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The National Bank of Rwanda governor Claver Gatete announced that the Bank had maintained its key lending rate unchanged at 6.00% at its July meeting. Previously the Bank has noted that it expects inflation to be in the range of 8% by the end of December if current trends continue. Rwanda has seen inflation pick up to 4.54% in May, compared to 4.98% in April, and 4.11% in March, and 1.09% in January this year.
Why trade the Non Farm Payroll?
The NFP gets a lot of bad press but is still a massive event risk and key economic indicator. This report systematically furnishes some of the greatest price moves in comparisson with other news data. A lot of dealers. analysts, day traders, funds etc follow this report and it therefore often brings about volatility in the FX markets.
This data statistic which is explored and later reported by the United States Bureau of Labor is thought to comprise the sum figure of workers of all business concerns in the US aside from a few areas including government and nonprofit.
The NFP data generally arrives close to the first Friday of every month.
Traders approaching this event-risk from a calm objective perspective based on how the market has responded a buffer period after the release can potentially furnish them with more orderly results than just predicting the apparent movement based on the figure released. Some moves will escape the trader but this is the nature of trading the financial markets.
Attention must be payed to trading psychology as these events can be highly charged. The purpose of a systemetic approach is to minimise emotion and think in terms of probabliity.
– Here is an example strategy that could potentially be traded from a 15-minute chart.
This is not a trade recommendation but only an educational example of how the NFP can be approached. Practice this on demo account only.
An important filter is that the NFP news would have to be in the direction of the current trend on a 30 minute chart which is one timeframe higher than the trigger candle.
1. Wait for a 15 minute candle after the NFP news release.
2. After the bar forms the trader should now wait for a forex price action signal
3. The stop loss goes above below the price action trigger setup bar.
4. Any open trade is closed at the end of day or can be trailed with bollinger bands, psar etc.
There is no exact science but risk should be low and reward high as whipsaws can cause many losses so reward needs to be suitably high.
This is not a trade recommendation but only an educational example of how the NFP can be approached. Practice this on demo account only.
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An uptick in US private sector employment yesterday, reported by ADP, added to the risk-taking sentiment by most investors which came as a result of a rate hike in Europe. Should today’s Non-Farm Payroll (NFP) data continue this trend of optimism, we may see the greenback taking severe losses against its rivals as traders seek out higher yields.
With the European Central Bank (ECB) hiking interest rates, and private sector employment rising in the US, the value of the USD appears to be taking a dive as riskier currencies like the EUR jumped in yesterday’s afternoon and evening sessions. The US dollar was seen decreasing yesterday as traders began to seek riskier assets following statements by the ECB’s Trichet that Portugal was not in as bad a shape as assumed, and debt and inflation would be taken care of throughout the euro zone.
The EUR/USD was seen moving towards 1.4370 yesterday while the GBP/USD leveled off near 1.6015. An uptick in US private sector employment yesterday added to the risk-taking sentiment by most investors. Should today’s Non-Farm Payroll (NFP) data continue this trend of optimism, we may see the greenback taking severe losses against its rivals as traders seek out higher yields.
Most significant on today’s calendar will be the US publication of its Non-Farm Payrolls (NFP) data. Should today’s news foreshadow a modest growth in the largest economy’s employment sector, an assessment that seemed nigh impossible just days ago, there is a possibility that more investment will get pushed towards the higher yielding EUR, driving USD values lower.
The euro (EUR) was seen trading bullish yesterday after an announced increase to its regional Minimum Bid Rate by 25 basis points to 1.50%. The statement released shortly after the release gave cause for optimism among investors as ECB President Jean-Claude Trichet hinted that the region’s debt concerns were not as dire as many had assumed; specifically mentioning woes regarding Portugal and its recent ratings downgrade by Moody’s.
The EUR/USD was seen moving strongly bullish yesterday as a result of the risk taking sentiment that arose from the rate adjustment. The price moved from its recent low of 1.4250 to as high as 1.4375 before leveling off mildly. The EUR saw similar gains between 0.2% and 0.6% against its other currency rivals.
Europe’s economic calendar today will be significantly lighter than it has been of late. A string of reports on German and French trade and budget balances, respectively, will get published early in the morning. An Italian industrial production figure will be then released shortly thereafter. Most serious investors are focusing their attention on the American release of Non-Farm Payrolls, the most impactful news event affecting this week’s economy.
The Australian economy released strongly bullish news yesterday morning with the publication of an employment indicator that showed the economy adding over 23,000 jobs over the past month. Despite a rate hike in China pulling strongly down on the value of the Aussie Wednesday and Thursday, this morning’s movement appears to favor stronger risk seeking behavior among investors and yesterday’s surprisingly high growth in Australian employment has many traders moving back towards the Australian dollar (AUD).
Weakening commodity prices may still pull on the nation’s economic growth and the AUD’s meteoric rise has gouged Australia’s exports. While the downturn may look dismal from afar, runaway inflation caused by the Aussie’s rise was expected to cut into the country’s growth projection eventually. As traders adjust their portfolios and risk assessment for the Land Down Under, the possibility exists for a solid uptick later in the year. For now, heightened risk taking is pushing the value of the Aussie higher and today’s US NFP data will either confirm or deny this new momentum.
Crude Oil prices found solid support Thursday, moving towards $100 a barrel in late trading as sentiment appeared to favor a mild growth in global industry alongside a potential uptick in demand for the black gold. Data releases out of the UK and Europe yesterday were driving many investors back into riskier assets as most reports suggested growth among the major industrial nations of the West would be on the rise. If proven accurate, the new outlook would have oil prices rising back into a bullish channel as demand increased.
As investors seek risk, the value of crude oil, which was seen fluctuating wildly all week, may in fact rise to a weekly high above $100 a barrel before today’s close. A sudden drop in dollar values due to this week’s sudden return to risk is expected to drive many investors into higher investments on physical assets; driving oil prices even higher. Should Crude Oil sentiment hold steady today, oil prices may see another meteoric rise similar to the spike that occurred in 2008 just before the global economy crashed.
A bullish engulfing pattern on the weekly chart does not bode well for further declines in the pair. Combined with rising weekly and daily stochastics, a case can be made for additional gains in the EUR/USD. The first resistance level the pair should face is 1.4700 off of the June high and a move above here and the pair would encounter selling pressure at the May high of 1.4940. Should the pair fail to move outside the upper line of the triangle consolidation pattern at 1.4515 the EUR/USD would encounter support at 1.4440 and the lower leg of the triangle which comes in at 1.4130.
The monthly chart shows potential declines for sterling. Falling stochastics point to additional losses in the pair. Traders could be looking for the GBP/USD to decline to 1.5650, a level that offers long term support. Both the 20-month moving average comes in near this area but more importantly this is where the falling trend line from the 2007/2008 highs comes in and sterling could see a technical bounce in this area. This level has further significance as it coincides with the October 2010 lows on the daily. To the upside resistance is found at 1.6150, the top of the current consolidation pattern as well as the previous trend line from the May 2010 low at 1.6280.
A triangle consolidation pattern has formed on the daily chart with the legs forming from the May high and the June low. Judging from the long term trend the USD/JPY would be expected to break lower where support comes in at 80.25. A break here would likely test 79.70 and 79.55. However, a move higher may also be in the cards and a break above the initial 81.10 resistance would target 81.75.
After forming a base near the 0.8300, the pair has risen to test its falling trend line from the February high which comes in at 0.8535, not far from the resistance level at 0.8550. Further resistance awaits the pair as the 50-day moving average. A breach here and the pair could unravel to the mid-May low at 0.8750.
After finding support at its 50-day moving average near 1.0660, the Aussie dollar is currently pressing its short term resistance at 1.0790 off of the July high. Forex traders should note that a move higher will go on to test resistance at 1.0890 from the May 11th high, followed by the all-time high at 1.1010.
Forex Market Analysis provided by ForexYard.
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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 Central Bank of Sri Lanka held its benchmark repurchase rate steady at 7.00%, and also maintained the reverse repurchase rate at 8.50%, and the reserve ratio at 8%. The Bank said: “Having taken into consideration the continued decline in headline inflation as well as other macroeconomic developments, the Monetary Board decided to maintain the Bank’s policy interest rates at their current levels,”.
By Jim Trippon Editor of China Stock Digest
The Chinese economy is one of the fastest growing economies in the world. China has exhibited a consistent growth of more than 9 percent since 1978 with the per capita income swelling by four times since 2001. The economy of China is expected to grow in the range of 7 to 9 percent over the next decade, which can be termed as a strong growth rate compared to leading economies like America and Japan.
Over the years, the development in China and the growth of Chinese economy has placed it strongly on the global map. Consumption patterns in China have made a huge impact on the global economy. One of the reasons for rising in oil prices can be attributable to the surge in demand from China. The significant growth of automobiles has lead to higher dependence oil imports. Chinese oil consumption was 6.6 million barrels per day (bpd) in 2005 that is approximately 33 percent of U.S. consumption, but oil imports of China is likely to increase significantly and is projected to be in the range of 9 to 13 million bpd by 2020.
The Chinese economy revolution started in 1978 when the Chinese government opened its gate for foreign investments. Some of the analysts closely studying the Chinese economy expect it to become larger than the U.S. economy in the next two decades, while another section of the analysts believe the same could be achieved in the next ten years time. According to information provided by the State Council For Research Center, China, the Chinese economy is projected to grow at 8 percent annually during its 11th five-year plan. China’s gross domestic product (GDP) is projected to reach $2.3 trillion and $4.7 trillion by the end of 2010 and 2020 respectively. China is expected to experience rapid industrialization over the next 15 years, which in turn indicates of higher consumption of resources and energy needs.
The Chinese economy comprises a 32 percent contribution from the services sector; approximately 53% is contributed by industry and the remaining 15 percent from forestry and agriculture. Primary exports made in China include toys, clothes, machinery and equipment. Three main countries, the United States, Hong Kong and Japan account for more than 50 percent of the exports.
Speedy growth in fixed asset investment, higher rate of savings coupled with sizeable FDI inflow will act as key drivers of economic development in future. Growth of the Chinese economy is driven by combining multiple factors that have been built on higher rates on investments made across the all the sectors. The Chinese economy has experienced outstanding foreign direct investments (FDI) steadily over the recent past. FDI in the Chinese economy have increased from $40.7 billion in 2001 to $70.3 billion in 2007 with investments primarily in the manufacturing sector.
Jim Trippon editor of China Stock Digest, #1 rated Dow Jones China Stock Market Newsletter. Fox Business News’, Cavuto says “Trippon, author of Becoming Your Own China Stock Guru, the only person that I know of that can be called a China Stock Guru.” Jim is available for interview by contacting 713.661.1040. Preview China Stock Digest at http://www.chinastockdigest.com. Preview of China Stock Guru at http://www.chinastockguru.com
July 7 (Bloomberg) — Matthew Circosta, an economist at Moody’s Analytics in Sydney, talks about Australia’s economy, currency and central bank monetary policy. Australian employers added more workers than economists forecast in June as an economy driven by mining-industry growth recovers from its worst quarterly contraction in two decades. Circosta speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
The Danmarks Nationalbank raised its key lending rate by 25bps to 1.55% from 1.30% previously, following a similar move by the ECB. The Bank also raised the interest on certificates of deposit to 1.20%, the current account rate to 1.10%, and the discount rate to 1.25%. The Bank said in its press release that “The interest rate increase is a consequence of the increase by the European Central Bank of its rate on the main refinancing operations by 0.25 percentage point to 1.50 per cent.”
July 6 (Bloomberg) — Michael Kim of Cendana Capital talks about the outlook for the social media and venture capital industries. Kim talks with Emily Chang on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)
The Bank of England (BoE) held the official Bank Rate, which is paid on commercial bank reserves, unchanged at 0.50%, as expected. The BoE also made no changes to its 200 billion pound asset purchase program. The Bank does not supply commentary with its monetary policy decisions, however the minutes of the monetary policy committee meeting will be published at 9.30am on Wednesday the 20th of July 2011, according to the Bank’s announcement.
