Weekly Trading Update - 21-25 September 2009

Well this week could have been a spectacular one but it was sadly a case of missed opportunities. I've been talking about the GBP/USD entering a new downward trend for a few weeks now but when it did finally break downwards this week, it left me behind. I was waiting for a slight pull-back yesterday morning after the initial breakout so I could get a good entry point, but sadly there wasn't one. It was a similar story on the EUR/GBP and GBP/JPY pairs as well, so in the end I only ended up trading two positions.

The first trade was on the EUR/USD pair early Tuesday morning. The daily Supertrend was green, ie bullish, so I was still looking for long positions on the 4 hour chart, and I went long after an upwards EMA crossover at 1.4710. I then closed half the position for 50 points and let the other half run, moving my stop loss to break-even. Sadly my target price of 1.4850 didn't quite get triggered, and worse still the price then fell back to take me out at break-even.

(There was another upwards EMA crossover on this pair but I didn't trade this one as I thought the upward trend was starting to run out of momentum).

The second trade was slightly more profitable. It was on the USD/JPY later that day. I went short after a downwards EMA crossover at 91.41 and then closed half the position for 40 points and the second half of the position for a further 40 points at 90.61.

So it was still a profitable week but as I say it could have been a hugely profitable week if I could have got a few good entry points on some of the big movers.

Forex: Dollar back down Fri, Sep 25 2009

Consumer Confidence was revisited to the upside, reaching 73.5 for September, while New Home Sales come out 429K at from 433K previous month, also under expectations. Rising 0.7%, less than expected, U.S. stocks spike to the downside, and quickly reverse, still with no strong definitions.

Greenback tuned to the downside against major rivals, with GBP/USD back to the 1.6000 level, and EUR/USD approaching to key 1.4700 zone. USD/JPY fell back close to 90.00, and majors are attempting to regain the bullish strength against U.S. currency.

U.S. Forex Market Commentary Thu, Sep 24 2009

EURO

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4625 level and was capped around the $1.4800 figure. The Federal Reserve, European Central Bank, Bank of England, Bank of Japan, and Swiss National Bank today announced they will extend their liquidity-providing facilities and operations through January 2010. The common currency was partially dragged lower by comments from Bank of England Governor King who said the weaker sterling has been “helpful” in reducing economic and financial imbalances. News that BoE would meet with London-based economists on Tuesday to discuss economic policies. Data released in the eurozone today saw the French number of unemployed rise 0.7% m/m to 2.553 million. Also, the German Ifo business confidence index rose to 91.3 in September from 90.5 in August, the sixth consecutive improvement but below expectations. The German economy, however, could suffer from political uncertainty, difficult credit conditions, and a weakening labour market. The ECB’s September monthly bulletin reported the EMU-16 economy is stabilizing. ECB member Quaden reported the worst of the financial crisis is over but said business may not return to normal. In U.S. news, data released in the U.S. today saw August existing home sales off 2.7% to an annualized 5.10 million rate. Weekly initial jobless claims fell to 530,000 from a revised 551,000 while continuing claims fell to 6.138 million from a revised 6.261 million. Euro bids are cited around the US$ 1.3900 figure.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.35 level and was supported around the ¥91.60 level. Bank of Japan announced it will extend liquidity provision measures through January 2010 to cushion money markets in concert with other central banks. Yen borrowing costs declined to a three-year low with three-month Libor at 0.34750, the lowest level since June 2006. Similarly, U.S. dollar three-month Libor printed at a record low of 0.28500. U.S. dollar rates have been below Japanese dollar rates since 24 August and that has resulted in the U.S. dollar being used as a carry trade funding currency. Data released in Japanese overnight saw the July all industry activity index climb +0.5% with industrial production up 2.1% m/m and the tertiary index up +0.6% m/m. Additionally, the August trade surplus came in stronger-than-expected at ¥187.5 billion. The Nikkei 225 stock index gained 1.67% to close at ¥10,544.22. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥133.35 level and was capped around the ¥134.65 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.15 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8218 in the over-the-counter market, down from CNY 6.8256. People’s Bank of China Deputy Governor Hu yesterday reported G20 nations should consider establishing an international wealth fund to invest a portion of members’ current account surpluses. There is continued speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.

September 24, 2009 Free Forex Trading Video - How To Get Rich Slowly

Many people enter the world of forex trading with the aim of making as much money as possible. However the assumption that most people make is that they need to be trading lots of positions in order to generate these big profits.

This is not necessarily the case though because it can be just as profitable (and it most cases a lot more profitable) to trade the longer term charts. I myself use the daily charts to determine the overall trend and the 4 hour charts for my entry and exit points.

However as Adam Hewison points out in his latest trading video, you can generate some serious profits by lengthening the time frame even further and trading the monthly price charts.

For example in this video you will learn how you could have successfully generated a clear profit of 6383 pips over the years just by trading the monthly chart of the EUR/USD pair. Plus because of the fact that currencies often trend for very long periods, you should see similar results when trading the other currency pairs as well.

USD Crumbles ahead of FOMC Wed, Sep 23 2009

USD Crumbles ahead of FOMC

U.S. Dollar Trading (USD) started to fall in Asia and the move accelerated in Europe as the market through caution to the wind and sold the dollar aggressively. New Year Highs were seen on the EURO, CHF and NZD against the Dollar. Traders were caught a little off guard as many thought the trading would be contained ahead of the FOMC announcement. Crude Oil was down $1.84 closing at $91.55. In US Stocks, DJIA +51 points closing at 9829, S&P +7 points closing at 1071 and NASDAQ +8 points closing at 2146. Looking ahead, FOMC Announcement widely expected to remain at 0.25% but attention will be given to the Statement and any talk of exit strategies.

The Euro (EUR) rallied from the start of Asia to test 1.4800 in Europe before consolidating gains around the figure. Key resistance is seen at 1.4850-70 and then onto the Key Psychological Level of 1.5000. EUR/GBP fell from fresh year highs above .9080 on a sell recommendation from a prime US investment bank. Overall the EUR/USD traded with a low of 1.4683 and a high of 1.4843 before closing at 1.4790. Looking ahead, EU September PMI Manufacturing forecast at 49.7 vs. 48.2 previously. Also released, PMI services forecast at 50.5 vs. 49.9.

The Japanese Yen (JPY) gained with broad USD weakness although fresh strength in US stocks helped most the crosses remain in familiar territory. USD/JPY found support at the 91 figure with the outlook remaining very cloudy as last weeks rejection of the 90 level being countered by yesterday's sharp reversal lower from the 92.50 level. Overall the USDJPY traded with a low of 90.49 and a high of 92.04 before closing the day around 91.05 in the New York session. Looking ahead, Bank holiday on Wednesday.

The Sterling (GBP) was one of the strongest currencies yesterday as crosses gave some reprieve along with a strong rally in GBP/USD up to the 1.6400 figure in late US trade. Helping lift the struggling pound was the sharp pull back in EUR/GBP and strong rally in Oil. Overall the GBP/USD traded with a low of 1.6217 and a high of 1.6406 before closing the day at 1.6360 in the New York session. Looking ahead, MPC minutes released from the meeting earlier this month.

The Australian Dollar (AUD) broke to fresh year highs in late US trade as Gold and Oil surged and risk appetite remain very elevated. USD weakness and NZD strength are helping underpin. AUD/NZD is under pressure though with the key 1.2000 level under threat. Overall the AUD/USD traded with a low of 0.8642 and a high of 0.8789 before closing the US session at 0.8750.

Gold (XAU) gained over $15 an ounce as Gold buyers flooded back into the market after the $1000 test on Monday failed. Overall trading with a low of USD$1004 and high of USD$1019 before ending the New York session at USD$1014 an ounce.

TECHNICAL COMMENTARY

Chart

Euro – 1.4810

Initial support at 1.4611 (Sept 21 low) followed by 1.4516 (Sept 14 low). Initial resistance is now located at 1.4866 (Sept 22 08 high) followed by 1.4908 (Aug 22 2008 high)

Yen – 90.75

Initial support is located at 90.13 (Sept 16 low) followed by 90.00 (Sept 16 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound – 1.6380

Initial support at 1.6135 (Sept 21 low) followed by 1.6114 (Sept 1 low). Initial resistance is now at 1.6568 (Sept 17 high) followed by 1.6742 (Sept 11 high).

Australian Dollar – 0.8770

Initial support at 0.8591 (Sept 21 low) followed by the 0.8529 (Sept 8 low). Initial resistance is now at 0.8875 (Sept 17 high) followed by 0.8814 (Aug 22 ' 08 high).

Gold – 1017

Initial support at 995 (Sept 21 low) followed by 982 (Sept 3 low). Initial resistance is now at 1024 (Sept 17 high) followed by 1032 (Mar 18 2008 high).

U.S. Forex Market Commentary Tue, Sep 22 2009

EURO

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4820 level and was supported around the $1.4670 level. Demand for risk grew today and the greenback was a casualty of the revival in risk appetite. Some traders got short U.S. dollars ahead of the Federal Open Market Committee’s interest rate decision tomorrow and Group of Twenty meeting later in the week in Pittsburgh. Speculation that the FOMC may decide to pare back or not renew some of its asset purchase programs contributed to a weaker greenback. A decision by the Fed to accelerate the end of its quantitative easing programs further could have a rough impact on the Treasury and mortgage-backed securities markets. On the other hand, an indication that the Fed plans to extend its emergency funding programs could have a negative impact on the U.S. dollar. U.S. economic data have been stronger recently and this probably works against the Fed extending some programs. Data released in the U.S. today saw September Richmond Fed manufacturing index remain steady at +14, unchanged from August’s +14 level. Also, the July housing price index was up 0.3% m/m and off 4.2% y/y. U.S. Treasuries appreciated after the sale of a record US$ 43 billion in two-year notes. In eurozone news, European Central Bank member Weber talked about exchange rates today, indicating they are “not out of line with stronger data coming from the eurozone compared to some other regions.” ECB member Sramko reported “There are still question marks over euro-zone growth despite upward revisions,” adding the ECB is “ready to take necessary steps” if economic growth stumbles after governments’ stimuli are phased out. This week’s G20 meeting could be a watershed event for the U.S. dollar. There have been strong international calls to replace the U.S. dollar as the main international reserve currency. Some announcements are expected on attempts to limit bankers’ pay. Euro bids are cited around the US$ 1.3900 figure.

JPY/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.95 level and was capped around the ¥92.10 level. Liquidity remained reduced during Australasian dealing on account of the ongoing Japanese market holiday. Asian Development Bank lifted its growth forecast for some developing Asian countries today and this added to risk appetite among traders. The yen continues to enjoy a positive interest rate differential over the U.S. dollar with the latter now acting as a funding currency given its record low levels. Three-month US$ Libor was fixed today at 0.28563 with three-month yen Libor fixed at 0.34875. Bank of Japan Governor Yamaguchi last week reported that maintaining emergency credit programs for “a long time…may hurt an autonomous recovery of market functions and invite the distortion of the allocation of resources.” He added, however, that a “positive mechanism has started to take hold in the Japanese economy.” The central bank voted to keep monetary policy unchanged last week and upgraded its assessment of the economy. New finance minister Fujii last week verbally intervened saying exchange rates “should be determined by the state of a nation’s economy.” His comments suggest the new Democratic Party of Japan government may not be inclined to sell the yen through actual intervention. The Nikkei 225 stock index on Friday lost 0.70% to close at ¥10,370.54. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥134.55 level and was capped around the ¥135.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.80 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8190 in the over-the-counter market, down from CNY 6.8299. People’s Bank of China Deputy Governor Hu reported G20 nations should consider establishing an international wealth fund to invest a portion of members’ current account surpluses. There is continued speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.

Forex: USD/CHF eases initial gains and tests 1.0655

Fxstreet.com (Barcelona) – After rising during the Asian session from 1.0670 to the intra-day high at 1.0733, USD/CHF has fallen around 80 pips to trade below 1.0700 level and test the 1.0650/60 tough zone. Currently the pair is trading around 1.0665/75, easing initial losses and posting 0.15% daily losses from opening price action.
Rajoo C, analyst at Precise Trader, comments: “The Hourly Oscillators are Oversold and the price is Below the MA, so CAUTIOUS approach is needed for the Bears. Hourly Trend is Sideways while 10815 holds and Daily Trend is also Sideways while 10585 holds, so expect the price to be Choppy until the breakout happens. The patterns on the Hourly is giving a price projection of 10610 level, on the 5 min is choppy but the bears ensure that the price doesn't go above 10735-10815. Conservative traders should be Sidelined or strictly trade only at Precise Traders Report levels. Aggressive traders should do the same until the breakout happens.”

Forex Bank

Forex AB is a Swedish financial services company. The company was started in 1927 as a currency exchange service for travellers, at the Central Station in Stockholm. The owner of Gyllenspet's Barber Shop, according to the legend, discovered that most of his customers were tourists in need of currency for their trips. The owner began keeping the major currencies on hand.

The company was subsequently acquired by Statens Järnvägar (SJ), the Swedish State Railways, which expanded the operations until it was sold off to one of the managers, Rolf Friberg, in 1965. The company was the only one apart from the banks that was licensed to conduct currency exchange in Sweden.

The company, which is still wholly owned by the Friberg family, has expanded into Denmark, Finland, Norway and Iceland and has over 60 shops, usually located at train stations or airports. The decrease in the business brought on by introduction of the euro has made the company look for alternative sources of revenue, like applying for a banking licence and attempting to move into more regular transaction services, earlier handled by Svensk Kassaservice, a subsidiary of the state owned Swedish postal company, Posten.

Since 2003 Forex is a licensed bank.