Month: November 2010

By FxNewsIndia – The Reserve Bank of India today raised their lending and borrowing interest rates by 25 basis points in a bid to contain inflationary pressures in the Indian economy. The rate increase brought the bank’s lending repo rate to 6.25 percent and the reverse repo rate to 5.25 percent while leaving the cash reserve ratio unchanged at 6 percent. Today’s rate decision was widely expected by market forecasters and marks the sixth time this year that the bank has increased their rates.

Central Bank governor Dr. D. Subbarao said in the bank statement announcing the policy decision that inflation was “well above the comfort zone of the Reserve Bank” and “significantly above its medium-term trend”.

The bank statement characterized the move as being “moderate enough not to disrupt growth”and targeted to contain the rising inflationary expectations which “may be aggravated by the structural nature of food price increases”.

Governor Subbarao also highlighted that growth in the Indian economy “is operating close to the trend growth rate” and the “baseline projection of real GDP growth for 2010-11, for policy purposes, is retained at 8.5 per cent”.

Despite a global economic outlook that is “fragile and uneven”, the RBI believes that “domestic growth drivers are robust which should help absorb to a large extent the negative impact of any slowdown in global recovery.”

Read the full policy statement here.

Several factors and theories that can be the cause for the exchange rates of the forex (Foreign Exchange market) to fluctuate and change, whether they are for the good or the bad of the market. These fluctuations usually take place in the floating exchange rates nations. As the world grows global the need for online forex has also become important. Today with the ECN or the Electronic communication network Online FX Advantage is something that you must look into along with some of the theories that could explain these fluctuations are as follows:

International Parities : The purchasing power parity, International Fisher effect or the interest rate parity can all be responsible for the change in exchange rates of the Forex.

Economic policies: The change in economic policies which the different governments are responsible for can also cause fluctuations. These economic policies refer to the government fiscal policies, the interest rates and the various other monetary policies that are controlled by each nation’s government.

Inflation trends: A currency will automatically begin to lose value if a certain nation starts suffering from inflation, or even if inflation levels are seen to be on the rise. This is the direct result of the fact that inflation causes purchasing power of that currency to reduce, and thus the value and demand for that currency also lessens.

Trade: The level of trade carried out or in, from a country also determines the exchange rates for its currencies. The higher the flow of trade indicates the bigger demand for its currency. When it comes to trade CFDs is really essential as it a maintains the contract between the seller and the buyer.

Political and governmental conditions: International as well as internal political affairs of a nation can also have an effect on its currency and therefore its exchange rate in the Forex. Exchange rates have a tendency of changing along with instability in a country or even expectations out of the ruling government party of the nation. Similarly, if a nation is facing some kind of financial crisis, the rise of a ruling party that is expected to have positive effects on its economy can also have positive effects on its exchange rates in the Forex. Forex Traders in India today has become a necessity in this ever changing and growing market.

Market psychologies: There are several psychologies of the buyers and sellers in the Forex market that also affect the exchange rate of the currencies. For example, there is a great demand for those currencies that are considered safe as per market history or standard as compared to the internationally weaker currencies, and most buyers will always tend to prefer the long lasting quality over other currencies, for example the Swiss Franc has long been considered the safe haven for investing. There are also some typical long term trends that all business cycles in the Forex follow religiously. An analysis of the cycle will prove to stem from long term trends that are based on anticipated political and economic situations. Understanding the market psychologies are among the essential Forex Trading Tips.

Article by http://www.fxcentral.net/

By Sara Nunnally, Editor, Smart Investing Daily, TaipanPublishingGroup.com

About a month ago, I was speaking in a conference room at the Venetian in Las Vegas. We were presenting our 2010 Global Summit, and I was introducing the book I co-authored with our executive publisher Sandy Franks.

It’s called Barbarians of Wealth: Protecting Yourself from Today’s Financial Attilas, and in it we outline four defensive strategies to help you protect your wealth from modern-day financial barbarians.

I told our conference attendees that defensive strategies aren’t the only ways to play the market — even in these tumultuous times.

I gave out three new ways in my presentation last month. One was to play the market itself. In a way, that means making money from both sides of a trade.

For example, we could be talking about exchanges…

You see, money flows through these companies. Exchanges make money from each and every trade that’s made on them… and they charge companies fees to list — kind of like dues.

Consider the volume of trades just on the New York Stock Exchange on Friday alone: 3.538 BILLION!

The NYSE Euronext, Inc. (NYX:NYSE), the company that owns the NYSE, makes a cut off of every single one of those trades.

Today, there are a number of exchanges that are publicly traded:

• IntercontinentalExchange, Inc. (ICE:NYSE)
• Deutsche Boerse AG (DB1:XETRA)
• Singapore Exchange LTD (S68:Singapore)
• NYSE Euronext, Inc. (NYX:NYSE)
• Nasdaq OMX Group Inc. (NDAQ:NASDAQ)
• CME Group, Inc. (CME:NASDAQ)

(By the way, investing doesn’t have to be complicated. Let me and my fellow editor Jared Levy simplify the market with out easy-to-understand articles.)

And here’s some interesting news: On Oct. 24, the Singapore Exchange Ltd. bid $8.3 billion for the ASX Ltd. (ASX:ASX).

The deal constituted 3.473 shares of the Singapore Exchange and 22 Australian dollars per share in cash. This combined for an ASX share value of A$48.00, a 37% premium to what shares were trading for on Friday, Oct. 22.

In response, ASX shares skyrocketed 25% on Monday, Oct. 25. Combined, the companies would make the world’s fifth largest exchange.

The deal still needs to be approved by both sides, but this type of consolidation will actually make markets more accessible.

And Singapore is at the heart of making other investment areas more accessible, too.

Last week, the Singapore Exchange started trading 19 Chinese ADRs, and will soon be adding Indian, South Korean and Taiwanese ADRs to its lineup. This move is the third ADR partnership it’s made with the Nasdaq OMX Group. The two exchange companies share technology and are working on getting companies to dually list on both exchanges.

Singapore is on the move… It has to be in order to compete with the likes of Tokyo and Hong Kong. That’s why it’s adding all these listings, because — as I noted earlier — exchanges make money from each and every trade.

Even if it’s a losing one.

On Friday, the Singapore exchange saw 1.085 billion trades.

And Singapore is a fully developed exchange, offering a complete range of securities and derivatives — including commodities.

The company is only listed on its own exchange, so to buy this exchange, you’d have to do so on the Singapore Exchange or as a pink sheet that has relatively low volume. But it is also included in the iShares MSCI Singapore Index ETF (EWS:NYSE).

And take a look at what the EWS has been up to over the past year:

View Larger Chart

This rise is half again more than what the iShares MSCI Hong Kong Index ETF has done in the last 52 weeks.

That shows you just how much Singapore is pushing higher… and the changes at the Singapore Exchange (which is 23% owned by the state-controlled Financial Sector Development Fund) are just going to amplify this leap forward.

In the first quarter of 2011, the company will be instituting a faster trading system, and the company’s CEO Magnus Bocker, who has also worked for the Nasdaq OMX Group, is really pushing a lot of new initiatives that will help the Singapore Exchange compete with Hong Kong and Tokyo.

The latest bid for the Australian exchange would be mutually beneficial, even if some think the bid was too high, and others are concerned about the state-controlled aspect of the Singapore Exchange.

If you can, it might be more worth it to grab some shares of the exchange itself, rather than take a position in EWS, of which the exchange represents less than 3.25% of its holdings.

A warning: Near-term dips are nearly a given with the Singapore Exchange as it’s going through the acquisition process. Traditionally, the company doing the acquiring takes a hit in share prices, but this deal will bring more investors and more fees to the exchange — and that’s good for the long-term bottom line.

P.S. Now, this news is just a week old, so I didn’t get to talk about Singapore in this detail at the 2010 Global Summit we held for our subscribers in Las Vegas.

But I did tell folks about three other ways to play the market that make money from both sides of the aisle, just like the Singapore Exchange. Taipan Publishing Group recorded my presentation — along with all our other editors’ presentations that weekend.

These recordings are now available to all those who couldn’t make it to Las Vegas. And even if you did, and you weren’t able to make it to every editor’s speech, or you missed that key bit of information, everything is “caught on tape” so to speak… every presentation, and both panel discussions, which generated some really good questions and investment ideas.

If you’d like to pick up a copy of our 2010 Global Summit in Las Vegas, follow this link.

Don’t forget to follow us on Facebook and Twitter for the latest in financial market news, investment commentary and exclusive special promotions.

About the Author

Sara is Co-Editor of Smart Investing Daily. As Senior Research Director and global correspondent, Sara Nunnally’s diverse resume includes studies in art history, computer science and financial research. She has appeared on news media such as Forbes on Fox, Fox News Live, and CNBC’s Squawk Box, as well as numerous radio shows around the country.

As Senior Research Director, global correspondent and co-editor of Smart Investing Daily, Sara has traveled all over the world in search of the best investment opportunities to recommend to her readers, be they in developed economies like France and Italy, in emerging markets like the Czech Republic and Poland, or in frontier terrain like Vietnam and Morocco. Her unique “holistic” approach of boots-on-the-ground research has given her an edge in today’s financial marketplace as she searches for the next investment opportunities in hot sectors like alternative energy, currency markets and commodities.

The Forex or Foreign Exchange market or the currency market is one of world’s biggest trading fields today. It’s growing each day with billions of money changing hands 24 hours a day. Forex market is not like stock market or so; it’s an over-the-counter market or OTC market which tells that there isn’t any worldwide exchange for an explicit currency pair. The market operates 24×7 among individuals with forex brokers, forex brokers with the banks, and banks with other banks. The bigger part of this market consists of currency traders, who hypothesize the movements in the exchange rates of currencies.

The currency traders around the world, such as an individual, a commercial corporation or a broker try to get the benefit of even a little fluctuation in the currency exchange rates. Mostly, exchange rate fluctuations happen because of the actual monetary flow in the economy and the macroeconomic condition of the world. When fluctuation takes place, news is published about it and everyone gets hold of it. So, unlike other markets, here traders can react instantly to the news instead of waiting for the market to open. The traders and brokers in forex market depend on data about the economy and the market event. The Forex Economic Calendar keeps track of all the important economic events which influence the Forex market and makes way for analysis. With the help of this analysis, anticipation about the futures OTC and market movements could be made.

In the forex market, currencies of different countries are traded against each other. Each currency pair is a market product. The currency pairs are usually noted as XXX/YYY. YYY is the ISO 4217 international three-letter code of the currency and the price of one unit of the currency XXX is expressed through YYY, i.e. EUR/USD. The currency pairs of non-US dollar currencies are frequently called Crosses. But cross-rate doesn’t imply only rate exchange of these currencies.

When the investor wants to trade one currency for another, it is called crossing currency which is the main objective of forex market. Understanding forex pricing is easy as it deals with two different prices quoted, that are – bid (The price you sell at) and ask (the price you buy at). It also deals with Crosses & Pips. In case of currency crosses, the variation of the price, between the price which a seller in the market would ask a wholesale customer and the price which, that seller would use, to bid from the wholesale customer is nominal, and mostly varies from 1 to 2 pips. But the retail customers usually go to brokers for trade.  The forex brokers work with loads of currency tips and strategies. One has to learn a lot about currency trading tips by research and observation of the market, to get success in forex trades. The forex brokers in India are conducting in the market well, but there’s a lot of cheats to be aware of. Though nowadays many companies are providing service or reference of reliable and efficient brokers.

Article by http://www.fxcentral.net/

Calling all euro bulls! The EURUSD pair or the “fiber” as what some people call it has just broken out from a symmetrical triangle. As you can see from its daily chart, the pair has actually reversed its downtrend when it escaped from a cup and handle pattern. It then continued to trade strong before consolidating into a symmetrical triangle for the last two weeks. Given this recent price action, though, I can say that buying the euro and selling the US dollar at the same time would be a better idea at least from a technical point of view. Such breakout could propel the pair up until it hits some resistance at 1.4250 or even at 1.4300. That’s at least a 200-pip upside in the near term. Not bad!

The remaining days of this week would be crucial for the EURUSD. A high degree of volatility is expected in all currency pairs especially the fiber because of the US Federal monetary policy decision tomorrow and the release of the US’s non-farm payrolls (NFP) report on Friday. There has been talks that the Fed would engage into another non-traditional money printing activities (quantitative easing) in the days to come in its desire to further ease the day-to-day market interest rates in order to encourage more lending and spending. Puff Daddy predicted it correctly – “More money, more problems.” Of course the problem here is reflected on the greenback as its valuation gets diluted by the increase in money supply. Friday’s NFP will likewise create some noise. Based on the recent estimates, about 65,000 jobs were added by US firms in the last month as against the 95,000 that got laid off in the previous period. If this figure is correct, then such would spark optimism among market participants, causing them to continue supporting non-dollar currencies like the euro.

More on LaidTrades.com …

By CountingPips.com

The Reserve Bank of Australia surprised the markets and unexpectedly increased its interest rate by 25 basis points earlier today. The decision to raise the cash rate to 4.75 percent was the first rate increase since May and was generally unexpected by market forecasters. The RBA move was dictated by the bank’s outlook of increasing inflationary pressures in the economy with strong demand for Australian goods and commodities from China and other emerging market countries.

Australia’s Glenn Stevens, Governor of Monetary Policy, said in his policy statement that the bank sees, “inflation rising again over the medium term” and “the moderation in inflation that has been under way for the past two years is probably now close to ending. Recent information suggests underlying inflation running at about 2½ per cent, with the CPI inflation rate a little higher due mainly to increases in tobacco taxes.”

“Inflation is likely to rise over the next few years. This outlook, which is largely unchanged from the Bank’s earlier forecasts, assumes some tightening in monetary policy.”

Last week, Australian consumer price inflation data showed that prices rose by 0.7 percent in the third quarter of 2010 up from a 0.6 percent rise in the second quarter. Despite the increase, the data was just below market forecasts. On an annual basis, the third quarter consumer price data increased by 2.8 percent above the third quarter of 2009 following a 3.1 percent increase in the second quarter.

Stevens also commented on the global economy today saying that, “The global economy grew faster than trend over the year to mid 2010. Global growth will probably ease back to about trend pace over the coming year as strong recoveries in the emerging world give way to a more sustainable pace of expansion and growth remains subdued in the United States and Europe. At the same time, concerns about the possibility of a larger than expected slowing in Chinese growth have lessened recently and most commodity prices have firmed, after a fall earlier in the year. The prices most important to Australia remain at very high levels, with the result that the terms of trade are at their highest since the early 1950s. The turmoil in financial markets earlier in the year has abated, though sentiment remains fragile.”

The Australian dollar quickly felt the effects of the surprise rate announcement today in forex trading and rose to reach a new all-time high against the US dollar. The Aussie has also gained against the euro, Canadian dollar, British pound, New Zealand dollar and the Japanese yen in today’s trading, according to currency data from Oanda.

AUD/USD Chart – The Australian dollar gaining versus the US dollar in forex trading today, reaching parity and establishing a new all-time high.

By Natalie R. – Following a long bearish streak versus the CAD over the past few days, the CHF seems to be headed for a bullish correction. Forex traders are advised to take advantage of this knowledge by going short on CAD/CHF now.

Below is a daily chart of CAD/CHF. The technical indicators are the RSI, Slow Stochastic and Williams Percent Range.

– A breach of the upper Bollinger Band is evident on the chart (1), indicating an imminent downward correction may be expected. Further more, a doji candelstick is seen indicating a reversal in trend amay be expected.

– A bearish cross is evident on the Slow Stochastic (2), signaling the next move may be a downward correction.

– The RSI (3) signals that the price of this pair currently floats in the over-bought territory, suggesting downward pressure.

– Williams Percent Range (4) further supportds the downward direction.

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 Russell Glaser – Fundamentally, this may very well be the most important week of the year for the FX markets.

Already today the Royal Bank of Australia raised interest rates 25 basis points to 4.75%.

Later today will bring the mid-term elections in the US and it looks as though the Republicans will come away with the House of Representatives and weaken the majority the Democrats hold in the Senate. Also more than half of the governorships are up for grabs. A republican victory could impact Congress’s upcoming debates which include an extension of the Bush tax cuts and an extension of unemployment benefits.

Wednesday will have what everyone is looking forward to, the announcement by the Fed to renew quantitative easing to raise inflation and lower unemployment numbers. Economists are expecting that the Fed will purchase approximately $500 Billion worth of 2 year, 10 year, and perhaps 30 year treasuries.

Thursday brings Central bank meetings from both England and the EU. The markets will be looking for signs that the EU will begin to scale back on their sovereign bond purchases.

Friday will have the Bank of Japan meeting with expectations for the BOJ to address the new quantitative easing in the US along with the strengthening of the Yen. The all-important US Non-Farm Payrolls will end the week with high volatility. The report should show the US economy added 65 thousand jobs in the month of October.

Speculations continue to run as to how traders will react to the further loosening of monetary policy in the US.

Despite short term technical indicators that show the EUR/USD overbought, the pair could rise to the downward sloping trend line on the monthly chart the near the 1.4550 level.

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.

Oil prices received a boost yesterday after Saudi Oil Minister Ali Naimi suggested consuming countries are happy with oil between $70 and $90 a barrel, raising the price ceiling by 10$ from the previous range of $70 – $80.

Oil received an additional boost following the release of better than expected manufacturing data from the U.S and China. Oil has advanced this year despite rising inventories as investors bet demand will increase as global economic substantiates. It appears that prices are heading back to around $85, with further room to appreciate.

One major block in crude’s resurging rally is the outcome of the U.S. Federal Reserve’s policy meeting on Tuesday and Wednesday. It is widely expected that further quantitative easing measures will be announce in order to recharge the lackluster U.S economic recovery. The only question is the size of the second “stimulus”. Oil prices tend to have an inverse relation as oil is denominated in U.S. Dollar and a weak currency makes the commodity cheaper and therefore more attractive to investors. If the scope of the intervention is smaller than expected it is likely the greenback will regain some strength, putting pressure on oil prices.

Tomorrow’s release of U.S inventories is expected to show an increase of 1.7 million barrels last week, after a 5 million barrel jump the previous week. It seems, however, that despite the markets oversupplied, prices remain moderately steady. A bigger than expected increase, none the less, will likely suppress oil prices in the short term, pushing them back to below $82.

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar weakened slightly during the Asia session, thanks largely to a surprise policy rate hike from the RBA. EURUSD traded 1.3874-1.3937, USDJPY 80.47-80.76. AUDUSD reached 0.9995, and looks poised for a second run to parity. However, Asian equities failed to make significant headway after US equities closed flat, suggesting investors are largely unwilling to put on fresh risk-seeking positions ahead of this week’s events. Even though investors are mostly focused on the FOMC and labour data later in the week, US manufacturing data lent some support to our economists’ forecast that real growth should pick up to +2.5% in Q4 vs. +2% in Q3, and that the FOMC announces only “QE2-lite” on Wednesday. The manufacturing ISM index jumped above expectations to 56.9 in October from 54.4 in September. Meanwhile, personal income, spending and price data for September were largely as expected. Of note, private wages and salaries managed to increase again in September which is a contributing factor to stronger growth. The US mid-term elections are due today and press reports suggest the Republicans will make strong gains in both the House of Representatives and the Senate, which could be dollar-supportive in the near term should investors expect less fiscal spending as a result.

EUR

For the third week in a row, no bond purchases settled last week under the ECB’s sovereign bond buying program. However, sovereign yields for peripheral issuers are still widening, and Irish 10y yields breached 7% again yesterday, suggesting the ECB may need to reactivate the program in the near future.

Recent sovereign risk concerns have been prompted largely by worries over budget negotiations in Portugal and Ireland. Friday’s decision by the EU Council to force bondholders to share the costs of future sovereign bailouts may have also been a contributing factor.

Final Eurozone and German PMI Manufacturing for October are expected to remain largely unchanged.

JPY

Economics Minister Kaieda said the government should intervene if FX market movements are abrupt, and he warned that the government may not be able to implement part of its stimulus plan until next year as it may be hard to pass the supplementary budget by December.

Kaeida went on to say that he is closely watching the outcome of the FOMC meeting, but that BoJ will make its own decision on monetary policy.

Finance Minister Noda said that FX moves in recent days were one-sided and that he stands ready to take decisive action if needed.

GBP

The PMI for the manufacturing sector rose to 54.9 in October, while a small decrease to 53.0 had been expected. The PMI for the service sector will be published on Wednesday. Contrary to the majority we expect to see a slight rise to 53.0. This would be further confirmation that the British economy is recovering. That means that at the central bank meeting on Thursday the Bank of England will not decide on any further measure of monetary policy easing. But it is still too early to sound the all clear. Even if the most recent publications suggest that an extension of the expansionary monetary policy is unlikely short term we will have to wait and see what effects the government’s budget consolidation measures will have. Should the UK publications disappoint over the coming weeks concerns about additional measures of quantitative easing on the part of the BoE will easily re-emerge. Moreover the BoE’s rhetoric is unlikely to change. Recently its members had increasingly referred to uncertainties regarding the economic outlook. As a result Sterling remains vulnerable to set-backs.

TECHNICAL OUTLOOK

EURUSD BULLISH Look for a break above 1.4159, which would trigger another bullish run towards 1.4373. Support holds at 1.3698

USDJPY BEARISH Outlook is bearish; next big support below 79.75 lies at 77.91. Resistance at 81.41, Monday’s high.

GBPUSD BULLISH Clearance of 1.6107 would expose 1.6276 and 1.6458 next. Support comes in at 1.5878 ahead of 1.5606

USDCHF BEARISH Bounce-off from 0.9463 pushed through resistance at 0.9929 thus exposing 1.0183. Near-term support at 0.9703.

AUDUSD BULLISH Positive momentum pressures 1.0004; a break here would expose 1.0222 measured target. Support at 0.9866 intraday low ahead of 0.9542 reaction low.

USDCAD BEARISH Clearance of 1.0154 puts odds in favor of extension of losses towards 0.9981. Upside capped at 1.0380

EURCHF BULLISH Targets 1.3924 with scope for 1.4041 next. Near-term support at 1.3540

EURGBP BULLISH While support at 0.8636 holds, view pullback as correction. Resistance at 0.8772

EURJPY BULLISH Only a break below 110.66 would hurt the positive tone. Resistance at 113.78 ahead of 115.68

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.