Month: July 2011

By ForexYard

With interest rate decisions on tap today, many investors appear weary of taking on risk. Should the ECB lift rates today, as is expected, there is potential for the EUR to see a sharp downturn as investors collate the data with China’s adjustment to mean that inflation is becoming a concern and risk may get taken off the table.

Economic News

USD – USD Continues Climb as Chinese Rate Hike Affects Risk

The news of China hiking rates has sent several traders into a risk averse mentality, helping to lift the value of the USD as riskier currencies like the EUR dipped in yesterday’s afternoon and evening sessions. Global growth concerns are coming to the fore with many viewing China’s third rate hike this year as a sign that getting inflation under control has topped their agenda.

The US dollar was seen increasing yesterday as traders began to seek shelter following China’s hawkish monetary policy adjustment. The EUR/USD was seen moving towards 1.4270 yesterday while the GBP/USD fell just below 1.60. A slump in a US manufacturing indicator yesterday also added to the risk averse assessment by most investors. Should Friday’s Non-Farm Payroll (NFP) data continue this trend of disappointment we may see the greenback making long strides against its currency rivals as traders flee risk.

Increased market volatility is on today’s forecast with a significant news day preceding Friday’s ever-pressing NFP release. Most significantly, the US economy will be publishing its ADP Non-Farm Employment Change data on the private sector. Should today’s news foreshadow a dismal employment outlook, there is a possibility that more investment will get pushed towards the safety of the greenback, driving USD values higher.

EUR – Will the ECB Lift Rates Today?

The euro (EUR) has been trading bearish these past several trading days on a recent downgrade of Portugal by Moody’s Investor Services and a general uneasiness about risk following a rate hike by China that may quell some of the region’s recent growth. Inflationary concerns are rising, as signaled by China’s policy adjustment, and pressure may be significant enough to warrant a rate hike by the European Central Bank (ECB) later today.

The last time the ECB council met to discuss interest rates, a statement of mildly hawkish uncertainty was released, and traders took it as a cue that rates may be adjusted in the next session, which is why many are expecting a 50 basis point increase this morning. Should the ECB lift rates today, there is potential for the EUR to see a sharp downturn as investors collate the data with China’s adjustment to mean that inflation is becoming a concern and risk may be off the table.

The euro zone’s interest rate announcement will be made 45 minutes after the Bank of England (BOE) releases a similar statement regarding its monetary policy. England is not expected to hike rates until early 2012, but hints at adjusting its Asset Purchase Facility could lead to shifts among large investment portfolios. Today’s market should be highly volatile and traders will want to be on guard as they traverse today’s investment landscape.

AUD – Australian Employment Sector Data on Tap

The Australian dollar (AUD) was seen trading strongly bearish versus most other currencies yesterday after China’s rate hike began to shift many traders back into risk averse assets. As was anticipated yesterday, news of a rate hike in China pulled strongly down on the value of the Aussie as investors moved away from higher yields in exchange for stores of value.

Yesterday’s news weakened the Aussie, fueled by poor fundamental data on Monday and flat news on Tuesday. With this morning’s release of Australia’s employment sector data, many are expecting the southern nation to begin addressing its growth outlook. Weakening commodity prices are beginning to pull on the nation’s economic growth and the AUD’s meteoric rise has gouged Australia’s exports. The downturn may look dismal from afar, but the runaway inflation caused by the Aussie’s rise was expected to cut into the country’s growth projection eventually. The bearish movement may prove positive for the country’s growth as it fights through an unusually extreme winter.

Oil – Oil Price Rebounds from Technical Shift

Crude Oil prices found support near $94 a barrel Wednesday 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 US and China yesterday were driving many investors back into safe haven assets as most reports suggested a surprise downtick in growth among global industrial output and consumer spending; with dismal consumer confidence reading these past few days from the major economies of the West.

As investors sought safety, the value of crude oil, which has been seen plummeting all week, in fact rose to a weekly high of $96.15 a barrel. A sudden jump in dollar values due to this week’s risk averse environment was expected to drive many investors into short-taking positions on physical assets. The move was not forthcoming, however, as traders took cue from China’s rate hike that oil demand may actually increase through the autumn months. Should Crude Oil sentiment hold steady this week, oil prices may see a flattening out in the days ahead.

Technical News

EUR/USD

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.

GBP/USD

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.

USD/JPY

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.

USD/CHF

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.

The Wild Card

Oil

Spot crude oil prices look to have moved higher from a falling wedge pattern that appeared on the daily chart. Given the measured move from the chart pattern and the current resistance levels, a likely target would be the $104.50-$105.50 range between the mid-May high and the mid-April low. Support is found at the falling wedge line which comes in today just below $94. Forex traders who missed the initial breakout may be patient and wait for a pullback to the wedge line where the pair could bounce higher which often occurs with a wedge chart pattern.

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 Bank Negara Malaysia maintained the Overnight Policy Rate (OPR) unchanged at 3.00%, and held the floor and ceiling rates of the corridor for the OPR at 2.75 percent and 3.25 percent respectively.  However the Bank increased the Statutory Reserve Requirement (SRR) ratio by 100 basis points to 4.00% from 3.00%, effective from 16 July 2011.  The Bank said: “The decision to raise the SRR is undertaken as a measure to manage the significant build-up of liquidity, which may result in financial imbalances and create risks to financial stability.”

Forex Systems Evaluation – The Basic Rules

Why do they fail?

There is an old saying about Forex Trading Systems. It is that the systems themselves never fail. It is always the users that fail. And the users fail because they did not make the system their own. That is, they have not built up enough confidence in it to follow the rules without questioning them. The only way to build confidence in a system is to test it until the point one is convinced by the results. The degree of conviction is very important. Traders need to be convinced to a level such that they will intuitively take a signal the very second it manifests itself.

Traders usually say, sometimes in jest and sometimes seriously, that a system will fail five times in a row. The sixth time, when the signal has been ignored, is when it kicks in and makes more than it had lost on the first five occasions. Whether stories like this are true or not, it only serves to underline the point. And the point is that the only way to know confidently that the sixth trade is the trade that is going to make the money is not only to test the system but to know and understand the result of the test. Forex Trading Systems do not work forever. The reason for this is a simple one.

Customization through trial and error

System are based around fixed rules and Forex Trading Strategies, but the Forex market is dynamic. So users have to periodically, if not continuously, test their systems to check whether or not changes in the market over time have degraded its usefulness. Over time conscientious users should develop a sixth sense. They ought to know instinctively that their forex trading system is out of kilter. For example, if a system in the past has only ever had three consecutive losses but now experiences four consecutive losses, something is probably going wrong. This is a warning signal to be heeded. Users can then do some tests and tweak their system to bring it back in line.

Tweaking a system to adjust its performance to adapt to current market conditions is not the same as curve-fitting. This is where an unproven system is tweaked to make it fit with recent historical data. Most forex software designers and traders are scrupulous about avoiding curve-fitting, which can be disastrous for trading results. But most accept that systems do need changing from time to time to reflect changes in the way the market is working. An alternative is to find another system that works better in the current type of market.

Andre J Young

Forex Trading For Beginners

Article courstey of DividendOpportunities.com

I have a chart that I want to show you. It’s nothing complex or hard to understand. In fact, I take pride in how simple it is to read.

You’ll be surprised that the information shown in this chart is the result of just a year of work; you’d never know it at first glance. I’m betting you’ll think it took years or decades to cultivate.

You might also think that replicating what my chart shows takes a fortune to pull off. I’ve done it with $200,000. That’s nothing to sneeze at, but it’s far from an extraordinary amount of money.

The results are also fully scalable. If you only have half that amount to invest, you’ll receive half of what my chart shows — still a considerable amount of money. If you have a $400,000 at work, just double my numbers. Anyone — and any dollar amount — can replicate my performance.

But the best news is that what this chart shows is the result of a strategy you can start today. It doesn’t take a Ph.D. to follow (I only have a lowly master’s degree, anyway). You don’t have to track the market every day — or every week for that matter. The beauty of this strategy is that it takes care of itself.

In fact, the primary investing “skill” you need is patience. If you can allow yourself to build a portfolio without having to constantly fuss over it, make unnecessary trades, or live and die by daily fluctuations, you can achieve these results.

My chart below shows what I’m talking about. Listed are the total amounts of the “paychecks” I’ve received since the implementation of the Daily Paycheck strategy. As you can imagine, I’ve been pretty happy:

The strategy is simple — I’m trying to build an income machine that pays me each and every day.

In January, I received 25 “paychecks” (that’s my nickname for dividend and interest payments from my holdings) worth over $1,600. That’s a little under my goal of one check for every day of the month.

Imagine if you’re a retiree — that’s a nice stream of cash from your investments to supplement any other income you might have.

But there’s another step if you really want to see your income stream accelerate over time… it’s why patience is key.

It’s tempting to take the cash. Who wouldn’t want an extra $1,600 per month in the bank? But I strongly recommend reinvesting your paychecks. By using your dividends to purchase more shares, compounding takes over. Your next payment will be larger, even if the dividend payment doesn’t increase.

I won’t lie, reinvesting does take a little time to see a major impact — that’s why patience is so important. (And before you start, give your broker a ring to make sure they offer reinvestment at no extra commission.)

But I think you can see from the performance so far that the Daily Paycheck strategy is one of the most promising ways to capture the most income from the market.

Always searching for your next paycheck,

Amy Calistri
Chief Investment Strategist — The Daily Paycheck

P.S. — What’s the best thing about the Daily Paycheck strategy? I love that it’s fully scaleable to any dollar amount. For instance, I’ve had subscribers start their daily income stream with $20,000 or less. My boss, StreetAuthority co-founder Paul Tracy, earned more than $6,000 in dividends in December using the strategy and a bit larger bankroll.

To learn more how you can start your own Daily Paycheck portfolio today, read this memo.

USDJPY remains in uptrend from 79.69, the price action from 81.26 is treated as consolidation of uptrend. Support is at the uptrend line on 4-hour chart, as long as the trend line support holds, we’d expect uptrend to resume, and one more rise to 81.60-81.80 area is still possible. However, a clear break below the trend line will indicate that the rise from 79.69 had completed at 81.26 already, then the following downward move could bring price to 78.00 zone.

Daily Forex Forecast

By Ulli G. Niemann

You’d have had to be living on a desert island with no TV, newspaper or internet connection to have missed hearing about the great mutual fund scandal of 2003.

The issue was that some mutual fund companies allowed certain hedge funds to engage in after-hours trading, sometimes incorrectly referred to as market timing. Unfortunately, some companies have used the confusion about the term “market timing” to further their own cause. How?

They have used this issue to pretty much ban all forms of trading their funds, and some companies are imposing hefty short-term redemption fees-penalties for all intents and purposes-in the name of avoiding impropriety. But the real idea behind it all is: Buy our fund and never sell it!

These companies advocate a stubborn Buy & Hold philosophy despite the devastating effects that approach had on investors’ portfolios during the recent bear market. Performance is immaterial to them-they want your money in their fund whether it’s going up or down.

With all of the negative press over the months you’d think that mutual fund companies would have cleaned up their act and started giving more consideration to the individual investor. Not so.

This was brought home to me when a fund manager of an $800 million mutual fund called me to see what my plans were in respect to holding our positions with his fund (about $2 million).

I explained my trend tracking methodology and he got very angry when he heard I would protect my clients’ accumulated profits by selling his fund if it were to drop 7% off its highs.

His blustering made it quite clear that he did not like anyone managing for the benefit of their clients; he only cared about what was best for him and his company.

So, what can you do to prevent being taken advantage of? For one thing, do what your mutual fund company does – not what they tell you to do. Adopt a strategy for following trends, such as I do, and use the mutual fund manger’s superior stock picking ability to your advantage by buying and holding only as long as the fund is performing well.

Remember, the fund manager has one big disadvantage over you: He always “has to” be invested so that the public can purchase shares in his fund. You don’t!

If market conditions dictate that you are better off in the safety of a money market account because we are in a severe downtrend, then you can take your money and run for cover. He can’t. He is constantly trying to adjust his portfolio to ever-changing economic conditions so that his potential losses are minimized. At the same time you are being told that his fund is the investment for all seasons. Don’t fall for it!

You as an individual investor are really in the driver’s seat. Unfortunately, you have probably been conditioned to think that Buy & Hope is a good investment strategy, when in fact it is a losing proposition.

Bottom line is, use a well performing mutual fund during strong up trends and get over to the sidelines during trend reversals. (That’s exactly what I did for my clients in October, 2001, and we retained the lion’s share of their profits while Buy & Holders kept insisting the emperor was wearing new clothes.) Pretty soon you will feel that you are in charge of your financial destiny and any chosen mutual fund is merely a tool to bring you closer to your goals of maximizing your gain and minimizing your losses.

United States Afternoon Financial Market Update – Global Macro Analysis including the forex, commodities and stock markets.

The Bank of Uganda set its new monetary policy interest rate (the central bank rate) at 13.00%.  Bank of Uganda Governor, Emmanuel Tumusiime Mutebile, said: “To tighten monetary policy, the Central Bank Rate will be set at 13% for the month of July. The interest rate will be used to guide the 7–day interbank interest rates,”.

The Bank of Ghana cut its key lending rate by 50 basis points to 12.50% in order to help boost lending as inflationary pressures reduce.  Bank of Ghana Governor, Kwesi Amissah-Arthur, said: "Inflation is going down and we don't see the banks responding (to lower interest rates)" and further noted that "the bank is confident that the annual inflation target of 9 percent is achievable".

The Narodowy Bank Polski's Monetary Policy Council maintained its benchmark 7-day interest rate unchanged at 4.50%.  The Bank said: "In the coming months, the annual CPI inflation rate will continue at an elevated level, mainly due to the strong growth in global commodity prices observed prior to the inflation increase."  The Bank also noted that it would "not rule out a further adjustment of monetary policy, should the outlook fro inflation's return to the target deteriorate".