Month: October 2010

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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 CountingPips.com

The US dollar has been mixed in forex trading action following the better than expected retail sales news released earlier today. The dollar has been gaining ground against the euro, Canadian dollar and the Swiss franc while losing ground to the British pound sterling, Japanese yen and the New Zealand Kiwi. The Australian dollar is currently trading almost unchanged against the dollar from the day’s opening exchange rate.

Gold has come down off its record highs from yesterday with a decline of approximately $6.00 to trade at the $1,370.70 level at time of writing. Oil has edged down by $1.06 to the $81.60 level.

The US stock markets have been mixed with the Dow Jones industrial average falling by approximately 41 points so far today while the NASDAQ is up by over 20 points and the S&P 500 is higher by approximately 1 point.

Today’s US retail sales data showed that sales increased by more than expected in September and rose for a third consecutive month. The advance estimate of monthly retail sales, released by the US Commerce Department, showed that sales advanced by 0.6 percent to $367.7 billion in September from August. The data was better than the market expectations that were predicting a 0.4 percent rise for the month.

The August retail sales data was revised higher from the 0.4 percent originally reported increase to a rise of 0.7 percent. On an annual basis, the September retail sales data rose by 7.3 percent above the September 2009 sales level.

Core retail sales, excluding automobiles, increased by 0.4 percent in September following a 1.0 percent increase in August and surpassed economic forecasts that were expecting core sales to rise by 0.3 percent.

Contributing to the higher sales level for the month was a rise in automobile sales with a 1.6 percent increase while electronics and appliance stores, miscellaneous store retailers and nonstore retailers all had increases of 1.0 percent or more in September.

Food and beverage store sales increased by 0.4 percent while gasoline station sales also showed an increase by 0.4 percent.

By Anton Eljwizat – Gold prices rose significantly in the last two months and peaked at $1381.50 an ounce. However, the 8-hour chart is suggesting that the recent up trend is loosing steam and a bearish correction is impending. Forex traders involved with commodities like this can take advantage of this knowledge by going short on crude oil now, and at a great entry price!

• Below is the 8-hour chart for gold by ForexYard.

• The technical indicators used are the Slow Stochastic, RSI and Williams Percent Range.

• Point 1: There is a “doji” candlestick formed in the chart, indicating that a reversal should take place.

• Point 2: The Slow Stochastic indicates a bearish cross, signaling that the next move may be in a downward direction.

• Point 3: The RSI signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure.

• Point 4: Williams Percent Range also supports the downward direction.

Gold 8-Hour chart

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 GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD
The dollar steadied during the Asia session, having earlier clawed back some of the losses sustained after yesterday’s surprise tightening by the Monetary Authority of Singapore. EURUSD traded 1.4009-1.4088, and USDJPY 81.28-81.68. But the dollar is still weaker over the past several days as Fed easing expectations have intensified. Later today, the market is finally expected to hear Fed Chairman Bernanke’s thoughts on the subject of further easing. Investors are uneasy over whether Bernanke will explicitly support the idea and, if he is noncommittal, the dollar could find some further support. Boston Fed President Rosengren remains in favour of more easing, in the belief that it may help reduce unemployment. He said there is a low probability the US will have deflation and that he would not want to see even disinflation at this point. Jobless claims were higher than expected and the August trade deficit was wider. Consumer data is due later and the deadline for the semi-annual report from the Treasury Department on foreign exchange also falls due today.

EUR
ECB Executive Board Member Stark said that inappropriate currency movements are damaging to economic and financial stability, and it would be fatal if currency wars evolved into a race to devalue. He said the ECB would continue to buy government bonds for as long as necessary – his comments in sharp contrast to those of Governing Council Member Weber who recently called for the sovereign bond purchase program to be immediately disbanded. He warned again that individual banks cannot rely on continued ECB support measures for their refinancing needs.

ECB Governing Council Member Bini-Smaghi said emerging market economies must gradually accept stronger currencies and current moves in the FX market are due to the weak dollar rather than a strong euro or yen.

China’s FX regulator said the euro’s rise added approximately $80bn to China’s FX reserves between Q2 and Q3, purely due to valuation. This reveals that a sizeable portion of China’s FX reserves are already euro-denominated.

JPY
Japanese lawmakers and policy makers made plenty headlines during the Asia session. In response to USDJPY hitting a new 15-year low yesterday, Finance Minister Noda said this was due to a broad-based dollar decline and not just against the yen. He warned that he is still watching FX markets with great interest and will take decisive steps if needed to curb excessive FX moves. He added that he would like to discuss ways to maintain international currency order at the upcoming G20 meeting, due to be held on Oct. 22-23. However, he warned that he would decide whether or not to intervene “regardless of the G7 or G20”.

Prime Minister Kan says he is concerned about the yen’s current strength. Economy Minister Kaeida added that the yen’s current rise is no good for the economy, and said he expects timely steps will be taken to counter the yen’s rise. The BoJ provided two speakers. Governor Shirakawa said that Japan’s return to sustainable growth may be delayed, and that the BoJ will take appropriate action. Deputy Governor Yamaguchi said further easing would be possible by extending the BoJ’s new asset purchase scheme, repeating remarks made earlier by Shirakawa.

Industrial production growth moderated somewhat in August, but still managed to rise by +15.1% y/y (prev. 15.4%).

TECHNICAL OUTLOOK

USDCHF support at 0.9225.

EURUSD BULLISH Recovery through 1.4045 exposes 1.4194 and 1.4371 Fibonacci resistance. Support at 1.3908.

USDJPY BEARISH The pair targets 79.75 with scope for 77.91 next. Resistance holds at 83.03 ahead of 83.99.

GBPUSD BULLISH Rise through 1.6018 favors extension of the uptrend towards 1.6201 ahead of 1.6379. Support at 1.5888 ahead of 1.5670.

USDCHF BEARISH Outlook is bearish; break below 0.9500 exposes 0.9225. Resistance at 0.9729 ahead of 0.9918 breakout low.

AUDUSD BULLISH Momentum is positive; expect recovery towards 1.000 ahead of 1.0166. Support at 0.9834 ahead of 0.9709 reaction low.

USDCAD BEARISH Targets 0.9931 with scope for 0.9820 next. Resistance at 1.0106.

EURCHF BULLISH Upside potential held at 1.3494 ahead of 1.3665. Initial support lies at 1.3265 ahead of 1.3072.

EURGBP BULLISH Currently holds resistance at 0.8840 ahead of 0.8894 and 0.9039. Support holds at 0.8689 ahead of 0.8563.
EURJPY BULLISH While support at 112.86 holds, expect recovery towards 115.68 ahead of 116.68 Fibonacci resistance.

Forex 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.

By Russell Glaser – The dollar continues to slide during the European trading session as traders eye a speech today by Federal Reserve chairman, Ben Bernanke. The speech could increase the negative momentum behind the dollar’s bearish move as the major currencies advance on the potential quantitative easing.

Yesterday’s volatile trading session which had the dollar falling to new lows appears to have carried over into today’s trading. The EUR/USD is moving higher at 1.4080, up from an opening day price of 1.4036. The USD/JPY is lower at 81.20, down from an open of 81.40. The Cable is posting solid gains as the GBP/USD is pushing for a new 4-month high at 1.6065, up from 1.6000.

Traders will be looking towards the 12:15 GMT speech by Bernanke as to the next move by the Fed. The speech could hint at a second round of quantitative easing which could push the dollar lower versus the majors. However, markets may have already priced in a renewal of quantitative easing, leaving the dollar oversold should Bernanke’s speech not address an easing of monetary policy.

Yesterday’s large moves by the major currencies could continue in the New York trading session. The EUR/USD is testing yesterday’s 9-month high at 1.4120. The USD/JPY may fall below the 81 level for the second time this week, and the GBP/USD looks to move above yesterday’s high of 1.6060 to the next resistance of 1.6250.

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.

Source: ForexYard

A tightening of monetary policy in Singapore was the main factor in the dollar dropping to record lows against several of its main currency rivals in trading yesterday. The EUR/USD pair went as high as 1.4123 before staging a downward correction. At the moment the pair is trading around 1.4025, still well above the psychologically significant 1.4000 level. Whether or not the dollar can extend its gains today will likely depend on a batch of US news events.

Economic News

USD – USD Values Likely to Be Influenced by Bernanke Speech

After plummeting to record lows against its main currency rivals in early morning trading yesterday, the greenback was able to stage a recovery and recoup some of its losses. The USD/JPY pair hit its lowest point since April 1995 yesterday, when it dropped to the 80.88 level. While a correction did take place, investors continue to closely monitor the pair for any surprise moves. A similar trend occurred with the USD/CHF pair. After dropping as low as 0.9460, the cross was able to steadily increase throughout the day, and is currently trading around the 0.9550 level.

Today, investors will be paying close attention to a speech from the Fed Chairman, set to take place at 12:15 GMT. Any hints as to when, and to what extent the Fed may enact a policy of quantitative easing will likely determine dollar values for the near future. The current rumor is that the level of quantitative easing set to take place is not as great as originally thought. Should the Fed Chairman allude to this, the dollar will likely see some gains to close out the week.

In addition, traders will want to pay attention to the US Core CPI and Core Retail Sales figures, both set to be released at 12:30 GMT. While neither is forecasted to show substantial gains in the US economy, anything above the predicted values will likely help the USD in the short term.

EUR – EUR Tumbles in Overnight Trading

In a sign of just how fragile the euro-zone economies are, the 16-nation currency dropped against virtually all of its main rivals in overnight trading. Analysts attribute the drop to traders who felt that the euro was overvalued against most of the other currencies. Consequently, the EUR/JPY pair fell over 60 pips since last night and is currently trading around the 114.15 level. In addition, EUR/USD also saw a drop of around 50 pips before settling in at its current level of 1.4025.

Today, euro traders will want to pay close attention to the European CPI figure set to be released at 09:00 GMT. The CPI measures the change in price for consumer goods over the last month inside the euro-zone. The figure is considered to be a key indicator of inflation and tends to generate market volatility. Should today’s figure come in at its predicted level of 1.8%, the euro may see a slight boost in morning trading. In addition, traders will want to pay attention to the speech from the US Fed Chairman at 12:15 GMT. Any talk about quantitative easing in the United States is likely to generate a lot of market activity, particularly among the EUR/USD pair.

JPY – Yen Falls after Nearing Record High against USD

After dropping to 80.88 yesterday, the USD/JPY pair has since staged a minor correction and is currently trading around the 81.40 level. While the pair is still a long way from hitting its all-time low of 79.75, analysts are paying close attention to any intervention the Bank of Japan may stage to bring the oft-traded cross back to a more reasonable level. Any gains the yen makes on the US dollar are largely seen as unfavorable in Japan, which depends on a weak currency to boost its export industry.

Today, any news out of the US regarding future quantitative easing measures is likely to impact the USD/JPY pair. Particular attention should be given to the speech from Fed Chairman Bernanke at 12:15 GMT. In addition, should any of the numerous US indicators set to be released today come in worse than expected, risk aversion could return to the market and boost the yen to close out the week.

Crude Oil – Crude Oil Slips Following US Report

A US report showing that fuel consumption fell to its lowest level in close to a year caused crude oil prices to slip yesterday. The commodity fell as low as 82.20 before staging a slight recovery in overnight trading. The poor economic climate in the US is largely to blame for the low consumption rates. Yesterday’s worse than expected unemployment data highlighted how far the world’s largest energy consumer needs to go before fully recovering from the economic crisis.

Today, traders are advised to follow the trend the US dollar takes in order to gauge the direction oil prices will go. Should the dollar fall in trading today, investors will likely turn to commodities like oil as an alternative investment. At the same time, if the dollar continues the upward correction started yesterday, oil is likely to drop further to close out the week.

Technical News

EUR/USD

The Stochastic Slow on the 8-hour chart shows a bearish cross has formed, and that a downward correction may take place today. This theory is supported by the Williams Percent Range on the same chart, which is currently in overbought territory. Going short with tight stops may be the preferred strategy today.

GBP/USD

The Relative Strength Index on the 4-hour chart indicates a downward correction could occur for the pair today. In addition, the Stochastic Slow on the 8-hour chart shows a bearish cross has formed. Traders will likely want to go short today in order to take advantage of the upcoming bearish trend.

USD/JPY

Despite its prolonged bearish trend, most technical indicators are showing the pair trading in neutral territory, meaning it is likely to stay around its current level for the immediate future. The exception is the Relative Strength Index on the 8-hour chart, which is approaching oversold territory. Still, traders may want to take a wait and see approach today in order to get a better idea of where the pair is heading.

USD/CHF

The MACD on the 4-hour chart is showing a bullish cross has formed, indicating an upward correction may take place today. At the same time, most other indicators are showing the pair in neutral territory. Taking a wait and see approach may be the wise choice for traders today.

The Wild Card

Dow Jones Industrials

The Williams Percent Range on the 8-hour chart shows the pair in overbought territory, indicating a downward correction may take place. The MACD on the 4-hour chart shows a bearish cross has formed, supporting our theory. CFD traders may want to open up short positions in order to take advantage of the impending bearish movement.

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.

USD/CAD

Daily graph: http://www.real-forex.com/charts-daily/151010/CAD_DAILY_151010.JPG

One-Hour graph: http://www.real-forex.com/charts-daily/151010/CAD_1H_151010.JPG

The decrease of the currency until the support level 0.9974 anticipated in the last session truly happened.

On the daily graph, we can clearly see that the pair almost reached the level mentioned above. Once reached, because of the importance of the level, a reversing trend may occur, suggesting an opportunity to trade “Long”.

Potential trade

We suggest looking for an ascending configuration on one-hour graph. Such a configuration should appear after the pair will break the resistance level of 1.0075 upward. Order suggested:

• “Limit” order on “Long” position 10 pips above the resistance of 1.0075, meaning 1.0085.
• First level for a “Stop Loss” order on the last low appeared: 1.0026

EUR/JPY

Daily graph: http://www.real-forex.com/charts-daily/151010/EUR_JPY_DAILY_1510.JPG

After quite a long period of increase in the pair, a reversal happened last week. Please pay attention how important were the candles in the beginning of the decreasing process.

After four days downtrend oriented, a new uptrend occurred, however with small candles, compared to those appeared in the beginning of the decreasing process.

An interesting resistance stopped the trend at 114.83, suggesting a reversing trend. The reversal may create an opportunity for a “Short” trade.

Suggestion: A daily reversing candle or a descending configuration may confirm the reversal to start the transaction.

Have a profitable day!

Real Forex team

By Warren Seah – When a trade goes bad, it is always difficult to decide what to do. At that point of time during trading, there is always emotional investment in the trade that plays an important role. It is always bad to have capital loss at stake but it is our reaction to such situation that brings about disaster.

There are a few choices you can take when meeting a bad trade:

1. Exit your trade and take the loss like a man

2. Hedge the trade

3. Allow the situation to remain the same and hope for a recovery

4. Move your stop loss closer to price action

I certainly hope that you do also opt for option 3 as I do not believe in miracles in FX and that out of 10 times, I could say that those 10 times it ends up a disaster. Exiting your trade at the right time when things goes awry stops the pip bleeding and also relieves you of your emotional agony.

You can then go on to look for other opportunities where you could profit but beware of ‘revenge trading’ which I hope you don’t get into for the sake of recovering back the loss you’ve experienced.

Hedging is quite a tricky method to apply as you have to be experienced to do so. Cause it may backfire on you where you might end up losing on both sides of the trade should the market range.

The worse of the lot is to allow your trade to continue the same way and hope for a comeback. You have no control of the market and exposing yourself to too much agony will affect your logical thoughts. But if you have a stop loss in place earlier, it should be within your risk level threshold.

Moving stop loss closer to price action is a great idea but you should not be tempted to do just because the price is closing in on your stop loss. Moving of stop loss should be based on a planned exit strategy that matches your trading strategy and market condition beforehand. The moving of stop loss is preferably decided by the market forces through price action or indicator based movement.

That way, you remove any emotional attachment in deciding how you want to move your stop loss and that you allow the market to ride out the storm by itself within your control due to your planned exit strategy.

About the Author

Warren Seah

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By CountingPips.com

The U.S. dollar has been mostly trading on the defensive in the forex markets today while the American stock markets closed slightly lower. The dollar has fallen versus the euro, British pound sterling, Swiss franc and the Japanese yen on the day while advancing against the New Zealand dollar, Australian dollar and the Canadian dollar, according to currency data near the end of the US trading session.

The Australian dollar briefly flirted with parity to the US dollar today as the AUD/USD currency pair touched a high point of 0.9994 and marked a new all-time high for the Aussie, according to currency data from Oanda.

The Japanese yen continued to strengthen versus the American currency as the USD/JPY pair touched the 80.89 exchange rate level in earlier trading. This marked the Japanese yen’s strongest exchange rate against the dollar in 15 years.

The U.S. stock markets, meanwhile, finished the day almost unchanged with the Dow falling by 1.51 points, the Nasdaq decreasing by 5.85 points and the S&P 500 down by 4.29 points.

Oil edged lower by $0.39 to $82.62 per barrel while gold continued its record run with an increase by $9.00 to trade at the $1,378.50 per ounce level. Gold reached a new all-time high in today’s trading above the $1,388.00 level before pulling back.

US trade deficit increases in August

The United States trade deficit widened by more than expected in August, according to a release by the Commerce Department today. The U.S. trade deficit increased by $3.7 billion as the deficit leveled at $46.3 billion in August following a revised deficit of $42.6 billion in July.

The data surpassed market forecasts that were expecting a deficit of approximately $44.0 billion for the month.

The U.S. had a total of $153.9 billion worth of exports in August which was an increase of $0.3 billion from July’s total. August also saw an increase in imports with a total of $200.2 billion worth of imports compared with $196.1 billion in July for a increase of $4.1 billion.

The politically sensitive U.S. trade deficit with China rose in August to a $28.0 billion shortfall after a deficit of $25.9 billion in July. Other notable U.S. trade deficits were the deficits with the European Union at $8.1 billion, Mexico at $6.0 billion, Japan at $5.8 billion and OPEC at $9.0 billion.

The U.S. trade surpluses with other countries for August included Hong Kong at $1.9 billion, Singapore at $1.1 billion, Australia at $1.0 billion and Egypt at $0.4 billion.

Producer Prices increase for third month in a row.

U.S. producer prices increased for a third straight month in September, according to a report released by the U.S. Labor Department. Producer prices or wholesale inflation increased by 0.4 percent in September following a 0.4 percent increase in August and a 0.2 percent gain in July.

On an annual basis, producer prices rose by 4.0 percent from September 2009 following August’s annual increase of 3.1 percent. Contributing to the price increase was a rise in food prices by 1.2 percent while energy prices increased by 0.5 percent in September and rose for a second straight month.

Economic forecasts for the monthly producer price numbers were expecting a 0.1 percent increase and a 3.7 percent gain on an annual basis. Core prices, excluding volatile energy and food costs, rose by 0.4 percent in September and registered a year-over-year increase of 1.6 percent with both figures surpassing the forecasts.

Weekly Jobless Claims rise by 13,000.

A separate government release by the U.S. Labor Department showed that weekly U.S. jobless claims increased in the week that ended on October 9th. New jobless claims climbed to a total of 462,000 unemployed workers, an increase over the prior week by 13,000 workers. This gain of jobless claims was more than expected as market forecasts predicted a fall to 445,000 jobless claims. The 4-week moving average of unemployed workers rose by 2,250 from the prior week to a total of 459,000.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending October 2nd decreased for the week. Continuing claims declined by 112,000 workers to a total of 4,399,000 unemployed workers. The four week moving average of continuing claims fell by 34,500 to 4,488,500.

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