InvestMacro FX

By Fast Brokers – Gold is finding support in our 2nd tier uptrend line as the precious metal avoided an encounter with 7/29 lows.  We notice a similar development with the EUR/USD and its own 7/29 lows, telling us the EUR/USD may be a stronger immediate-term read on gold.  The Greenback is balancing across the board following its swift appreciation, giving gold a boost due to its negative correlation with the Dollar.  Remember that gold is following the Greenback more closely than U.S. equities these days, though the movement of the S&P does have a moderate influence on the direction of the precious metal.  Therefore, present weakness in the S&P futures could limit upward mobility in gold as the Pound and Euro appreciate.

Consolidation could be the theme in markets over the next session or two as investors take a breath and digest the pullback in U.S. equities.  Since this week’s economic data out of the EU and Britain have been positive, investors may be second-guessing their instinct to follow the negative tide of news surfacing from the U.S.  However, near-term pressure does remain to the downside since we’ve noticed increasing sell-side activity along with a collapse of the psychological $950/oz level.  Gold has something to prove to the upside, beginning with our 1st tier downtrend and 3rd tier uptrend lines along with 7/29 highs and the psychological $950/oz zone.  As for the downside, the precious metal has technical cushions in our 2nd tier uptrend line, Monday lows and 7/29 lows.

Present Price: $936.85/oz

Resistances: $938.54/oz, $939.68/oz, $941.20/oz, $942.47/oz, $944.12/oz

Supports: $936.39/oz, $934.74/oz, $932.46/oz, $930.31/oz, $928.16/oz

Psychological: $950/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers – EUR/USD is looking to recoup some of yesterday’s losses after ZEW Economic Sentiment data blew past expectations and registered expansion (50+).  However, gains are being contained by weak PPI and housing data from the U.S.  The S&P futures have also been under considerable downward pressure as investors cash in on overbought conditions.  Europe’s impressive sentiment reflects the better than expected GDP data we saw last week.  Therefore, EU economic prospects are improving as prices contract and expenses become more reasonable.  Unfortunately, U.S. numbers are crashing the party and the S&P futures are back below 1000 again.  Hence, the EUR/USD’s upward mobility could be limited until U.S. equities settle down.

Meanwhile, the EUR/USD has managed to avoid a retest of its highly psychological 1.40 level as sell-side volume remains on the tame side.  The currency pair is balanced on our 1st tier uptrend line as it approaches an inflection point with our 1st tier downtrend line.  Our 1st tier uptrend line carries some weight since it connects through July lows.  Hence, a collapse of our 1st tier uptrend line could signal a retreat towards 1.40 and 7/29 lows.  Fortunately for bulls, 1.38-1.40 has a lot of historical consolidation, meaning this trading zone should prove to be reliable if it is encountered.  As for the upside, there are considerable barriers due to the EUR/USD’s recent deterioration.  These include our 1st and 2nd tier downtrend lines along with intraday highs and the 1.4180-1.42 area.

The S&P futures could have some more room to go to the downside if they don’t make a solid effort to pop back above our 2nd tier uptrend line.  Furthermore, crude has had a difficult time as of late.  Therefore, the next two sessions will be important for the EUR/USD and its correlations to regain their footing in order to build a new base for a leg up.  The EU will release some more PPI and current account data tomorrow.  However, investors will likely look forward to Friday’s slew of PMI data along with U.S. Existing Home Sales.  The breather could help the EUR/USD stabilize before Friday’s busy session.

Present Price: 1.4113

Resistances: 1.4120, 1.4138, 1.4155, 1.4164, 1.4180

Supports: 1.4108, 1.4092, 1.4070, 1.4060, 1.4043

Psychological: 1.40

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Adam Hewison – They Say That Timing In Life Is Everything.

Well here I am at my vacation home in Maine watching the markets go crazy. Yes, we are so lucky to have access to the Internet and to the markets themselves no matter where we are in the world.

I didn’t plan on doing a video today, but the market action left me no choice. Today we witnessed an important “Trade Triangle” signal in this major index that should not be ignored.

In my new video, I share with you this same signal that thousands of MarketClub members witnessed and will discuss some of the potential downside targets for this index.

This is a video that is worth watching as I think we should all be prepared for what lies ahead.

See the New Video Here…

There is no need to register for this video and of course you can watch it with my compliments. Enjoy the video and please give us your feedback on our blog.

All the best,

Adam Hewison
President, INO.com
Co-Creator, MarketClub

Source: ForexYard

The U.S dollar came slightly off highs against major counterparts on Monday, after a report that showed improved manufacturing conditions in the New York region in August. The Dollar earlier received a boost as commodities sold off following a sharp drop in Chinese equities overnight. Today the greenback declined before the Commerce Department reports housing data at 12:30 GMT on speculation the U.S recession probably eased further. The impact of a stronger- then-expected number will be positive from a risk point of view, analysts said, hence reducing demand for the dollar as a refuge.

Economic News

USD – Dollar Gained from Drop in Equities However the Correction Is Imminent

Yesterday’s trading experienced a moderate level of bullishness for the USD with the sudden weakness in equity markets bringing back a level of risk aversion. Expectations for a bearish Dollar in the optimistic environment that emerged at the start of this month have now begun to dwindle as stock markets continue to get squeezed. The safety of currencies such as the USD and JPY has grown throughout the beginning of this trading week.

Climbing as high as 1.4048 against the EUR, and as high as the 1.6275 price level against the Pound, the greenback is finally starting to show signs of bearishness after a long day of upward trading. Market fundamentals may have less to do with today’s early morning movement, however, as economic data shows a continuation of yesterday’s trends. A technical correction is underway, but data releases expected at the opening of European and American markets should drive some volatility in today’s trading.

The opening of the European markets will reveal consumer sentiment in Germany and the Euro-Zone in the form of the ZEW sentiment reports at 9:00 GMT today, while the US markets will release data concerning inflation and the number of building permits issued last month for the construction of new homes. These will mark the important calendar events for today and traders should be on guard for further USD depreciation if a market correction is indeed underway.

EUR – EUR Dampened from Risk Aversion; ZEW Report on Tap

After the recent drop in equities, the EUR has fallen off its latest gains against its primary currency counterparts. While still holding above the 1.40 level against the USD, the EUR was nevertheless trading at a two-week low versus the greenback yesterday. On the other hand, the EUR continued to out-perform the British Pound, climbing as high as 0.8645 before the opening of European markets yesterday. Versus the Yen, the EUR also suffered a set-back from equity losses, trading as low as 132.50.

On the positive side, Euro-Zone exports have risen, signaling growth in the troubled region and pointing to future appreciation for the EUR against most of its rivals. However, the demand for riskier assets took a beating yesterday after the sharp fall in global stock markets. Most information regarding the 16-nation currency this week point to sharp movements in both directions following individual data releases. EUR traders should anticipate the heavy news week ahead and prepare for volatility.

Being released today at 9:00 GMT are the ever-important ZEW economic sentiment reports from Germany and the Euro-Zone. Both reports are expected to show an increase from the previous reading, while remaining below the significant 50.0 mark. This sends the mixed signal of demonstrating growth in optimism, but a modicum of hesitation about market strength as well. British inflationary data may also generate volatility for the GBP, but traders should focus more closely on the ZEW reports as these will drive today’s market

JPY – JPY Correction Due, European Confidence Deciding Factor

As one of yesterday’s leading currencies following the sharp drop in equity markets worldwide, the JPY is now experiencing a distinct technical correction. Whether this recent downward move will sustain itself may depend largely on the data releases at the opening of the European and US markets for each of the Yen’s currency rivals individually.

Climbing as high as 94.20 against the USD, 132.50 against the EUR, and 153.50 versus the Pound, things now appeared to have reversed ever since this morning’s trading witnessed a sharply declining JPY opposite these leading currency rivals. If market optimism is shown to have increased in Europe following the ZEW sentiment reports at 9:00 GMT, the JPY could continue to see sharp losses versus its rivals as risk aversion begins to abate.

Crude Oil – Oil Slumps below $68 a Barrel, but Returning to Bullishness

After last Friday’s surge above $73 a barrel, Crude Oil now trades near the $69 price level with a few bullish signals being provided by the market. Yesterday’s drop in equities, and subsequent boost in the value of the USD, helped drive oil prices below $70 a barrel, but this morning’s rally in risk appetite is proving positive for commodity prices. Since the start of today’s trading, Crude Oil has climbed over $1.00 and continues to experience bullishness.

With European consumer sentiment reports expected, there is the possibility that a growth in optimism will help rally investors to riskier assets, thus lowering the Dollar in today’s trading. With the greenback losing value, Crude Oil could gain strength on the USD’s behalf. Traders should be on the lookout for any signs of positive growth in the Euro-Zone as this may trigger a return to risk appetite, and a potential sell-off of USD, helping to push oil prices higher.

Technical News

EUR/USD

The Slow Stochastic and the RSI on the hourly chart are showing a continuation of the current bearish correction. There is also a very accurate bearish channel forming on the daily chart. In addition, all indicators on the hourly chart are pointing down. Going short might be the right choice today.

GBP/USD

The Cable is in the middle of a very intensive downtrend that started a week ago and shows great momentum that on a bigger scale appears to have more room to run. In the shorter time frame a bullish cross on the 30 min chart indicates that there might be a minor correction before the bearish move resumes. Selling on highs appears to be preferable today.

USD/JPY

Narrow range trading continues as the pair did not make a significant move in either direction, and is currently traded around the 94.80 level. The hourly chart’s Slow Stochastic is showing a fresh bearish cross suggesting that downwards correction might take place in the nearest time frame. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. The 4 hour charts do not provide a clear direction as well. Waiting for a clearer sign on the hourlies chart might be a good strategy today.

The Wild Card – GOLD

Gold prices are once again dropping, and it is currently traded around $937 per ounce. And now, the 4 hour chart’s Slow Stochastic is giving bullish signals, indicating that gold prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 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 GCI Fx Research

€

The euro came off sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4045 level and was capped around the $1.4195 level.  The common currency extended recent losses on account of stronger than expected U.S. economic data and a pullback in U.S. equity prices.  Data released in the U.S. today saw the Federal Reserve Bank of New York’s Empire State manufacturing index improve to 12.1 from -0.6 in July.  Other data saw the August NAHB housing market index print at +18, up from +17 in July, while June net long-term TIC flows printed at US$ 90.7 billion, much stronger than expected and above the revised May print of –US$ 19.4 billion.  In contrast, however, total net TIC flows came in at –US$ 31.2 billion, an improvement from the revised –US$ 65.86 billion May print but below the US$ 23.0 billion forecast.  Global equity markets were given today after Asian markets suffered a sell-off.  The Federal Reserve today extended an emergency program by three to six months called the Term Asset-Backed Securities Loan Facility (TALF) that is designed to cushion the commercial real estate market.  In eurozone news, the EMU-16 trade surplus registered a two-year high in June.  European Central Bank member Weber reported the German economy is likely to perform better than expected in the third quarter.  The ECB today reported the Eurosystem has purchased €7 billion in covered bonds.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.20 level and was capped around the ¥94.85 level.  The yen was up strongly across the board as a downturn in global equities dampened demand for higher-yielding currencies.  Data released in Japan overnight saw Q2 gross domestic product expand 0.9% q/q, less than expected but the first improvement since Q1 2008.  The improvement means Japan is no longer in a technical recession but many economists believe economic growth may slow to an annualized 2.9% pace in the three months ending 30 September.  On the political front, Prime Minister Aso’s Liberal Democratic Party is likely to lose the upcoming lower house election to the Democratic Party of Japan.  Policymakers including Bank of Japan Governor Shirakawa have warned Japan’s domestic demand is likely to remain very weak.  The Nikkei 225 stock index lost 3.10% to close at ¥10,268.61.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥132.50 level and was capped around the ¥134.50 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥153.45 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.20 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8332 in the over-the-counter market, up from CNY 6.8314.  Chinese equities realized their worst decline since November on account of declining commodities prices and concerns that People’s Bank of China will tighten liquidity measures.

₤

The British pound extended recent losses vis-à-vis the dollar today as cable tested bids around the US$ 1.6275 level and was capped around the $1.6515 level.  Bank of England Monetary Policy Committee member Sentance reported the U.K. economy is expected to return to economic growth in the second half of the year and said global economic growth will in part depend on Asian economies.  Data released in the U.K. overnight saw the Rightmove August house price index off 2.2% m/m and 3.1% y/y.  Cable is now off seven big figures over the past ten days.  Sterling remains pressured by BoE’s announcement that it is expanding its bond-buying operations by ₤50 billion.  Sterling is also being pressured by increased borrowing and deficit spending.  Cable bids are cited around the US$ 1.5975 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8645 level and was supported around the ₤0.8585 level.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

The Japanese economy grew in the second quarter of 2009 to lift the world’s second largest economy out of its deep recession.  Japan’s GDP grew by 0.9 percent in the April through June quarter following a first quarter decline in GDP by a revised 3.1 percent according to data from the Economic and Social Research Institute.  Japan’s economy had contracted for four consecutive quarters through the first quarter of 2009 and marked the deepest recession since World War II.  Today’s data almost matched market forecasts that were expecting the GDP data to grow by 1.0 percent. On an annual basis, Japan’s GDP is 3.7 percent higher than the 2nd quarter of 2008 level following a revised annual decrease of 11.7 percent in 1st quarter.

Contributing to the growth in GDP was an increase in exports by 6.3 percent for the second quarter.  Exports had fallen by 22.5 percent in the first quarter and by 13.6 percent in the fourth quarter of 2008.  Japan’s government stimulus also played a role in the GDP gain as public investment increased by 8.1 percent in the quarter after an expansion of 2.6 percent in the previous period.  Consumer spending, which accounts for approximately 50 to 60 percent of Japan’s economic activity, rose by 0.8 percent in the quarter after falling by 1.2 percent in the first quarter and by 0.7 percent in the fourth quarter of 2008.

Japanese Yen, US Dollar gain in Forex Trade.

Forex Trading so far today has seen US dollar and Japanese yen strength against most of the other major currencies. The yen has increased against the euro, British pound, Australian dollar, US dollar, Canadian dollar, New Zealand dollar and the Swiss franc as of 12:44pm ET. The US dollar, meanwhile, has advanced in trading today versus the euro, British pound, Swiss franc, Canadian dollar and New Zealand dollar while falling against the Japanese yen and trading virtually unchanged versus the Australian dollar.

USD/CAD Chart – The US Dollar gaining against the Canadian Dollar today in forex trading and trading over the 1.1000 level (1Hour Chart)

Source: ForexYard

The U.S. Dollar gained versus the EUR but extended losses against the JPY since Friday, after the U.S. Consumer Sentiment index unexpectedly declined in early August. The data aided the Dollar, which in many instances has tended to move in the opposite direction to its economy, due to higher risk aversion. The most important data expected today is the Empire State Manufacturing Index and TIC Long-Term Purchases from the U.S. at 12:30 GMT and 13:00 GMT. It is recommended that you open big positions in the USD’s main pairs now, as market volatility builds up today.

Economic News

USD – U.S Dollar Soars against the EUR and GBP

After going through the beginning of last week with falling trends, the Dollar finished last week significantly higher against most of its major currency pairs. However, against the Yen, the Dollar continued to drop, and the pair now stands at the 94.50 level.

The Dollar’s bearishness at the start of last week’s trading was owed to much negative U.S economic data. The Federal Budget Balance showed pessimistic, proving that the U.S. federal budget is deep in deficit. Additionally, the U.S. retail sales data was unexpectedly negative, emphasizing that U.S consumers have yet to regain their faith in their financial security. What’s more, the Federal Reserve avoided hiking Interest Rates last, despite its record low. Both of these factors led to an extremely bearish USD.

The Dollar’s downtrend was reversed in the latter part of last week, as the relatively positive inflation data, which was published via the Consumer Price Indices (CPI) managed to make investors bullish on the Dollar. The drop in commodities prices, such as Gold and Crude Oil, was another dominant factor responsible for USD recovery.

Looking ahead this week, much market moving data is expected from the U.S. economy. Amongst the main publications are the Building Permits and the Producer Price Index (PPI) on Tuesday, and the Existing Home Sales on Friday. The Building Permits is expected to be the best figures in 8 months, and the Dollar is likely to strengthen as a result. However, the PPI is forecasted to deliver its first negative result since March. Negative inflation data could erase the Dollar’s recent recovery. Traders are advised to open their USD positions now, in order to make maximum profits this week.

EUR – EUR Set For a Volatile Trading Week

The EUR saw an incredibly volatile session during last week’s trading. The European currency began the week with a sharp bullish trend against the Dollar, just to lose its gains close to the weekend. The EUR saw a significant uptrend against the British Pound on the one hand, yet a sharp drop against the Yen on the other hand.

It seems that the EUR’s volatility has come as a result of the mixed data form the Euro-Zone’s major economies. For example, the French economy saw its first signs of recovery as the French Industrial Production rose by 0.3% in June, suggesting positive inflation. However, European Industrial Production dropped by 0.6% in June. The German Gross Domestic Product (GDP) unexpectedly rose by 0.3% in the 2nd quarter, showing that the German economy unexpectedly rose out of recession. On the downside for the EUR last week was that the European Consumer Price Index dropped by 0.7% in July, indicating that inflation is still dropping in the Euro-Zone.

As for the week ahead, a much important data is expected to be published from the Euro-Zone, which is also likely to have a great impact on EUR volatility. The German ZEW Economic Sentiment will be released on Tuesday, and analysts forecast a result of 45.2. Such an outcome is likely to boost the EUR, as this will show that the German economy is continuing to improve. Considering that the German economy is the strongest economy in the Euro-Zone, this result could have a great impact on the EUR. Traders are also advised to follow the German PPI on Wednesday as this may provide much support for the EUR this week.

JPY – Yen Rises to a 2 Week High vs. the EUR

Last week, the Yen rose against all the major currencies. The USD/JPY dropped around 300 pips to the 94.50 level. The Yen rose about 500 pips against the EUR, and saw an 800 pips rise against the Pound!

The Yen’s recent uptrend is largely due to positive data from the Japanese economy. For example, the monthly Core Machinery Orders report showed a 9.7% increase, better than the 2.8% forecast. Also, late last night, Japan’s Prelim GDP results showed a rise of 0.9% in the 2nd quarter, which was slightly below estimates. This led to the JPY rising to a 2 week high vs. the EUR and a basket of other currencies in early trading. This week week, the main publications that are expected from Japan are the All Industries Index on Wednesday at 04:30 GMT. Analysts forecast the result to be 0.4% as opposed to May. If the final result comes in line with forecasts, the Yen is likely to build on its recent bullishness against its major currency counterparts.

OIL – Crude Oil Plummets Below $68

Crude Oil’s high volatility continues, and a barrel of oil has once again dropped below $70 in the past day, and currently stands at $67.93 in early Monday trading. Crude dropped last week on speculations that reduced demand and rising stockpiles in the U.S will lead higher supplies during the upcoming North Atlantic hurricane season. However, if the hurricane season isn’t as many people expect, then the of Oil may actually plummet further.

The recent strengthening of the Dollar in the past week has also had a strong impact on Crude Oil prices. USD strength typically impacts Dollar-denominated commodities because it makes them more expensive for holders of other currencies. If the Dollar will continue to strengthen during the next few days, Crude Oil’s recent dive in value may continue.

Technical News

EUR/USD

A bearish formation on the daily chart is still intact; however the momentum is already quite low. The 4 hour chart is also maintaining a slightly bearish configuration yet with no distinct conclusion. Traders are advised to hold for the break and then swing into it.

GBP/USD

The price of this pair appears to be floating in the over-sold territory on the RSI of the 4-hour chart, signaling an impending bullish move. The fresh bullish cross on the hourly chart’s Slow Stochastic also supports this notion. Going long appears to be a good strategy today

USD/JPY

A correction on the hourly chart could be fore coming as a price move has originated at the bottom border of the Bollinger Bands. This may signal a move from the lower border all the way to the other border. Going long with a tight stop may be the right choice today.

USD/CHF

On a daily chart RSI the pair is showing consistent bullish momentum for a while now and today is no difference. Although the signal is not strong the pair might have a local target at 1.08 level, which might make it feasible for forex traders to go long with tight stops

The Wild Card – EUR/NOK

The price of this pair has just entered the over-sold territory on the 4-hour chart’s RSI, signaling upward pressure. The fresh bullish crosses on the MACD of the hourly and 4-hour charts support the notion of an impending bullish correction. By entering early long positions, forex traders can enter the market on this pair, and at a great starting price.

Forex Market Analysis provided by Forex Yard.

© 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 Adam Hewison – It has been sometime since we last looked at this market which has had a remarkable move from its lows. So how high can Starbucks (NASDAQ:SBUX) go given the current economy and the competition from McDonalds (NYSE:MCD) and Dunkin’ Donuts (Privately Owned)?

In this short video I will point out some key levels that I believe will present problems for this iconic coffeemaker.

See the New Video Here…

There is no need to register for this video and of course you can watch it with my compliments.

Now go grab a cup of coffee and watch this video.

Enjoy, and please give us your feedback on the MarketClub Traders Blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

By CountingPips.com

Consumer prices in the U.S. were unchanged in July on a seasonally adjusted basis after advancing the previous two months according to a report released today by the U.S. Department of Labor. The Consumer Price Index had increased by 0.7 percent in June and by 0.1 percent in May as energy prices gained some steam before falling in July.  On an annual basis for July, consumer prices declined by 2.1 percent from the July 2008 level following a 1.4 percent annual decrease in June. July’s price decline matched economic forecasts that were expecting no change for the month while the annual rate decline surpassed forecasts expecting a 1.9 percent decrease.

Core consumer prices, excluding food and energy prices, increased by 0.1 percent in July following a 0.2 percent advancement in June and have been in positive territory every month of 2009. The annual change in core prices showed a 1.5 percent increase over July 2008 following June’s 1.7 percent annual increase. Market forecasts were predicting core inflation to register a monthly increase of 0.1 percent and an annual increase of 1.6 percent.

Contributing negatively to the consumer price data in July was a decrease in the price for energy as the energy index fell by 0.4 percent in July after advancing by 7.4 percent in June. Food and beverage prices fell by 0.2 percent while apparel prices increased for the second month in a row with a 0.6 percent advance and other goods & services showed the largest monthly gain of 0.8 percent.

UMichigan/Reuters Consumer Sentiment survey falls.

The preliminary consumer sentiment survey by the University of Michigan declined to its lowest level since March this month unexpectedly. The consumer sentiment survey decreased to a 63.2 score in August after a score of 66 in June. August’s score was worse than market forecasts that had predicted the monthly survey would increase to a 69.0 score.

The expectations index, which measures future economic sentiment, decreased from 63.2 in July to 62.1 in August. The current conditions index, which measures current economic sentiment,decreased from 70.5 in July to 64.9 in August. The 1-year inflation expectation dipped a bit from 2.9 in July to 2.8 in August.

US Dollar gains in Forex Trading today.

The U.S. dollar has traded higher in forex trading today after falling mostly for the last two days as the lower consumer confidence number weighed on stock markets and the economic outlook. Overall, the dollar has gained ground versus the euro, British pound, Canadian dollar, Swiss franc, Australian dollar and the New Zealand dollar while the USD has fallen against the Japanese yen as of 2:35pm ET in the afternoon of the US trading session.

EUR/USD Chart – The Euro falling today versus the US Dollar after gaining for the past two days and falling back below the 1.4200 level (hourly chart).

By Jeffrey Kennedy

The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection. Now through August 17, Elliott Wave International is offering a special 45-page Best Of Trader’s Classroom eBook, free.

To be a consistently successful trader, the most important trait to learn is emotional discipline. I discovered this the hard way trading full-time a few years ago. I remember one day in particular. My analysis told me the NASDAQ was going to start a sizable third wave rally between 10:00-10:30 the next day… and it did. When I reviewed my trade log later, I saw that several of my positions were profitable, yet I exited each of them at a loss. My analysis was perfect. It was like having tomorrow’s newspaper today. Unfortunately, I wanted to hit a home run, so I ignored singles and doubles.

I now call this emotional pitfall the “Lottery Syndrome.” People buy lottery tickets to win a jackpot, not five or ten dollars. It is easy to pass up a small profit in hopes of scoring a larger one. Problem is, home runs are rare. My goal now is to hit a single or double, so I don’t let my profits slip away.

Since then, I’ve identified other emotional pitfalls that I would like to share. See if any of these sound familiar.

Have you ever held on to a losing position because you “felt” that the market was going to come back in your favor? This is the “Inability to Admit Failure.” No one likes being wrong and for traders, being wrong usually costs money. What I find interesting is that many of us would rather lose money than admit failure. I know now that being wrong is much less expensive than being hopeful.

Another emotional pitfall that was especially tough to overcome is what I call the “Fear of Missing the Party.” This one is responsible for more losing trades than any other. Besides overtrading, this pitfall also causes you to get in too early. How many of us have gone short after a five-wave rally just to watch wave five extend? The solution is to use a time filter, which is a fancy way of saying wait a few bars before you start to dance. If a trade is worth taking, waiting for prices to confirm your analysis will not affect your profit that much. Anyway, I would much rather miss an opportunity then suffer a loss, because their will always be another opportunity.

This emotional pitfall has yet another symptom that tons of people fall victim to chasing one seemingly hot market after another. For instance, metals have been moving the past few years so everyone wants to buy Gold and Silver. Of course, when everyone is talking about it is usually the worst time to get into a market. To avoid buying tops and selling bottoms, I have found that it’s best to look for a potential trade where (and when) no one else is paying attention.

My biggest, baddest emotional monster was being the “Systems Junkie.” Early in my career I believed that I could make my millions if I had just the right system. I bought every newsletter, book and tape series that I could find. None of them worked. I even went as far as becoming a professional analyst guaranteed success, or so I thought. Well, it didn’t guarantee anything really. Analysis and trading are two separate skills; one is a skill of observation, while the other, of emotional control. Being an expert auto mechanic does not mean you can drive like an expert, much less win the Daytona 500.

I am not a psychologist or an expert in the psychology of trading. These are just a few lessons I’ve learned along the way… at quite a cost most times. But if you are serious about trading, I strongly recommend that you spend as much time examining your emotions while you are in a trade as you do your charts before you place one. What you discover may surprise you.

For more trading lessons from Jeffrey Kennedy, visit Elliott Wave International to download the Best of Trader’s Classroom eBook. Normally priced at $59, it’s free until August 17.