Month: August 2011

Aug. 12 (Bloomberg) — Roel Campos, former commissioner at the U.S. Securities & Exchange Commission who’s now a partner at Locke Lord Bissell & Liddell LLP, talks about the decision by France, Spain, Italy and Belgium to impose bans on short-selling from today. Campos speaks from Washington with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Today’s ban of short-selling on certain stocks in several European nations presents an interesting case worth studying for forex traders. The move to ban short-selling is intended to boost confidence in the region by preventing a massive loss of value for certain companies and banks. These moves have worked temporarily in the past, albeit with mixed success rates, but investors should look to the forex market if they wish to see true market adjustments.

The forex market, as volatile as it is, possesses no such framework through which to ban any behavior. Assets may be bought or sold freely, or taken off the market. The ability to impose a ban on certain behavior in the stock market simply does not exist in the forex market. This largely explains why many large investors turn to forex during times of market uncertainty: there is simply less official stipulations about what can and can’t be done. This makes currencies and commodities move more naturally (even if they appear erratic). If you want to trade in a market which has fewer rules imposed on you, forex is where you should turn. Plain and simple.

Read more forex trading news on our forex blog.

The afternoon reports on nominal and core retail sales in the United States adds to recent notions of an economy not entering a second recession, as many pundits had expected. Employment data these past few weeks have shown the US economy adding jobs in greater numbers this summer; today’s retail sales data bolsters this data by showing consumers boosting their spending levels, despite frantic expectations of economic turmoil.

The news has helped the US dollar (USD) hold value where it may have plummeted instead. Swings in stock market values this week have made forex trading more interesting, given the heightened volatility that springs forth during a period of flight into Treasuries and Gold. Today’s data strengthens the idea that US Treasuries will rise, likely pushing the USD higher in today’s late trading.

Read more forex trading news on our forex blog.

A report issued at 10:00 GMT this morning by the agency Eurostat revealed a moderate downturn in industrial production levels across the euro zone. While many analysts had anticipated a very weak growth of only 0.1%, the 0.7% decline was hardly expected. Though analysts see the weakness as a result of rampant declines globally, the EUR has been struggling to hold its value in these times of risk flight.

Data released by France this week has also unsettled several investors. The nation’s gross domestic product (GDP) was expected to rise by approximately 0.3%, but saw zero growth in the second quarter instead. These reports point to a period of stagnation in Europe as its major economies struggle to fend off the market bears.

Read more forex trading news on our forex blog.

Aug. 12 (Bloomberg) — Hans Goetti, the Singapore-based chief investment officer for Asia at Finaport Investment Intelligence, talks about the outlook for global stocks and Federal Reserve monetary policy. Goetti speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

Markets have turned their attention from the periphery to central Europe as France posted a slower than expected GDP in Q2. The negative data has the euro slightly higher versus the dollar but down in most of the crosses. The lone exception is the Swiss franc which continues to strengthen as traders unwind long CHF positions.

The EUR is up a touch on the dollar after trading as low as 1.4150 earlier this morning following 0% growth from France in Q2. Economists were expecting French GDP to come in near 0.3%. The weak data comes at an inconvenient time as fixed income traders have begun to take a second look if France is worthy of its AAA credit rating. While the rating agencies affirmed France’s rating earlier this week the pressure earlier did arouse a response from President Sarkozy in an attempt to convince markets that France was serious about getting its budget deficits in-line. The WSJ reported German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet next Tuesday to plan how to solidify European governance and voice their opposition to Eurobonds. The two will also focus on aligning fiscal and budget policies across the EU.

While the euro is lower versus the JPY and the GBP it is stronger versus a tumbling Swiss franc as the CHF has fallen for the second day following a potential peg to the EUR. The EUR/CHF has a 61% retracement target at near 1.1200 from the July 22nd high to the low this month.

The EUR/USD continues to range trade between 1.4400 and 1.4150. The pair is currently being supported by gains in European equities with most major European bourses up by almost 1.5%. The EUR/USD could seek some buying action should US equities trade higher. Equity markets have been trading under extreme levels of volatility this week and FX traders should be taking their cues from the US equity markets’ reaction to this afternoon’s US retail sales and consumer confidence survey.

Read more forex trading news on our forex blog.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

By ForexYard

July’s ADP and NFP employment reports, released last week, both showed drastic increases in job creation, with ADP’s private sector data showing 14 consecutive months of growth. Yesterday’s weekly unemployment claims figure seems to be continuing this trend with only 395,000 people filing for unemployment benefits, beating forecasts by approximately 10,000 claims.

Economic News

USD – US Dollar under Pressure from Soft Data

The US dollar was seen trading moderately lower yesterday as traders began to reevaluate the recent flattening out in USD values. The EUR/USD was seen garnering support near 1.4150 yesterday and jumping towards 1.4300 in late trading. The greenback saw similar movements against most other currency pairs as well.

A short series of data released yesterday painted a relatively weaker picture for the US economy’s growth. Weekly unemployment claims saw a better than forecast rise, hitting 395,000 for the past week; perhaps the only positive news over the past seven days. A trade balance report showed a widening deficit, significantly exceeding expectations. So far the news has helped drive the USD lower as traders seek out other assets.

With a heavy news day expected Friday, dollar traders should be anticipating some exciting currency movements brought about by heightened liquidity. The economic calendar will be focused on the US with several reports on retail sales and consumer confidence. The greenback is intensely in focus among investors today as we conclude an intense week of rollercoaster volatility.

EUR – EUR Tracks Declining Stocks

The euro was seen trading lower yesterday in light of data releases suggesting stagnation in the German wholesale sector. The lackluster performance of global stocks also drove many regional investors away from the EUR despite the relative potential is has for making gains should more investment flee the United States. The euro was, however, seen climbing against its American counterpart in late trading yesterday.

While growth variances between the US and Europe came into view this past week, the higher yielding assets like the GBP and EUR appeared positioned to lose as traders turned away from risk. The growth in risk aversion may have many investors choosing to store their value in lower yielding currencies, like the USD and JPY as the week comes to a close, though investments in US Treasuries contradict the idea behind the recent ratings downgrade by S&P.

As for Friday, the euro looks to be anticipating an evaluation of its recent downturn against the other major currencies with mild bias further leaning to the downside. The euro zone will be publishing several economic events on today’s calendar. Traders should try and follow the significant publications emanating from the US and euro zone economies today as a heavy string of reports are expected from both.

JPY – JPY Seen in Ascent as Traders Seek Store of Value

The Japanese yen (JPY) was seen trading higher versus most other currencies this week after news began to shift many traders back into safe-haven assets. The yen has been a top performer these past several months considering many traders bank on the Japanese carry trade during times of intense risk appetite and move towards the JPY in times of risk aversion, making it an appealing currency in these recent times of ominous debt talks.

The JPY was in a position to make solid gains yesterday after debt auctions in Italy moved many investors away from the euro zone and into safer assets. Moves toward riskier currencies halted as pessimism took hold and drove much of yesterday’s trading liquidity towards traditional stores of value. As such, traders appear to be anticipating an uptick in the JPY prior to this week’s close.

Oil – Oil Price Floats near $86 a Barrel

Crude Oil prices sunk mildly yesterday, reaching near $85.50 in late trading. Growth differentials between the Atlantic states have risen into view this week while manufacturing output and service data revealed mild weakness in Europe. This has so far led several large investors and analysts to consider a shift away from the EUR and other risky assets in exchange for the safety of the USD and JPY, despite the inherent weakness growing in the American economy due to the recent ratings downgrade.

As investors sought safety, the value of crude oil, which has been seen dropping through most of the week, continued to fall slightly towards $85.50 a barrel. A sudden slump in dollar values due to this week’s risk sensitive environment has helped many investors move hesitantly away from assets like gold and silver, and crude oil also appears touched by this sentiment. Should Crude Oil prices hold steady this week, we could see some gains going into the week’s final hours, but longer term outlook appears to remain bearish.

Technical News

EUR/USD

An opening gap higher on Monday morning took the pair above its current downward sloping channel that contained the EUR/USD since late July. Selling into EUR/USD gains may be the right play as the pair has been unable to hold a bid above the 1.45 level. Initial resistance comes in at 1.4540 though a break above the June high of 1.4700 would likely reverse the negative technical tone. To the downside support comes in initially at last Friday’s low of 1.4050 followed by the 200-day moving average at 1.3940 and the rising trend line from June 2010 which comes in at 1.3840.

GBP/USD

Cable looks to be supported after moving lower and receiving a bounce at 1.6220. This level holds the 55-day moving average and a 38% retracement from the mid- July low to the late July high. Resistance is found at 1.6475 followed by 1.6550. A break here and sterling could test the April high of 1.6750. 1.6220 is initial support followed by the 200-day moving average at 1.6085, 1.6000, and the July low of 1.5780.

USD/JPY

The spike higher in the value of the USD/JPY due to Japanese government intervention was short lived as the 80 yen level was eagerly sold into. The pair has retraced 68% of its move from the August low to the post intervention high and may continue to move lower. A previously broken trend line from the late July move lower may be supportive but most likely only a short term pit stop on the way back to the all-time low at 76.25. Resistance is found at 79.50 and the post intervention high of 80.22. An additional round of FX intervention could take the pair to the long term trend line off of the 2007 high which comes in at 82.00.

USD/CHF

Even measures undertaken by the Swiss National Bank to weaken the Swiss franc have failed to give the USD/CHF a bid. On Monday morning the pair gapped lower to a new all-time low. Momentum is steadily falling and traders may want to continue to hold their shorts. Initial resistance stands at 0.7800 followed by 0.8080 and the downward sloping trend line from the February low at 0.8270.

The Wild Card

EUR/CHF

Yesterday the EUR/CHF rallied a remarkable 5.5% after reports of a temporary peg to the EUR. Skeptics of the SNB’s resolve to fight CHF strength may find this an opportunity to enter the CHF trend at better levels. The appreciation seen yesterday reached as high as the 38% Fibonacci retracement from the July 4th high and forex traders can place a stop above this level at 1.0930 with a target back at the low for the pair at 1.0060.

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 Mike P. Kulej

Most trading is done using some type of technical analysis. There is an almost infinite number of indicators which can be used in myriad of ways. Trend lines, retracement levels, Fibonacci numbers, Elliot wave analysis, candlestick patterns, point and figure charting are also widely used. Just about any form of technical analysis can be used for trading Forex. Yet there is a trading application popular in other in other financial markets that is not widely used in currency trading – price gaps.

There are couple of reasons for that. Forex is a 24 H market, therefore markets don’t stop, providing continues stream of price quotes. Even during important fundamental announcements, when it is possible for price to move substantially, creating gap, it would only be visible on tick charts and hidden on any larger magnitude graphs. Most traders wouldn’t even notice it, making it useless for any practical approach. Also, Forex market is the most liquid and deep of all financial markets. This means that just at about any price level there are enough buyers and sellers to make price gaps almost impossible to form.

The only time when gap analysis and trading is of any value happens at the start of a trading week. Typical retail platform closes at 17:00 EST on Friday and opens at 17:00 EST Sunday. Some banks start trading 3 or even 4 hours earlier, which might create price gap when platforms open for trading. Also, heavy order build up on one side will create sudden price shift, a gap. In most instances these events can be exploited.

Most of the time these gaps are filled within 4-8 hours. If the gap is to the downside, one can establish a buy position and hold it until the price fills the empty spot. It is not advisable to chose an arbitrary buy point, but rather look for shorter term reversal signs on 5M or 15M chart. Also, the target should not be the absolute width of the gap, but rather a point about 2/3 into the gap. For example, if GBP-USD closed on Friday at 1.6200 and opened on Sunday at at 1.6140, we wouldn’t try squeeze every possible pip, but rather settle for an objective around 1.6180. This vastly improves success rate.

Another trading strategy is “fading the gap”. This means, that as the gap is filled, we are looking for a trade in opposite direction. Using the GBP-USD example from above, we would try to sell it when the price is inside the gap. Here also the 2/3 rule applies- our sell order would not be placed at at 1.6200 but rather 1.6180 or so. Target for this trade would be an area of the low formed before this gap was filled. This technique is even easier to use than the first one.

Few additional rules are helpful when qualifying gap for a trade. Small ones are not good candidates for trading. This will vary form currency to currency, but anything under 20 pips will be better left alone. We are looking for 40+ pips in difference. Gaps not filled within 24 Hours are no longer considered for “fading” trade. Statistically, price tends to keep on going rather than reverse in this situation. Perhaps most importantly- confirm gap existence on at least one more platform. Once it is confirmed on another charting server, chances for successful trade are greatly enhanced.

About the Author

Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on www.spectrumforex.com. Spectrum Forex LLC offers numerous services to individual traders. He also publishes trading blog www.fxmadness.com. With questions and comments e-mail him at [email protected].

Article by Harjeet

India, traditionally an agrarian economy has gradually developed into an open market economy after opening up to global competition. Free exchange market, liberalised foreign trade, and participation of foreign companies in form of FDI (foreign direct investment) are the new concepts describing Indian economy as of today.

An Overview of Indian economy
A significant shift was observed since 1990s in forms of investment strategies and external trade regulations to define the present more liberated India. Not only in Asia, but even globally, India is a dominant economic power. Many economists have predicated that India could become among the top two global economic powers in the coming few decades. A gradual but definitive shift is observed in the economic activity of India. Once a predominantly agriculture based economy, India has evolved into a market economy with sufficient investment opportunities in infrastructure, retail, finance and insurance, information technology, telecommunication, and manufacturing. Marked improvement was also observed in growth and development of human capital. Skilled work force and capable managers characterise human resource available in India.

Important Economic Indicators
Indian economy is among the top five globally based on PPP (Purchasing Power Parity). During 2010 – 2011 fiscal this worked out to US $4.06 trillion, and 1.54 trillion in terms of official exchange rate. GDP grew at a double digit figure of 10.4% as compared to previous financial year. The dominance of services or tertiary sector is substantiated by the fact that its contribution to GDP during 2010-2011 was 55.3% as compared to the manufacturing or secondary structure with 28.6%, and agricultural sector with 16.1%.

Though agricultural sector contributes 16.1% to India’s GDP, it employs 52% of total available labour force. Industrial sector provides employment to 14% of available work force, and services sector to about 34%. Total investments amounted to 32% of Indian GDP as per estimates of 2010.

Agricultural and Industrial Products
India is among the leading producers of food grains internationally. Rice and wheat are the main food crops, with sizeable productions of millets and maize. Lentils and oilseeds also form significant agricultural produce. Among cash crops, tea, cotton, jute, and sugarcane stand out. India is among the largest growers of each of these cash crops which are exported.

Among industries, textiles, chemicals, steel, ship building, and engineering goods are traditional large scale industries. Petrochemicals, cement, mining machinery, automobiles and pharmaceuticals have developed to grow into major investment opportunities for both domestic and foreign investors. Industrial production growth rate has been calculated at 9.7% for fiscal 2010-2011.

Tea, cotton, apparels, jute products, chemicals, automobiles, iron and steel, precious stones, and petroleum products are the main exports form India. In the last fiscal India exported goods and services worth US $201 billion. Imports into India mainly constitute crude oil, fertilizer, machineries, precious stones, and chemicals. With the opening up of the Indian market, this country has become one of the favoured destinations for investment opportunities. Government of India and State Governments are inviting FDIs and implementing encouraging investment strategies.

India is credited with reserves of gold and foreign exchange amounting to US $284.1 billion. FDI has been estimated at US $191.1 billion for the period 2010-2011.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investing in India and Investment options.