Month: January 2011

By Yan Petters

Last week’s most notable trends were the bearish crude oil and the bearish Japanese yen. And then, with a blink of an eye the trends have sharply reversed. By Friday evening, it was quite clear that the protests in Egypt will only escalate, and that political turmoil is inevitable.

This had two main affects; one, considering that the Egyptian unrest was triggered by the political turmoil in Tunisia, that the unrest in Egypt will spread to crude-producing parts of the Middle East, and as a result will have a significant impact on oil supplies from the region. As a result oil prices have rallied, and crude oil reached as high as $90.80 a barrel.

Second, this has also boosted the demand for risk-aversion in the market, and as a result spurred demand for safe-have currencies, such as the yen. Since Friday, the yen gained about 100 pips vs. the U.S. dollar, 200 pips vs. the euro and 170 pips vs. the British pound.

As for today, traders are advised to keep following all the developments from the Middle East, as these are likely to have a large impact on the market for the near-future.

Here are today’s leading global economic releases:

13:30 GMT, Canadian Gross Domestic Product (GDP) – The GDP report measures the change in the value of all goods and services produced by the economy over the last month, as opposed to a year before. If the end result will beat analysts’ expectations for a 0.2% growth, the CAD might see a bullish trend against its major currency rivals.

14:45 GMT, U.S. Chicago Purchasing Managers’ Index (PMI) – This is a survey of purchasing managers in Chicago, who are asked to rate their current business conditions. An end result higher than the projected 65.5 mark is likely to support the USD.

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 Anton Eljwizat

The GBP has dropped significantly versus the JPY in the last week, and it is currently traded around 130.60. And now as evident in the data, the daily chart is giving bullish signals, indicating that GBP/JPY pair might go up, as a bullish cross has taken place on the Slow Stochastic and the cross may raise another 50-100 pips in the coming 2 days. Traders are strongly advised to take advantage of the trend at an early stage. Therefore, why not open long positions at an excellent price?

• The next resistance levels are found at the 130.90, 131.20 and 131.40 levels.

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

Recent developments in Egypt are having a significant impact on commodities and the major currencies. Just before the weekend, when protests in Egypt began escalating, crude prices jumped 500 pips to $90.80 a barrel. In addition, safe-haven currencies such as the yen were also largely supported, and the Japanese currency is currently strengthening against all of its major rivals.

Economic News

USD – Dollar Closes a Volatile Week with Green Signals

The dollar saw a very volatile session during last week’s trading. The dollar began last week’s session with a falling trend against the euro and the British pound. The EUR/USD pair reached as high as the 1.3755 level and the GBP/USD reached as high as the 1.6015 level. Yet eventually both pairs reversed trends, the EUR/USD is now trading near the 1.3585 level, and the GBP/USD near the 1.5830 level.

The dollar recovered against most of the major currencies for two main reasons. First of all, the dollar strengthened following positive signals from the U.S. economy. The confidence among U.S. consumers rose in January to the highest level in eight months as Americans became more optimistic about job prospects. In addition, sales on new homes in the U.S. rose more than forecasted in December to a 329,000 annual pace.

The second reason for the appreciation of the dollar is the political turmoil in Egypt which has boosted demand for safer assets. The concerns are that the unrest will spread to oil-producing nations in the Middle East, and will damage oil supplies from the region.

As for this week, the most exciting economic release is expected on Friday, as the Non-Farm Employment Change is scheduled. Current expectations are that the labor sector in the U.S. continues to recover during January. Traders are also advised to follow the ADP forecast of this release, which is expected on Wednesday, as it is likely to create high volatility as well in the marker.

EUR – Euro Corrects Gains Vs. The Majors

The euro began last week’s trading session with a rising trend against most of its major counterparts. However, close to the weekend the trend reversed and the euro lost about 170 pips vs. the U.S. dollar, and about 200 pips vs. the British pound.

The euro was strengthened early last week following hawkish comments by European Central Bank (ECB) President Jean-Claude Trichet. Trichet vowed to battle inflationary pressures and stressed the ECB is determined to fight inflation attributed to rising commodity and food prices. He also said that he doesn’t see risks of an economic downturn due to sovereign budget cuts. This has boosted optimism regarding the euro-zone’s outlook and as a result supported the euro.

However, close to the weekend the euro began correcting gains against most of the major currencies as unrest in Egypt has elevated risk-aversion in the market, and boosted demand for safer assets, such as the greenback and the yen. Demand for the euro, which is considered to be a relatively risky asset, was damaged.

Looking ahead to the following week, many interesting economic publications are expected from the euro-zone. The most significant of the all will surely be the Minimum Bid Rate, which is scheduled at Thursday. The Minimum Bid Rate is in fact the euro-zone’s interest rates announcement for February, and analysts estimate that the ECB will leave rates at a record low of 1.00%. Traders are also advised to follow the ECB’s press conference which will be held at the time, as this is also likely to generate high volatility in the market.

JPY – Yen Rallies as Protests in Egypt Spurs Demand for Safe-Haven Currencies

The Japanese yen saw an extremely volatile trading session over the past week. The yen saw several ups and downs against its major rivals, yet it ended the week with sharp uptrends, including a 120 pips gain vs. the U.S. dollar, a 250 pips gain vs. the euro and a 270 pips gain against the British pound.

The yen’s trading was impacted by two significant events. The first one was the Standard & Poor’s unexpected decision to downgrade Japan’s credit ratings from AA- to AA. The credit rating was lowered due to persistent deflation and as political gridlock undermined efforts to reduce an $11 trillion debt burden. The yen instantly slid against the major currencies following the announcement.

However by Friday, protests in Egypt began escalating, provoking concerns that a political turmoil might be impending. This has boosted risk-aversion in the market, spurring demand for safe-haven currencies, such as the Japanese yen.

Looking ahead to this week, several interesting economic releases are expected from the Japanese economy, yet at least for the near future, the political developments in the Middle East might have a larger impact on yen trading. Traders should take under consideration that if the unrest in the region will grow, the yen might strengthen further.

OIL – Crude Oil Rallies to $90.80 a Barrel on Concerns Egyptian Unrest Will Spread

Following a bearish weekly session, crude oil prices are currently recovering. Crude oil began last week’s session at around $89.20 a barrel, and fell to as low as $85.00. However, just before the weekend crude recovered, and hit $90.80 a barrel.

Crude oil prices rallied after protests in Egypt provoked concern that the unrest may spread to crude oil-producing parts of the Middle East. Protesters are demanding an end to Egyptian President Hosni Mubarak’s 30-year regime, and are currently reluctant to accept the new prime minister and vice president. The fear in the market is that the unrest in Egypt, which was initiated in Tunisia, will spread to oil-producing nations, and will damage oil supplies from the region.

As for the week ahead, traders’ attention should be devoted to all developments from the Middle East, as this is likely to continue to play a leading role in commodities trading. Traders should take under consideration that as long as the unrest in the region remain, crude prices might be further supported.

Technical News

EUR/USD

After seeing several failed attempts to cross the 1.3800 level, the EUR/USD pair saw a bearish correction which took it as low as the 1.3570 level. Currently, as both the MACD and the RSI on the 4-hour chart continue to point down, the pair might see further bearishness, with potential to reach the 1.3500 level.

GBP/USD

The pair has been trading within a restricted range for the past three weeks, between the 1.5750 and the 1.6050 levels. A bearish cross of both the MACD and the Slow Stochastic on the daily chart signal that today’s movement might be bearish. Going short might be the right choice today.

USD/JPY

After climbing about 100 pips in Thursday’s trading session, the USD/JPY pair has corrected all of its gains, and is currently trading near the 82.00 level again. If the pair will manage to cross the 81.85 support level, it has potential to drop as low as the 81.00 level today.

USD/CHF

The USD/CHF pair continues with the flat trading around the 0.9420 level. The pair has remained around this level since January 25. Currently, as the daily chart is providing mixed signals, it seems that traders might prefer alternative investments today, and would stay out of this one.

The Wild Card

Oil

After falling about 800 pips in twelve days, crude oil managed to gain 500 pips in a single trading day, and a barrel of crude is currently trading near the $90 level. In addition, as all the oscillators on the daily chart are pointing up, it appears that another bullish session might be impending. This might be a great opportunity for forex traders to join a very popular trend.

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.

The Euro declined versus the US dollar on Friday due to riots and political crisis in Egypt. Experts believe the unrest could spread to other Arab countries in neighbor of Egypt.

The pair EUR/USD declined 0.23 percent to 1.3609 on Friday as compared to 1.3757 on Thursday. The pair is expected find support at 1.3448 with could witness resistance at the level of 1.3757.

Fresh buying was seen in the greenback backed by strong US economic data as GDP increased 3.2 percent for the fourth quarter. Following are next week’s major events and happenings that could affect the trading of the pair EUR/USD

On Monday January 31st, 2011 the preliminary data of consumer price inflation will be reported in euro zone while official data on retail sales will be published by Germany.

Official data on personal consumption expenditure will be reported in United States while the leading economic indicator of Chicago PMI will also be published in US on Monday.

On February 1st 2011 Institute of Supply Management will release the data on US manufacturing growth, whereas official report on unemployment rate will be released in euro zone. Germany will also publish its unemployment data.

On Wednesday February 2nd 2011, employment data of private sector by payroll processing company ADP will be published in United States. Moreover data of crude oil inventories will also be published in United States. On the other hand euro zone will report its data of producer price inflation on Wednesday.

On February 3rd, 2011 chairman of Federal Reserve Ben Bernanke will address at public engagement and could disclose his future plans for monetary policy. Further weekly report on jobless claims will also be published along with data on labor costs, factory orders and productivity in United States.

Official data on retail sales and minimum bid rate in euro zone will be announced by ECB on Thursday.

On February 4th, 2011 official data on nonfarm payrolls, average hourly earnings and unemployment rate will be published in US.

About the Author

Daily forex trading news written by Rehan from DailyForexTrade.com

By Cedric Welsch

Leading economists and analysts have forecast that the US dollar is the currency to hold in the year 2011 as they expect it to maintain strength vis-à-vis other key currencies. Their key point to support this argument is that the US economy will show better recovery as compared to the economies of Europe, Japan and the British Pound.

Their view seems to get support from the condition of the US economy, which seems to be improving. The latest numbers released by the U.S. Bureau of Labor Statistics suggests that the national unemployment rate fell to 9.4% in December from an earlier figure of 9.8%. The encouraging part of this news was that the job additions came from the private sector, which continued to add jobs for the twelfth consecutive month. As per the report, the private sector added 103,000 new jobs in December. Overall, in the year 2010, the private sector added nearly 1.3 million new jobs. A point to note is that, the rate of growth in job additions strengthened quarter on quarter throughout 2010, suggesting that the growth was taking place in a sustainable manner. Thus, while nearly 14 million Americans may still be jobless, the rate of job addition has been catching pace. The report also suggested that due to the wearing off of the government stimulus, jobs were lost at the state and local government levels. Nearly 20000 state level government jobs were pared in December and the figure for lost state level government jobs last year stood at 250,000. Meanwhile, manufacturing in December expanded at the highest rate in the last seven months and holiday season sales were up 5.5%.

This suggests that the government initiated fiscal stimulus programs did have some impact and in their absence, the state of the US economy could have been much worse. Experts believe that in order to keep the process sustainable, the US government needs to keep some of the fiscal incentives alive in order for the economy to maintain its growth trajectory.

While, the fiscal policy stimulus is under debate, the US Fed’s planned monetary policy stimulus could grease the wheels of the US economy and help it maintain its growth momentum. The US Fed is expected to print around $ 600 billion and inject it into the economy via purchase of government bonds. This injection is likely to keep interest rates tamed and provide a stimulus to credit off take. Analysts earlier had felt that such a massive injection of liquidity into the economy could lead to the solar paring its value. However, now with the US economy on the uptick, and the other economies of UK, Europe and Japan still under a cloud, analysts are of the view that the US dollar could take lead versus currencies like the pound, Euro and the Yen. And it may be the ideal currency to invest in.

About the Author

Currency news trading materials are extremely important for traders. Plus add a little bit of forex broker review feedings to your mind as a trader.

By Cedric Welsch

This has always been the classic tradeoff that economists and governments need to decide on, in their attempts to stimulate economic growth. While, fiscal policy is mainly related to taxation and deficits, monetary policy is concerned with management of money supply and setting interest rate levels. The issue of inflation needs to be kept in mind, while developing the monetary policy.

Fiscal policy can be effectively used to influence economic growth by appropriately changing tax levels in the economy. Tax rate changes can also be done in a way such as to target certain sections of the economy or sectors by making specific changes in taxes. Thus reducing taxes on incomes of individuals can automatically increase the disposable income at the hands of consumers and encourage them to spend. Tax benefits for buying houses can help boost the housing sector. Similarly, fiscal policy can be used to stimulate various sectors of the economy. Monetary policy on the other hand has an overall impact, and by changing conditions that impact money supply, aggregate demand in the economy can be influenced.

The US President seems to now be engaging the fiscal policy lever to provide further stimulus to the US economy. Obama’s new agreement to extend the Bush era income tax cuts is likely to increase disposable income at the hand of consumer and could help provide a stimulus to consumer spending and the US economy. This move could also reduce the pressure on the US Fed with regard to its $600 billion bond purchase program to keep interest rates low. Effectively, fiscal policy is being used to stimulate the economy over monetary policy tools. Obama’s proposal sets the estate tax at the top rate of 35 percent, while extending aid for the long-term unemployed by thirteen months. The proposal would also allow companies to deduct the full cost of investments in equipment next year. Economists are of the view that this fiscal policy maneuver could raise US GDP next year by as much as 0.5% to 3.1%.

The income tax cuts is applicable to all wage earners and would result in savings of $800 for those with incomes of $40,000 and up to $2136 for those with incomes over $106,800. The Obama proposal is likely to cost the US government nearly $120 billion in what would have otherwise been collected as taxes. Effectively, US consumers would have an additional $120 billion to spend.

Assuming that the program gets a green signal and does not get caught in political crossfire, it is likely to boost demand in the US economy and should result in a reduction in unemployment gradually, setting in a positive and hopefully a self sustaining growth cycle. Economists are of the view that the program could lead to an increase in employment by as much as 2.7 million and bring down the unemployment rate to 8.7% from the present high of 9.8%.

An increase in demand in the US is likely to have ripple effects for economies around the world and with the US being the largest importer, Obama’s plan is likely to touch the lives of people around the world.

About the Author

Consistent forex news trading releases keep trading professionals on their toes. But that’s never enough if you don’t read forex scam info.

By Mark Bond

My first few forex trades were horrible. I jumped into the market on a whim and of course I lost money immediately. I was very discouraged, but I was determined to be successful at this vocation, no matter what!

I have been working at the same dead end job for the past 7 years, only making enough to pay the bills. I came across the TradingHeroes.com website and got inspired to look into learning forex trading. The lifestyle that these traders have is awesome!

At first it was kind of confusing, like with most endeavors. The thing that confused me the most was trying to figure out when a currency pair would go up or down according to fundamental news. After a few months of fiddling around and getting nowhere, I decided to find at least one inexpensive course to at least learn the basics. I bought it and it was great!

I was trading (and still am) a practice account, but I was still losing money. At least I was losing money at a slower rate.

After reading blogs and forums, I heard a lot of people talking about backtesting software. What the heck is that?!

Further research led me to such software programs as Metatrader and Tradestation. These were great programs with one small problem. They allowed me to test automated forex trading systems, NOT discretionary systems. What I needed was a forex software simulation program that let me practice executing trades candle by candle.

This would allow me to try out different technical analysis indicators in “real time” and actually judge how I would probably react in certain market conditions. I couldn’t find anything searching on Google at the time, but while reading the TradingHeroes.com blog one day, I heard about this great forex simulation practice software.

I checked the website and it was very inexpensive so I downloaded it immediately. It is a great piece of software and they even have free data that you can download from the website to import into the program.

After that, I became a forex strategy simulator machine! One thing I discovered was that I had a tendency to trade during illiquid hours and was getting stopped out in large moves. I have found that the best times to trade are during the London and New York sessions.

The latest strategies that I have been testing are moving average crossovers and “box trades.” Box trades are technical signals where if price breaks out of a box, I would enter the pair in the direction of the break.

I am always looking for new strategies to test. One good place to look for new strategies to test are the forums at Forex Factory.

I’m not a professional yet, but being able to test technical analysis indicators has helped me progress tremendously. I can practice forex trading anywhere that I have my laptop. I can test any forex trading strategy or system that I can come up with. The best part is that I will never lose any real money.

I am still learning and I will pass on more useful tips as I come across them. This was the biggest discovery for me thus far! Thanks for reading!

About the Author

Mark Bond is an aspiring professional forex trader. He has been greatly inspired by Hector Trader and the Trading Heroes website. He would like to share his experiences with others and further his education to reach his goal.

By Paul Bryan

Free FX demo accounts are a service that are loved by some yet hated by others, why is this so? Surely a free demo account can be nothing but a good thing?

Not exactly so, it does have its benefits but also has it’s pitfalls, in this article we will examine the pros and cons of such an account.

Let’s start off by looking at the demo account. For those who may not be aware, the free demo account does exactly what it says on the tin, it lets you demo FX trading for free, sounds great for a newbie trader and in many ways it is.

The brokers who offer a free FX demo account do so to help get people interested in FX, nothing wrong with that since they exist to expand the number of traders in the market and on their platform. It’s also a great way for the new trader to begin to learn FX trading.

Currency trading is no simple click and go experience, several brokers have introduced no frills platforms with low minimum deposits to get the virgin trader started and one or two have taken it a step further and allowed people to open a free demo account where you can begin trading with make-believe money until you have the confidence and knowledge to risk your own hard-earned cash.

That’s were the main pro of the demo account lies, in being able to learn the FX market and key functions of trade without risking a penny! However, this is not always good news.

When trading with ‘virtual’ money suddenly the risk becomes less, in fact risk is non-existent as you have an endless stream of make-believe money this means you may be more likely to risk on trades you know you shouldn’t and wouldn’t make in the real world. This can lull you in to a false sense of security.

Lets say you make en extravagant risk with demo money and it comes off, so you make another big risk and that comes off too, all of a sudden your confidence is up and you feel you can start playing with your own money and taking uncalculated risks.

The FX market has suddenly become very very appealing, if you can make this much money in the demo area imagine how well off you would be if you were using real money? This is where things go wrong, you then go ahead and open a real FX account and deposit your own cash.

Your confidence is up and you feel like you know what you are doing. You make a risky trade with your own cash and it fails, suddenly your FX career is over and you are sat looking at a significant loss, it seems when its your own ‘real’ money the demo you got with virtual cash counted for nothing.

Of course if you take things slowly and carefully you can avoid this and become a successful trader, but you have to have that self control. demo accounts are very useful, but only if you carry out trades exactly as you would if it was real money. Never make a trade in a demo account that you wouldn’t make with your own cash!

To help get around this several brokers now offer mini-accounts with deposits as low as $25. This is virtually a demo account anyway with such low deposits, however, its still your own cash so you are more likely to make realistic trades and not risk big time trades.

At Investawise we feel this is the best option, sure use a free demo account for a week or two while you learn the basics of FX trading, but then open an account and start with low funds, never jump both feet first into currency trading, success comes from patience, awareness, and discipline.

About the Author

Simply a 10 years old child could understand this FX trading system which is Extremly accurate and Highly profitable, Download Now.

You can learn how forex hoster work in forex trading here.

By Jovan Vucetic

Many novice traders rush into forex trading enticed by broker ads of 400:1 leverage; free real time demo accounts or simply by the thrill of getting into the action. Even those that test their signals service or trading strategies in real time to see how they perform don’t do so adequately. In any case, there is a limit to how much you can gain from real time practice: testing trading strategies with live demo trading accounts is only useful if you know what you are doing.

The first step in refining your trading skills and strategies is to accept that this is a process that involves repetition, practice and reinforcement. This is where a Forex Simulator is very useful. It can save you money and ensure that you don’t start out a loser.

Unlike a live forex demo account which functions in real time, a forex simulator enables users to upload, view and review historical data at any given point in time. Used to confirm one’s understanding of pattern recognition and trading signals, data can be rewound and fast forwarded to test and retest your knowledge and understanding.

Using a Forex Simulator enables you to get months of training in just a few days work because you can pause, rewind, fast forward. You can set up 5 minute timeframes to up to what ever you choose. You can take snapshots of trades. You can use any indicator you like. You can keep a trade journal and refine your strategy.

Remember buying those PC games and being able to save a mission before coming back to it, repeating it over and over again until you got good enough to pass the stage? Well a forex simulator works in a similar way. Practice, reinforcement and repetion until you get good. Imagine getting a year of practice in a month!

When you are finally ready to open a live demo account you will see your confidence skyrocket. Why? Because you are finally starting to understand what you are doing. A Forex Simulator is a serious tool for serious traders who want to learn to trade first before trading with real money.

Visit http://www.margin-strategies.info/forex-trading-education.html for more information.

About the Author

Jovan Vucetic is the Editor of http://www.margin-strategies.info. Margin Strategies provides Free Forex Lessons and Unbiased Reviews of Forex Trading Systems, Brokers and Forex Courses.

GBPUSD’s bounce from 1.5751 extended to 1.5989 only, the subsequent fall suggests that lengthier sideways consolidation in a trading range between 1.5751 and 1.6058 is underway. However, as long as 1.5751 support holds, uptrend could be expected to resume and one more rise towards 1.6298 (Nov 4, 2010 high) previous high is still possible. Only break below 1.5751 could indicate that the uptrend from 1.5344 had completed at 1.6058 already, then the following downward move could bring price back to 1.5500 area.

Written by ForexCycle.com