will tell if prices are able to hit $46 by the end of trading today. A release of a string of positive economic figures could support this price level. Therefore, traders are advised now to make some profits as the price of Crude Oil is set to remain volatile in the short-medium term.

Technical News

EUR/USD

This pair appears to be consolidating towards the center line of the Bollinger Bands on all charts, indicating a lack of direction. However, the recent bullish cross on the daily chart’s Slow Stochastic signifies that a bullish correction may take place in the nearest future. Going long might be the right choice today.

GBP/USD

The Bollinger Bands on the hourly and daily charts appear to be tightening in anticipation of a volatile movement. With the recent bearish cross on the 4-hour chart’s Slow Stochastic oscillator, the impending movement may be a downward correction. Going short with tight stops might be the right choice today.

USD/JPY

The 4-hour chart’s RSI oscillator is currently floating in the over-bought territory. The chart also shows a bearish cross on the Slow Stochastic, suggesting that the bullish trend is losing steam and a bearish correction is impending. This notion is also supported by the daily chart’s RSI oscillator which is currently floating in the over-bought region. Going short looks to be a good option for the day.

USD/CHF

The hourly chart shows the pair range trading between the 1.1750 and 1.1710 levels; however, there appears to be a bearish cross on both the hourly chart as well as the daily chart’s Slow Stochastic, signaling a continuation of the correction to the up-trend seen the past few days. Setting short positions with tight stops might be the right choice today.

The Wild Card – Crude Oil

The price of this commodity appears to be floating in the over-bought territory on the 4-hour chart’s RSI, signaling a downward correction may be imminent. The recent bearish cross on the 4-hour chart’s Slow Stochastic supports this notion. Entering an early short position on Crude Oil may help forex traders earn substantial profits today as they ride out the impending downward movement.

Market Analysis provided by Forex Yard.

© 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 Sean Hyman

Your stocks are crashing and your real estate value is eroding all at the same time. Even commodities are tanking. These are some of the greatest ways Americans have accumulated wealth up until now. So what’s a trader or investor to do?

Learn to trade the “recession proof” market – the Currency (Forex) Market!

For instance, it’s been no secret that the number of unemployed in the U.S. is growing rapidly. See the chart below that shows this trend vividly.

650,000 Job Losses Expected to be Reported on Friday!

This is also causing an enormous spike in the unemployment rate. See its chart below. Previously the unemployment rate had jumped up to a whopping 7.6%. However, on Friday this is expected to come in at 7.9%.

The Unemployment Rate goes Parabolic!

Learn how to Make Money from Fundamental Trends!

It’s extremely unfortunate what is happening in America. I bleed “red, white and blue”. However, I can’t change this fundamental trend in place. This will be up to forces that are much bigger than me: the government, the Fed, the Treasury, etc.

However, until they can get this turned around (and that will take some time), we can profit from the fundamental trend that has unfolded.

As economies have gotten hit hard in the U.S. and around the world, money has run to what it feels are “safe havens”. Since the dollar is the world’s reserve currency AND it had been beaten down for years, back to back…money ran there for shelter from this “economic storm” and that trend continues to this day.

For the last year, the rise of the dollar has been one of the few “upward trending” games in town, even when you look to just about every market out there: stocks, real estate, commodities, etc. In fact, it’s breaking out to new highs even now! How many financial instruments anywhere can boast that right now? Very few!

Two Steps to Making Gains in the Forex Market!

So while your stocks and real estate are perishing for now, you need something to buffer these blows with. That’s where the forex market comes in. It’s one more way you can diversify yourself and also get into trades that are heading higher NOW and not months or years from now.

How do you delve into this market? I’d say there are two steps to take before you “go live” in this market.

Get Educated about this market. I’m always amazed at the people that delve into any trading market with NO education. Would you try this at plumbing, brick laying, being a doctor or a lawyer? Of course not! Yet, people delve into this arena with “experienced traders” and expect to profit just as they do. They are simply dreaming. What they need is an education to “learn the ropes”. Anyone can afford to get an education in currencies these days. Why? Because we’ve made it “online” so that you can take it in your spare time AND made it to where it only costs $25 so that everyone can afford it.

So your first step is to take your online course, by clicking here.

Get a “real time”, free demo account. When I first learning how to trade stocks, I never had this awesome option. However, in currencies you do. So click here and get your free real time demo today. It comes with FREE real time quotes and charts that you can trade off of. Your trades go onto demo servers, so you literally don’t risk 1 cent but yet you get to learn the ropes by gaining experience in trading this market.

Once you’ve gotten your low cost education and you are implementing what you’ve learned by using the demo account, after about 30 days you will be ready for the final step – “Going Live”.

To get a live account, click here and bookmark this site now so that you can open up your live account after the 30 days are up. You should start with a micro or mini forex account. Deposit at least $300 to $3,000 to get started and you’re “up and running”…trading this “recession proof market” and helping your future by making gains NOW rather than just sitting idly by while your stocks, commodities and real estate continue to dwindle before your eyes.

Take these steps and it will help you to stop the downward spiral of your net worth and to do something proactively about it today.

About the Author

This post was provided by Sean Hyman, Head Instructor at mywealth.com. See his blog at http://www.mywealth.com/blog.

By GCI Fx Research

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The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2650 level and was supported around the $1.2455 level.   The U.S. Treasury announced that its new mortgage relief plan will help up to 9 million homeowners avoid home foreclosure.  Mortgage servicers have been authorized to immediately reduce mortgage payments for eligible borrowers.  In other U.S. news, the February non-manufacturing PMI survey fell to 41.6 from 42.9 in January, an acceleration in the downturn in the services industry.  Likewise, both the new orders and employment sub-indices moved lower.  Additionally, the ADP February U.S. private sector jobs survey revealed a loss of 697,000 private sector jobs last month.  Most dealers believe these data indicate this Friday’s non-farm payrolls data for February will be extremely weak with some whispers of job losses around 750,000.  In eurozone news, the European Commission released proposals today to strengthen financial supervision across the European Union including an early warning system led by the European Central Bank.  Central and Eastern European central bankers and regulators released a joint statement today to address the “often simplified and misleading” information about the risks facing the financial sectors in those countries.  Data released in the eurozone saw the February services PMI survey decline to 39.2 from 42.2 in January.  ECB member Noyer yesterday report he doesn’t see any risk that any eurozone country will collapse and added the ECB may enact additional unconventional monetary policy.   Euro bids are cited around the US$ 1.2385 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.50 level and was supported around the ¥98.15 level.  Bank of Japan ramped up its purchase of corporate bond purchases overnight, part of the central bank’s strategy to steer market interest rates lower and reduce credit strains in the capital market.  BoJ Policy Board member Suda spoke today to business leaders.  Q4 capital spending data will be released overnight.  The Nikkei 225 stock index gained 0.85% to close at ¥7,290.96.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥125.60 level and was supported around the ¥122.35 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥140.70 level while the Swiss franc moved higher vis-à-vis the yen and tested bids around the ¥84.85 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8434 in the over-the-counter market, up from CNY 6.8413.  Data released in China overnight saw the February Purchasing Managers Index improve to 49.0 in February from 45.3 in January.  The Chinese media reported China is considering an additional fiscal stimulus to shore up the domestic economy.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

European rate cut decisions, like those expected tomorrow by the ECB and BoE, typically result in traders pricing-in the impact a day or two ahead of schedule. As such, we may be seeing the depreciation of the EUR continue through the day as most traders are near 100% positive that the ECB will in fact slash rates by 50 basis points tomorrow around noon. This weakness will likely continue throughout today’s trading.

Economic News

USD – Equity Losses Fuel USD Appreciation

Slumping equity markets continue to put pressure on higher yielding currencies and in turn are boosting the Dollar. The Dow Jones Industrial Average posted another losing day yesterday. Falling equity markets are influencing the forex market by reducing risk appetite. The Dollar has been the primary beneficiary of these market conditions and yesterday was no exception. At the end the day, the Dollar was higher across the board.

Adding to the market’s aversion to risk was a Senate testimony from Federal Reserve Chairman Ben Bernanke. Bernanke remarked that the possibility remains for additional bailouts in the U.S. banking system. Investors did not take too kindly to this news and showed their disdain by buying Dollars. The theme of bidding up the Dollar as risk aversion climbs has been dominating this week’s trading.

Today’s trading may see a similar theme play out as major economic data is due to be released from the U.S. The ADP Non-Farm Employment Change is forecasted to show another large drop in unemployment numbers. Also the ISM Non-Manufacturing PMI looks to show deepening pessimism in the U.S. economy. The EUR/USD may drop further on negative news, perhaps even past the significant support line of 1.2400.

EUR – European Currencies Pricing in Expected Rate Cuts

The EUR has faced a rough week thus far. Currently losing against every major currency rival, the EUR may in fact be pricing in tomorrow’s expected rate cut by the European Central Bank (ECB). Declining to 1.2525 against the USD in today’s early trading hours, and down to 0.8900 against the GBP, the EUR is a little worse for wear.

Typically before an important interest rate decision by the ECB, traders begin to anticipate the policy decision and price-in the impact a day or two ahead of schedule. As such, we may likely be seeing a depreciation of the EUR as most traders are near 100% positive that the ECB will in fact slash rates by 50 basis points tomorrow around noon. Moreover, we may likely see a continuation of this pricing-in up until the moment of its announcement.

However, if for some reason the ECB follows Australia’s lead and decides to hold rates steady, there will be a dramatic shift into an upward correction for the EUR pairs and crosses as traders re-value the EUR in a positive direction. As this is unlikely, given recent European economic news, traders are likely to see just such a rate cut.

Looking at today, with very few indicators being released from the Euro-Zone the driving force behind the movement of this currency is going to be Dollar news and the anticipation of tomorrow’s interest rate cuts by the ECB and Bank of England (BoE). These rate cuts appear to be in the foreground to this week’s trading as many traders are making large profits off the movement which typically follows such an announcement.

JPY – RBA Surprises the Market with Interest Rate Decision

The Australian Dollar has seen particularly heavy volatility due to major economic events in the Aussie economy the past two days. Yesterday the Reserve Bank of Australia (RBA) held its cash rate steady at 3.25%, taking the markets by surprise. Economists had forecasted a 25 basis point cut in the Aussie Interest Rate which the market had previously priced into the AUD pairs and crosses. Another surprise to the market was a significantly better than expected Current Account. This measure showed considerable strength in the Australian economy despite a recession-filled global economy.

These two market releases helped to boost the AUD/USD from 0.6292 to a high of 0.6463. However, losses in global equity markets reduced the demand for higher yielding currencies and helped to shed the pair’s gains. Early this morning, Australian GDP was released and the indicator came in significantly under the forecasted value. Economists had forecasted a contraction of 0.2% but the actual value released was a drop of 0.5%. This accelerated the selling of the AUD that began with U.S. equity losses. The pair is currently trading near the 0.6360 mark and may continue its descent for the near future.

Oil – Traders Await Crude Oil Inventory Report

The Price of Crude Oil saw heavy price volatility yesterday, which declined in the European trading session but later jumped 5% during the New York trading session. The rise in price was due to increasing expectations that OPEC will make further supply cuts during its next meeting. Crude Oil closed the day up at $41.45 from yesterday’s price of $39.59.

A number of conflicting forces are influencing the price of Crude Oil. Declining equities throughout the world’s markets combined with weakening demand in the face of the recession are exerting pressure on the price. In contrast, future OPEC supply cuts mixed with a decline in last week’s Crude Oil Inventory Report have helped to increase the price.

Today, Crude Oil traders await this week’s Crude Oil Inventory Report from the Energy Information Agency (EIA). The report is forecasted to show a rise in Crude stocks by 300,000. A reading higher than the expected value could put further pressure on the price of Crude Oil with a target price of $40.

Technical News

EUR/USD

It appears a violent breach of the lower border on the 4-hour chart’s Bollinger Bands has occurred, signaling that an upward correction may occur in the near future. The recent bullish cross on the daily chart supports this notion. Going long might be a wise choice today.

GBP/USD

This pair appears to be leveling off in anticipation of a volatile movement. The Bollinger Bands on the hourly and daily chart have begun to tighten, signaling that this movement could be coming later today. With momentum shifting into a downward position, this volatile move may be negative for the GBP. Traders should wait for the breach, and then ride out the wave for profits.

USD/JPY

A bearish cross has recently formed on the 4-hour chart’s Slow Stochastic and the price of this pair currently floats in the over-bought territory on the daily chart’s and 4-hour chart’s RSI. These oscillators are signaling that the upward momentum may begin to shift in the near future into a downward posture. Going short with tight stops might be a wise choice later today.

USD/CHF

It appears a breach of the upper border of the hourly chart’s Bollinger Bands occurred early this morning, indicating the pair may correct downwards in the nearest future. However, the bullish channel which this pair is currently trading in has not been penetrated by a clear breach of its upper or lower levels. Trading within this range by buying on lows and selling on highs might be a wise choice today.

The Wild Card – Gold

The price of this commodity currently floats in the over-sold territory on the 4-hour chart’s RSI, indicating an upward correction may occur in the immediate future. With the recent bullish cross on both the 4-hour and daily chart’s Slow Stochastic oscillators, this correction may indeed be imminent. Forex traders can earn high profits today by opening large buy positions and riding out this impending movement.

Market Analysis provided by Forex Yard.

© 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.

The Australian economy decreased for the first time in eight years in the fourth quarter of 2008 according to a release today by the Australian Bureau of Statistics. The GDP report showed that the Gross Domestic Product declined by 0.5 percent in the October to December quarter following growth in the third quarter by a revised 0.1 percent. On an annual basis, the GDP grew by 0.3 percent over the fourth quarter of 2008 following an annual growth rate of 1.9 percent in the third quarter.

Economic forecasts had expected that the GDP growth would be 0.2 percent for the fourth quarter and 1.2 percent for the annual growth rate over the fourth quarter of 2007.

The fourth quarter GDP was the lowest quarterly reading since the December of 2000 quarter when the GDP contracted by 0.8 percent. Contributing negatively to the GDP decline for the quarter was a decrease in the manufacturing sector by 0.5 percent while wholesale trade fell by 0.2 percent. Excluding the farming sector, the GDP contracted by 0.8 percent.

Today’s GDP release comes a day after the Reserve Bank of Australia decided to hold its interest rate steady at 3.25 percent after two consecutive 100 basis point reductions. The RBA has shaved off 3.75 percentage points from the official cash rate since October 2008 to help fight a slowing Australian economy amid the global economic slowdown.

AUD/USD Chart – The Australian dollar fell sharply against the US dollar following the more than expected decline in the GDP data.

The Bank of Canada lowered its interest rate today by 50 basis points to bring the rate to an all-time low of 0.50 percent. Today’s rate cut was widely expected by economic forecasts and comes after the Bank lowered their rate by 50 basis points in January and by 75 basis points in December. The BOC has now slashed 400 basis points off the interest rate since December of 2007.

The Bank of Canada cited a weaker global economy and slowing domestic economic activity as spurring the latest rate cut.  The rate reduction comes one day after news out of Canada showed that the Gross Domestic Product declined by an annualized 3.4 percent in the fourth quarter of 2008 and marked the sharpest quarterly decline since 1991.

Today’s BOC rate decision statement commented on the Canadian economy stating, “National accounts data for the fourth quarter of 2008 and other indicators of aggregate demand point to a sharper decline in Canadian economic activity and a larger output gap through the first half of 2009 than projected in January. Potential delays in stabilizing the global financial system, along with larger-than-anticipated confidence and wealth effects on domestic demand, could mean that the output gap will not begin to close until early 2010.”

The next BOC rate announcement is scheduled for April 21st.

Australia holds interest rate steady after two large cuts.

The Reserve Bank of Australia decided to hold its official cash lending rate unchanged today at 3.25 percent today according to a government release. Australia had last lowered its interest rate by 100 basis points in each of February and December before today’s rate decision. Overall, the RBA has decreased its interest rate by a total of 375 basis points since October 2008. Today’s decision surprised market forecasts that were expecting the rate to be decreased by 25 basis points to 3.00 percent.

The RBA statement said the bank felt it was appropriate to hold the rate steady as, “there has already been a major change in both monetary and fiscal policy” and that the Australian economy is weathering the global downturn better than most.

Australia’s Glenn Stevens, Governor of Monetary Policy, commented on the Australian economy in the report stating, “In Australia, demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere. The Australian financial system remains strong and the monetary policy transmission process is working to deliver large reductions in interest rates to end borrowers. Nonetheless, economic conditions are clearly weak, and given the speed and scale of the global economic deterioration and its effect on confidence, weak conditions are likely to continue in the near term.”

Stayed tuned tomorrow as Australia’s fourth quarter GDP is scheduled to be released at 00:30 GMT. The GDP data is expected to show no growth or 0.0 percent change and could have effects on whether the RBA will be more likely to reduce the interest rate next time around.