InvestMacro FX

The chances of a direct conflict between the US and North Korea are escalating. The US Navy is reportedly following a North Korean ship through international waters. Under recent UN sanctions, the US could request to board and search the vessel. North Korea would certainly not allow this to happen. Also, North Korea has promised to test a ICBM this weekend and send it over Japan into the Pacific. Supposedly the missile has the capabilities to reach Hawaii.

Either of these two events would cause enormous uncertainty in the global markets. For those clients who believe that the likelihood of either of these events happening is high, we suggest a short EUR/CHF position. normally in times of global crisis, the USD is the best safe-haven currency, followed by CHF. A short EUR/CHF position combines these two ideas since one cannot be directly long USD and long CHF in one pair.

Short EUR/CHF combines a short EUR/USD position (which has long USD as it’s denominator) with a short USD/CHF position (which is long CHF as it’s denominator). So while a short EUR/CHF position has no direct USD involved, the position is a combination of the two high probability safe-haven positions.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

In the below image, we put a EUR/USD 30 minute chart overlaid with our standard Bollinger Bands (“BB”).

We see higher lows for the last 16 hours and a fairly tight channel moving higher. The risk/reward scenario seems to be pointing towards the 1.4000 level last seen yesterday.

We suggest a Buy Limit order just below market (current bid 1.3924) at 1.3915. Our Stop Loss level order is our first support level of 1.3875 and our Target Level with this trade is 1.4000.

We are willing to lose 40 pips to gain 85.

Stay Nimble!

Stephen Leahy
Back Bay FX Services, LLC
www.backbayfx.com

thanks to FX Solutions for the below image.

By Adam Hewison

We are going to be doing something a little bit different today as we analyze the forex markets. Examining the forex markets is nothing new, but we have never gone through 13 pairs of cross rates on the fly. I also show you a quick and effective way to analyze the dollar index at the same time.

In my new video I look at all the major cross rates in a way to quickly tell if you should be in or out of the market.

I am basing my forex observations on our “Trade Triangle” technology and will gladly show you how we apply them to any currency cross rate. It is a quick and easy lesson that will show you exactly what I look for when I’m going to go into a market.

See the New Video Here….

The video is free to watch and there is no need to register. I would love to get your feedback about this video on our blog.

All the best,

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

Source: ForexYard

The Philly Fed Manufacturing Index and a string of other positive U.S. data boosted the Dollar yesterday. This marks a turnaround for the U.S., as there is increasing optimism that the current recession will be over sooner than later. Now may be a good time for forex traders to enter the market as investors continue to profit from yesterday’s bullish Dollar.

Economic News

USD – Dollar Driven Higher By Federal Reserve Rate Outlook

The U.S Dollar went bullish versus the EUR and Yen on Thursday after a report showing the number of continuing claims filed for jobless benefits during the first week of June fell more than expected. The USD finished trading to end up 38 pips higher vs. the EUR at $1.3917, while against the Yen, the USD rose 0.9% to 96.58 Yen.

Sharply higher U.S. Treasury yields also lent support to the Dollar. Higher rates on U.S. investments compared to the rest of the world are expected make the USD more attractive versus other currencies in the short-medium term future. In the earlier trading however, the greenback weakened as traders cut bets that the Federal Reserve will raise its benchmark Rate this year to a 45% chance from 64% odds a week ago.

The Dollar traded in a range between $1.3750 per EUR and $1.4001 this week. The currency fell to a 6 month low of $1.4338 on June 3 on concern that investors will demand higher yields as U.S. debt sales surge to finance a record budget deficit.

Analysts stated that with no U.S. economic data due for release on Friday, many investors were starting to look ahead to a Federal Reserve policy meeting next week. The outcome of the Fed meeting, which commences on Tuesday, and the ensuing reaction in U.S. long-term yields are seen as key to the near-term direction of the U.S Dollar in the future.

EUR – EUR Climbs Against the CHF

The EUR jumped against the Swiss franc on Thursday to as high as 1.5144 Francs amid speculation that the Bank for International Settlements was acting on behalf of the Swiss National Bank (SNB) to defend the 1.50 Franc level, analysts said. The EUR may weaken however against the Swiss Franc should the SNB soften its stance on weakening its currency, according to analysts.

The EUR also advanced against 12 of the 16 major currencies on speculation that the European Central Bank’s (ECB) officials speaking tomorrow will signal they plan to keep Interest Rates on hold, maintaining the allure of assets in the 16-nation region. The EUR also gained for a second day versus the Pound after U.K. Retail Sales unexpectedly dropped in May for the first time in 3 months.

The European currency appreciated to as high as 0.8604 vs. the Pound Sterling, and may move higher to 90 pence in the next 3 months. Against the U.S Dollar, however, the EUR weakened to $1.3917, from $1.3955 yesterday. Investors have abandoned bets that the EUR would appreciate further after the common European currency failed to strengthen beyond $1.40.

JPY – The Yen Tumbles Versus the Major Currencies

The Japanese Yen weakened against all 16 major currencies after U.S. economic reports added to signs the steepest global slump since World War II may be starting to end. The JPY remained low against the EUR for a third day as signs the global recession is easing spurred demand for higher-yielding assets. The currency weakened to 134.43 per EUR and fell to 96.58 per U.S. Dollar. The Yen declined the most versus the Australian and New Zealand Dollars after the World Bank said the Chinese economy will expand 7.2% this year, up from a previous forecast of 6.5%.

The Japanese currency is still headed for weekly gains versus the Dollar and the EUR after U.S. reports earlier this week showed confidence among homebuilders fell unexpectedly in June, and industrial production dropped for a seventh month in May, raising concerns that any recovery by the world’s largest economy will take time. The Yen may continue to decline if there are more signs in the coming week that the global economic slump is dissipating.

Crude Oil – Crude Oil Rises on Positive U.S. Outlook

Crude Oil finished Thursday’s volatile session 49 cents higher at $72.00 a barrel. The commodity was upbeat after economic data in the U.S. raised hopes for an economic recovery. Oil prices have nearly doubled since February on signs of a potential economic recovery. However, the pace of the rally has also sparked concerns that prices do not fully reflect improvements in Oil fundamentals, and costly Crude may hurt any nascent recovery.

Oil had risen above $72 this week on a weaker Dollar and militant attacks in Nigeria, Africa’s biggest Oil producer, which disrupted supply. Investors have also pushed Oil higher by buying contracts as an inflation hedge to offset a decline in the Dollar. There is a reasonable possibility that the price of Crude will continue to rise in the coming weeks.

Technical News

EUR/USD

The pair made its bearish reversal yesterday, reaching the 1.3917 level. The hourly chart’s RSI and daily chart’s Stochastic slow indicate that this bearishness may be short lived, as the cross could go bullish again anytime soon. Entering the pair at an early stage may turn out to be a good strategy for today.

GBP/USD

There still seems to be plenty of steam left in the GBP/USD upward momentum. The MACD of the 4-hour chart and RSI of the daily chart support this upward notion. Entering the bullish trend now may be a wise choice today.

USD/JPY

The pair has gone increasing bullish recently, reaching as high as the 96.76 level. The chart’s 4-hour MACD supports a further bullish behavior for this pair, whereas the chart’s 4-hour RSI contradicts this. Entering the pair when the signals are clearer may be a wise choice today.

USD/CHF

The USD/CHF cross has been range trading between the 1.0750 and 1.0900 levels as of late. It seems that the pair’s bullish run may have run out of steam, and a bearish correction could be underway soon. This notion is supported by the RSI of the hourly and weekly charts. Going short with tight stops may turn out to be a good strategy today.

The Wild Card – EUR/NOK

This volatile pair continues to be affected by the volatile forex market. The last 2 days has seen a lot of strength in the EUR/NOK pair. The hourly chart’s Bollinger Bands and daily chart’s RSI support this trend to continue. Entering this popular trend now may turn out to be a wise strategy today.

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 lost ground-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3870 level and was capped around the $1.4000 figure.  Traders were unable to push the common currency above the psychologically-important US$ 1.4000 figure despite gains in U.S. equities markets and crude oil prices.  Many data were released in the U.S. today.  First, weekly initial jobless claims climbed 3,000 to 608,000 from a revised 605,000 while continuing jobless claims printed at 6.687 million from a revised 6.835 million the prior week.  The modest improvement in continuing claims and small rise in initial claims could be a positive for the troubled U.S. employment sector.  Second, the May index of leading indicators climbed 1.2%, above expectations.  Third, the June Philadelphia Fed index of manufacturing activity improved more than expected to -2.2 from -22.6 in May.  Traders are still talking about the government’s plan to enact major changes at the Federal Reserve, including adding the mandate to become a prudential systemtic risk regulator and reducing or taking away its consumer finance mandate.  In eurozone news, the German Chancellor Merkel pledged support for new rules on financial markets supervision and said they must be “common and binding.” The German government reported it plans to issue €310 billion in new debt through 2013.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.70 level and was supported around the ¥95.60 level.  Bank of Japan and the Japanese government upgraded their assessments of the Japanese economy, lending credence to economists’ view the economy may have already bottomed out.  There are tentative signs that industrial production and the export sector are improving.  The central bank is expected to keep its overnight call rate target unchanged at 0.10% for the foreseeable future.  The Nikkei 225 stock index lost 1.39% to close at ¥9,703.72.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.00 figure and was supported around the ¥133.00 figure.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥158.45 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.35 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8337 in the over-the-counter market, down from CNY 6.8360.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6185 level and was capped around the $1.6470 level.  Data released in the U.K. today saw CML May gross mortgage lending decline to ₤10.3 billion.  Also, May retail sales were off 0.6% m/m and 1.6% y/y, a stark contrast with April’s 0.9% m/m and 2.6% y/y increases.  Third, May public sector borrowing reached a record net ₤19.9 billion.   Fourth, the May CBI industrial trends survey rallied to -51 from -56.  Cable bids are cited around the US$ 1.6110 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8605 level and was supported around the ₤0.8490 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 James Woolley

Many people new to share trading overcomplicate the whole process. They load their charts with lots of fancy technical indicators and are constantly testing out new systems in order to try and find that holy grail trading system that’s going to make them rich. However it should be pointed out that the most basic systems are often the most profitable.

If you look at the price patterns of various different companies you will generally see that when a stock is trending upwards it will never go up in a straight line. Even when there is a very long-term upwards trend there will always be pull-backs along the way.

So therefore if you are looking to trade these long-term trends then a very simple but effective trading strategy would be to wait for one of these pull-backs and then enter a long position as soon as the price moves back up again.

To help you with this strategy you may like to use a technical indicator or two to help you. For example two indicators I like to use are the exponential moving averages (5 and 20) and the parabolic SAR.

So what you do is you identify shares that are in established upward trends, then you wait for a pull-back where you should hopefully see the EMA (5) cross below the EMA (20) and the parabolic SAR turning red. Then you simply what for the price to reverse back up again and resume it’s upward trend which is often signalled by the parabolic SAR turning green again and the EMA (5) crossing back up through the EMA (20).

To give you a real-life example just take a look at the daily chart of Amazon (AMZN). You will see that it trended upwards between November 2008 and May 2009. The price then pulled back and we saw both the parasolic SAR turning red and the EMAs crossing downwards. Now this may have signalled the end of the upwards trend but as it turned out the EMAs crossed back upwards and the parabolic SAR turned green which was an excellent opportunity to go long again. As a result the price raced through the $80 level and went all the way up to around $88.

So you can see that this very simple trading strategy can produce some excellent results and it’s a lot more effective than most of the overcomplicated systems that a lot of traders use. Successful share trading isn’t really that difficult. You simply need to look for shares that are trending either upwards or downwards and then find a way of profiting from this trend, which you can do by using a simple system such as the one above.

About the Author

Click here to read a review of Tradefair and to read a full Zecco review.

By CountingPips.com

The U.S. Leading Indicators Index published by the Conference Board today increased for the second straight month in May. The Leading Indicator Index, which measures future economic activity, registered a 1.2 percent increase in May following a revised increase of 1.1 percent in April. The index had declined by 0.3 percent in March. May’s increase beat the market forecasts which were predicting a gain of 1.0 percent for the month.

Consumer expectations, real money supply, stock prices, building permits, interest rate spread, supplier deliveries and manufacturers’ orders for nondefense capital goods helped positively contribute to the leading index.  Manufacturers’ new orders for consumer goods & materials, weekly jobless claims and average weekly manufacturing hours were negative sectors impacting the leading index.

The coincident index, which is viewed as a measure of the current economic activity, decreased by 0.2 percent in May after falling in April by 0.3 percent while the lagging index also decreased by 0.2 percent after declining by 0.8 percent in April.

Weekly jobless claims show small rise, continuing claims decline.

Weekly U.S. initial jobless claims edged up in the week that ended on June 13th according to the U.S. Labor Department today. Jobless claims totaled 608,000 unemployed workers, an increase of 3,000 from the week prior.  The 4-week moving average of unemployed workers fell by 7,000 from the prior week to 615,750 workers.

Meanwhile, workers seeking continued claims for unemployment benefits for the week ending June 6th decreased by 148,000 workers to a total of 6,687,000 unemployed workers. This was the first decline in continuing claims since early in January and the largest decline in over seven years. The four week moving average of continuing claims grew by 2,250 workers from the previous week to 6,757,500 workers.

US Dollar mixed in Forex Trading today.

The U.S. dollar has been mixed today in forex trading against the other major currencies. The dollar has been higher versus the euro, Japanese yen, Canadian dollar, Swiss franc and the British pound while trading lower against the Australian dollar and New Zealand dollar.

The euro has fallen versus the dollar today as the EUR/USD has gone from its 1.3958 opening(00:00 GMT) to trading at 1.3898 in the afternoon of the U.S. trading session at 2:42pm EST according to currency data from Oanda.

The British pound has fallen today as the GBP/USD has declined from its 1.6392 opening exchange rate to trading at 1.6325 usd per gbp. The dollar has gained versus the Japanese yen and trading at 96.52 after opening at the day at the 95.78 exchange rate.

The dollar has advanced versus the Canadian loonie as the USD/CAD trades at the exchange rate of 1.1340 after opening the day at 1.1310.

The dollar has increased against the Swiss franc as the USD/CHF trades at 1.0867 after opening at 1.0796 today while the dollar has been weaker against the Australian dollar and New Zealand dollar. The AUD/USD trades at 0.8004 after a 0.7958 opening while the NZD/USD trades at 0.6395 today after opening at the exchange rate of 0.6330.

GBP/USD Chart – The British Pound falling today versus the US dollar in forex trading and moving below its 100 hour moving average (red).

By Mark Galasiewski

This article was originally published as a special Interim Report of EWI’s Asian-Pacific Financial Forecast on March 23, 2009. Since then the SENSEX has risen as much as 65%. For a limited time, Elliott Wave International is offering a full 10-page issue of the Asian Pacific Financial Forecast, Discover The Bull Markets You’re Missing, free.

**********************************************

Prices in India’s SENSEX have just broken above a downtrend line, imitating a pattern from 2004 that led to a strong rally. This interim report updates our wave count for India, since its wave pattern in particular may offer investors a rewarding long-term opportunity.

In the March 2009 issue of The Asian-Pacific Financial Forecast, we showed how pattern, price, time and sentiment considerations were pointing to the end of multi-month, five-wave declines in most major Asian-Pacific indexes by late March. In most cases, those lows have likely been achieved.

Although we have looked for a fifth wave down to below the October low in the SENSEX, it has failed to materialize. That failure plus the recent sharp reversal rally prompts our return to an earlier wave count. The daily SENSEX chart shows how the decline since the 2008 high can be counted as three waves. A three-wave decline opens the possibility of a rally back to near the 2008 highs. But there is reason to set our sights even higher.

Perhaps the best argument for a bull market in Indian stocks is the potential fractal relationship we identified in the November 2008 issue, published just four days after the October low. The weekly chart below is an updated version of the one we showed at that time. Here is our analysis from the November
issue:

“The Wave Principle teaches that the stock market is a self-similar fractal. That means that some pieces of its price record—which Ralph Nelson Elliott called waves—resemble other pieces elsewhere in that record. The weekly chart of India’s SENSEX shows just such an example.Notice how the up-down sequence labeled Intermediate waves (1) and (2) (in the small red box) is a microcosm of the larger up-down sequence from the 2003 low to the present (i.e., waves and , in the large black box). In both cases, the wave-two correction retraced approximately 50% of the wave-one advance. (We have calculated those retracements using the same logarithmic scale shown in the chart: logarithmic charting displays equal percentage moves proportionally).

“If we have identified this “nested fractal” relationship correctly, it means that Indian stocks are about to begin Primary wave of the bull market that began in 2003. Waves and lasted more than four times the duration of waves (1) and (2). If that same proportion holds going forward, the SENSEX may continue advancing for 15 years before reaching the end of wave .”

Since then, the analogy to the 2004 period (“The 2004 Analog”) has become even more interesting.

Just as then, prices have broken down from an apparent triangle, and then reversed and broken out above the downtrend line. In 2004, prices never looked back after the breakout. As long as prices do not fall back below the low of today’s breakout bar, we will assume that the 2003-2008 bull market will continue to provide a road map to the future of India’s stock market.

For more information emerging opportunities in Asian markets, download Elliott Wave International’s free 10-page issue of the Asian Financial Forecast.

About the Author

Mark Galasiewski is the editor of Elliott Wave International’s Asian-Pacific Financial Forecast and member of EWI’s Global Market Perspective team covering Asian stock indexes.

By Fast Brokers – The USD/JPY finally yielded to our 3rd tier downtrend line after knocking on the door for several days.  The currency pair proceeded to drop through our 3rd tier uptrend line without hesitation on rising volume.  However, volume did not reach an abnormal level, and the USD/JPY is finding support once again at our 2nd tier uptrend line.  Our 2nd tier uptrend line continues to be a reliable defense, and the USD/JPY may very well bobble between our trend lines as they reach their respective inflection points.  Though the currency pair is trending up at a crawl pace, the medium-term downtrend continues to bear down on price. Our 5th tier downtrend and 1st tier uptrend lines should prove to be the true tests as far as a longer-term trend is concerned.  Meanwhile, the USD/JPY remains in its indecisive state, apparently waiting to see whether the global economic recovery is for real.  A significant break to the downside could cripple Japanese manufacturers and the nation’s economy, whereas a breakout to the upside would likely indicate comfort in the concept of stability and future growth in the U.S.  Meanwhile, if our 2nd tier uptrend line doesn’t hold, the pullback could pick up momentum towards our 1st tier uptrend line with a retest of May 22 lows.  A contraction such as this would likely require a sizeable drop in U.S. equities, and the ability of the S&P to hold 900 remains to be seen.

Present Price: 96.02

Resistances: 96.33, 96.90, 97.45, 97.58, 98.66

Supports: 95.82, 95.20, 94.45, 93.76, 93.32

Psychological: 95, 100

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 – The Cable has pulled back to our 3rd tier uptrend line after investors reacted negatively to today’s data from Britain.  Most analysts are highlighting the report showing negative growth in retail sales over the past month.  However, viewing the data from a more historical perspective, British retail sales tend to deviate from 0% in both directions during good and bad economic times.  Additionally, the -0.6% decline we saw today is certainly a negative indicator, but nothing too abnormal.  The more disconcerting data releases today were the M4 money supply and CBI industrial order expectations.  The less than anticipated growth in the M4 money supply supports the concept of deflationary pressures, taking a bite out of corporate earnings in the process.  Additionally, the industrial order expectations number is still at a shockingly low level.  Therefore, orders aren’t picking up as quickly as manufacturers would have hoped, indicating the global economy is recovering at a slow pace.

Despite Thursday’s disappointing showing so far, yesterday’s releases showed considerable progress concerning Britain’s fight against unemployment.  The CCC is falling at an encouraging rate while average earnings are back in the green.  If we continue to see a downtrend in CCC and uptrend in average earnings then retail sales should trend upwards as well.  Therefore, even though the Cable is weakening today, we believe that Britain remains in an advantageous position economically as compared to the U.S. and EU.  Even though we’ve seen some negative pressure on the GBP/USD lately, bulls continue to come to the defense of the currency pair, preventing the Cable from retesting 1.60 for the time being.

However, should the S&P futures pull back further, the GBP/USD would likely participate to a certain degree due to their positive correlation.  Should near-term weakness in the Cable continue, the currency pair has considerable support between1.5850-1.60.  Therefore, there would need to be a decisive turn to the downside in U.S. equities for the Cable to leave behind this trading range.  This line of defense is represented by our 2nd tier uptrend line.  The GBP/USD is getting squeezed between our 3rd tier uptrend and 2nd tier downtrend lines as they approach their inflection point.  We notice a similar inflection point in the EUR/USD.  If the Cable reacts negatively to the collision, we could view a pullback towards our 2nd tier uptrend line.

That being said, we believe there is still a reasonable downward pressure on the Cable due to the present weakness in U.S. equities.  Therefore, a retracement towards 1.60 would not be surprising.  Regardless, the medium-term uptrend is in good shape due to the progress the GBP/USD has made since January lows.  With Britain’s economic data out of the way for the week, movement in the Cable will likely rely more upon its positive correlation with U.S. equities.  Hence, investors should keep a close eye on the S&P and its ability to hold 900 should it be tested.

Present Price: 1.6299

Resistances: 1.6315, 1.6371, 1.6412, 1.6498, 1.6574, 1.6620

Supports: 1.6263, 1.6210, 1.6141, 1.6080, 1.6013

Psychological: 1.65, 1.60

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.