Month: November 2010

Chinese and Russian officials have reached an agreement to use their own currencies in bilateral trading instead of the US dollar, according to news reports out of China by Xinhua. The dollar, the world’s reserve currency, had been used by both countries up until now in most of their bilateral trade.

Government officials in both China and Russia in the recent past have criticized the dollar’s reserve status and have argued for a systemic change.

Trade between the two countries can now be settled in yuan or rubles without the need to convert to dollars. This week the Russian ruble started exchanging against the yuan in the Chinese interbank market while the yuan will be added to the Russian market in December, according to the report.

About the Author

FxNewsChina.com – China Forex News

By Adam Hewison – It’s more important to the market than Ireland, Greece, Portugal, and Spain combined.

The trials and tribulations of these four countries (that have run up huge deficits) have been well known for quite some time. What is more important in my opinion is not the size of the debt, which is staggering, but rather what is going on with market perception.

Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.

So what is market perception? Well, have you ever noticed that when some big world event happens, or a new “hot” IPO hits the markets, traders expect that market to go in the talked about direction and typically it does. What doesn’t get talked about is how the market then corrects itself and the technicals really come into play.

The only real way to avoid the trap is through the use of technical analysis, or in the case of MarketClub, our “Trade Triangle” technology. This technology doesn’t read the newspapers, doesn’t watch cable news, and is independent of everything else except the market itself.

What is the most important thing to most investors? I would have to say it is the bottom line. If you’re not making money in the market, then you’re doing something wrong. Maybe you’re paying more attention to the talking heads on cable, or to the nightly news, but you’re not really paying attention to market perception.

I was lucky enough when I began my career to learn about technical analysis very early on. I said to myself, when it can be this easy there must be something more that I’m missing. It was then that I made the mistake of looking at all these other so-called tools like fundamentals, earnings reports, etc. You name it, I looked at it.

One day I finally got smart and realized that I had already found the “true gold” in trading by using technical analysis.

I was just watching some talking head author on TV and they were saying that technical analysis is so 1920’s and old technology. Of course, the person who was saying that was looking to sell copies of their book.

I said to myself, boy oh boy, not to look at technical analysis, which is like the DNA of the market, is a huge mistake. I can see people going out and buying this author’s book and being led down the wrong path. I will not name the book as readers of this gobbledygook are going to spin their wheels only to find that it really doesn’t work.

Let’s keep things simple. That is the secret to successful trading.

At MarketClub we tend to look at the market in a very simple fashion. Let me explain; the market can only do three things: it can go up, it can go down, and it can go sideways. In life there are very few things that you can simplify as easily as that.

So using MarketClub’s “Trade Triangles” you are able to determine when the market is going up, in which case you want to be long, and when the market’s going down, in which case we want to be short or out of the market.

Now of course we do filter the “Trade Triangles” of MarketClub to help avoid trading losses. With any kind of trading or investing program the risk of loss is always there. The key to success is how you manage those losses. Are the losses small enough as to not bite into your capital in a major way?

Again, when you’re looking at market fundamentals or other ways to trade, they really don’t tell you when to get out. Obvious examples of this would be the Enron scandal or the recent GM debacle that took unwary investors to the poor house.

But it’s hard to fake a market saying everything is great, when the market is heading south. So what is an investor to think? I believe you have to trust your eyes and the direction of the market. After all, that’s what makes up your bottom line.

In today’s video we’re going to be looking at one or two markets and how the “Trade Triangles” are positioned right now. We are not predicting what’s going to happen in the future. We are simply going to look at the purity of the “Trade Triangles” and how they can help investors with the most important market element of all, market perception.

Enjoy the video.

All the best,
Adam Hewison
President of INO.com
Co-founder of MarketClub

By CountingPips.com

U.S. weekly jobless claims decreased by more than expected in the week that ended on November 20th, according to a release by the U.S. Labor Department today. New jobless claims fell by 34,000 workers to a total of 407,000 unemployed workers, marking the lowest level of claims since July 2008. The 4-week moving average of unemployed workers decreased by 7,500 workers from the previous week to a total of 436,000.

Market forecasts were expecting jobless claims to decline to 435,000 unemployed workers following the prior week’s 441,000 revised number of claims.

Meanwhile, workers seeking continuing claims for unemployment benefits for the week ending November 13th also decreased for the week. Continuing claims fell by 142,000 workers to a total of 4,182,000 unemployed workers. The four week moving average of continuing claims dropped by 51,500 workers to a total of 4,309,000.

Continuing claims decreased by more than expected as market forecasters were looking for 4,275,000 continued unemployment claims.

By CountingPips.com – New Home Sales in the United States decreased by more than expected in October, according to a report released by the Department of Commerce today. Purchases of new single family homes fell by 8.1 percent  in October to an annual rate of 283,000 new homes sold. Market forecasters were expecting a 1.6 percent rise in the monthly sales level for an annual rate of 312,000 new homes sold following a 12.0 percent increase in September.

On an annual basis, October’s rate of new homes sold was 28.5 percent lower than the October 2009 sales level.

Leading the decrease in October was a 23.9 percent drop in new homes sold in the the West while the Midwest registered a 20.4 percent decline in sales. Sales in the Northeast fell by 2.1 percent while the South saw a rise in new home sales by 3.1 percent.

On an annual basis, the West registered a 46.9 percent decline from the October 2009 home sales level while the Midwest declined by 27.8 percent, the South decreased by 23.0 percent and the Northeast sales fell by 12.1 percent.

By CountingPips.com

New orders for durable goods and new home sales fell by more than expected in the month of October, according to data released by the U.S. Commerce Department today. New orders for durable goods, products manufactured in the U.S. and considered to last more than three years, decreased by 3.3 percent in October to a total of $196.0 billion. This follows a 5.0 percent increase in orders for September.

Market forecasts had been expecting that durable goods orders would advance by approximately 0.1 percent for the month.

New orders for durable goods, excluding transportation, decreased unexpectedly by 2.7 percent in October following an increase of 1.3 percent in September. This data was worse than the market forecasts which were predicting an increase of 0.6 percent for durables minus transportation.

By CountingPips.com

The US dollar has been mixed in forex trading on a day with a filled economic schedule before tomorrow’s Thanksgiving Day holiday. The dollar has been trading higher against the Japanese yen, euro and the British pound sterling while losing ground to the Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc, according to data by Oanda in the afternoon of the US trading session.

The US stock markets, meanwhile, have been sharply higher today with the Dow Jones industrial average rising by over 100 points, the NASDAQ up over 45 points and the S&P 500 rising by more than 15 points at time of writing.

Oil has advanced by $2.16 to trade at the $83.41 per barrel level while gold has edged down by approximately 1 dollar to trade at the $1377.80 per ounce level.

EUR/USD – The euro has edged slightly lower today against the dollar and could be on its way to a lower close for a third straight day. The pair currently trades near 1.3350 level.

This afternoon details of the Irish government’s austerity budget have been released, and the details are enough to chill the blood.

The Telegraph reports that the average Irish household will incur new taxes of £3000, in addition to sweeping welfare cuts including 5% off child benefit and 13% off the minimum wage. In short, to make the £5 billion savings needed to receive next year’s EU-IMF bailout installment, Ireland must dismantle its welfare state.

It is hardly surprising given this that the austerity budget has proven divisive within the Irish Parliament. Following the Irish Prime Minister Brian Cowen’s announcement of the budget and his acceptance of the EU-IMF rescue deal, the Irish Green Party withdrew support from Cowen’s coalition government and called for an election. Cowen has ceded to this demand and scheduled an election for December after the budget, but for now Ireland’s political future remains uncertain.

In part this uncertainty is responsible for the currency market’s less than positive reaction to the announcement of the bailout.

EU finance ministers had hoped that confirming the bailout would reassure the markets that Ireland had begun the path to solvency, in particular the Irish banking sector. Instead, key voices inside Irish politics complained that they’d had foisted onto them a bailout they didn’t want, thereby unraveling EU intentions completely.

However, political parties within Ireland opposed to the austerity budget ought recognize that these cuts have been a long time coming. Prior to the global downturn the Irish housing market grew at an explosive rate, fueling economic growth that was simply unsustainable. The IMF meanwhile perceives today’s budget announcements to be the aftershocks of the last decade’s unsustainable growth: not the beginning of a new recession.

In short, though the cuts are deeply unpleasant for Ireland, they are the consequences of a banking sector that simply lent too freely. Today’s austerity budget announcements are the symptoms of a market correction ten years in the making.

In addition, it is unlikely the markets will begin viewing the euro in a truly positive light again until those nations in danger of insolvency report positive news. For instance, Greece arguably exacerbated negative feeling toward the euro by failing to meet EU targets for reducing its public deficit last week.

EU officials expected a euro boost following the Greek bailout in May. However this didn’t happen in part because the Greeks failed to use the bailout cash effectively. In turn, the Irish must demonstrate that the EU-IMF bailout has improved their solvency prospects before markets grow optimistic about the euro.

In the meantime though, Ireland’s political parties can improve the situation by demonstrating their commitment to today’s cuts. This might reassure the markets in the short term that Ireland is committed to becoming solvent. The alternative for the parties is to continue fostering conflict among themselves, and pining for an economic heyday that no longer exists.

By Peter Lavelle at PureFX.co.uk.

By James McKee

Ireland’s woes are not restricted to Europe, indeed the country’s problems are stretching out to Asian stock markets where the New Zealand Dollar is being adversely effected as time goes on. Growing doubt about the European market is causing waves in New Zealand’s currency value against all of the majors including the Japanese Yen, the US Dollar and the Great British Pound. These downtrends are also traversing the drink and finding their way into the Australian dollar as things become worse in Europe.

Companies such as Hewlett Packard have already stated an interest in pulling out of Ireland should the country continue its downward path. Ireland’s economy is effecting the entire “Euro Zone” as problems mount and investors become uneasy with what they are seeing. The global economy is certainly playing a huge part in the Forex currency exchange right now with regard to the connections between various nations traversing oceans and tens of thousands of miles. This increase in fear with regard not only to Irish investment but that of any European nation will continue to punish the Australian dollar, the Euro and the New Zealand Dollar as well. All eyes are on Ireland currently and all are eager and fearful.

Ireland being bailed out by the IMF has not been enough to convince markets and investors that Europe is a safe place to invest, Forex or otherwise. The recent developments are troubling to say the least and Ireland needs to amend its policies and undergo significant changes as a nation. The austerity measures demanded by the IMF and World Bank are sure to cause violence and upheaval in Ireland as time goes on. There have already been violent demonstrations by Irish citizens in light of a sharp increase in student tuition at higher education centers. Many believe that if other austerity measures come into play violence will become far more common place in Ireland than it is currently.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.

The United Kingdom gross domestic product advanced in the third quarter and was unchanged from the previous esimate released in October, according to a report by the Office of National Statistics. The U.K. GDP data showed that quarterly GDP rose by 0.8 percent in the August through September quarter following growth of 1.2 percent in the second quarter. On an annual basis, the GDP increased by 2.8 percent from the third quarter of 2009.

The monthly and annual data matched economic forecasts as the data was unrevised from the previous estimate released on October 26th.

Contributing to the rise in GDP was an increase in output in the production industries by 0.6 percent and also an increase in the output of the service industries by 0.6 percent. Exports of goods and services increased by 2.2 percent and imports rose by just 0.7 percent.

Household expenditures increased by 0.3 percent in the third quarter while government expenditure advanced by 0.4 percent.

About the Author

FxNewsEurope.com – Euro Forex News

So the Irish government has announced it has accepted an €80 billion bailout from the EU to refinance its ailing banking sector, including a £7 billion loan from the UK. The announcement of this British loan in particular has certain members of the government and media in a tizzy.

For example, Senior Tory and arch Eurosceptic John Redwood has flat out asked why Britain is propping up the Irish finances, when Ireland entered the common currency fully aware of the risks. Meanwhile Moneycorp’s Mark Deans has written that Britain has been co-opted by the EFSF into making the loan.

These commentators write as though Britain was doing the Irish a favour by providing the £7 billion loan. They suggest that because the UK is not a member of the common currency it has no business supporting members of the eurozone.

In doing so they characterise George Osborne as a sentimentalist: someone willing to risk Britian’s fragile public finances out of neighbourly feeling. We do not share this view. Britain – like the EU – has to the Irish aid out of self-interest: a desire to protect its own investments. Simply put the UK cannot afford to see the Irish banking sector collapse.

For instance, last Friday the Bank of International Settlements revealed that Lloyds TSB and RBS have between them £140 billion exposure to Irish debt. If Ireland collapsed this would weaken these banks significantly: no small potatoes given coming only 2 years after the UK government refinanced them.

In addition Ireland is one of the UK’s biggest trade partners. Therefore if Ireland collapsed Britain would lose billions per year in imports and exports.

Hence those that comment that Britain has no business assisting Ireland, or suggest we’re being co-opted by the EFSF, are not looking at the bigger picture. This is not about the UK contributing to the recuperation of the common currency.

This is about protecting Britain’s interests.

By Peter Lavelle at PureFX.co.uk