via annacoulling.com Forex market roundup & some suggested trades for this week. Since writing nice trade this morning on the audjpy which netted 90 pips which is pretty good for a Monday morning. You can find more details of this on my facebook page.
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Market Roundup
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September 26 2011, 2:17pm | Comments »
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China – a rabbit in the spotlight
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In the last two months we have seen the People's Bank of China raise interest rates twice, in an attempt to curb inflation which is now gathering momentum, and as such creating the potential for a bubble, the like of which the world may have never seen. As you will see from the article by one of my favourite financial journalists, Ambrose Evans-Pritchard, he even goes as far as to suggest that China could default on it's sovereign debt. The ramifications for international markets would be dramatic and severe, with equities and commodities hit very hard as the economy takes on many of the characteristics of the sub prime mortgage debacle of the last few years. There is no doubt that the writing is on the wall, and it is only a question of time before reality kicks in, and the true extent of the debt bubble in China is revealed. When it is, the tsunami of debt may overwhelm world markets once again, as a second after shock hits the financial markets as they struggle to recover from the deep recession of the last few years. As such 2011 could be an interesting year for many reasons, not least as it is supposed to be the year of the rabbit which symbolises peace and quiet after the year of the tiger. Only time will tell if the stars are right - if not, the rabbit may end up as road kill!! The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist. China's credit bubble on borrowed time as inflation bites - you can read the full article by following the link here You can follow my daily FTSE 100 forecast or my Dow Jones index daily analysis by clicking on the relevant link.
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December 5 2010, 11:09pm | Comments »
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Why has the US dollar strengthened this week?
Many forex traders are confused as to the reasons why the US dollar has suddenly risen from the dead, bouncing back from the lows of 76.00 on the USD index chart, to currently trade at 77.92 against a basket of other currencies, reversing recent strong trends for pairs such as the eur/usd and aud/usd. The answer is Tim Geithner, who has finally broken his silence to comment on the increasing weakness of the US dollar, and in particular whether it is the declared intent of the US authorities to weaken the currency further with QE2, creating an unfair advantage in the so called "race to the bottom".
"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to [be] competitive," he said. "It is not a viable, feasible strategy."
The dollar strengthened against a basket of currencies after his comments to business leader in California's Silicon Valley on Monday, including the yen, euro and sterling.
You can read the full article by clicking on the following link here :
US Treasury chief Timothy Geithner says America will not engage in dollar devaluation
f you would like to read more of my forex trading analysis, then simply follow the link here where you can find more detailed technical analysis of the various currency pairs.
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October 19 2010, 8:39pm | Comments »
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In depth analysis of the currency wars – catch up with the latest news
The currency wars continue unabated, and with Singapore the latest entrant, what does the future hold for us as forex traders, investors, and indeed the US dollar. The currency continues to decline as the US authorities join other central banks around the world in a desperate attempt to keep their currency weak. The problem for the rest of the world of course is how far will the FED go in continuing with its proposed policy of quantitative easing – after all it has very deep pockets and can probably stay the course longer than most – or can it. Should the US continue to such an extent that world banks and governments simply lose faith in the US dollar as a reserve currency, or indeed stir up so much resentment that the currency is no longer held as that of a reserve, this could have much deeper and longer term implications for the US authorities, than that of simply holding deflation at bay. The video explores the issues with John Authers of the FT and Edward Hadas.
The Lex video is an experiment in financial journalism that aims to give you an insight into the debates that shape each day's Lex column. John Authers and Edward Hadas discuss Singapore's tightening of monetary policy and the effect on the dollar
To watch the video simply click the link below
http://video.ft.com/v/635784820001/Lex-live-Currency-wars
You can read all my latest forex trading forecasts and analysis by clicking on the link.
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October 15 2010, 9:51pm | Comments »
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Forex markets – what we can expect this week
It is rare in the financial markets that one event can dominate and influence the outcome of so many diverse instruments, but at present this is most certainly the case, with the US economy teetering on the brink and the FED now increasingly backed into a corner with regard to its policy of a second round of quantitative easing (QE2 as christened by the media). In the last few months we have seen the paradox of equities, commodities & bonds all surging higher as the markets wait for the FED to confirm that it is now taking action to support the US economy and prevent a rapid decline into a double dip recession.
Last week's employment figures have simply accelerated this decision with Wednesday's ADP numbers causing early alarm, followed by Friday's awful non farm payroll data which came in at -95k against a forecast of +1k, and worse than last month's -55k. The knock on effect of this uncertainty, has now triggered the so called "currency wars" (aka the race to the bottom) as beleaguered central banks wrestle with the problem of a strong currency and falling export demand with countries such as Japan, China, Korea and Taiwan leading the way. The problem at present is that every developed economy around the world is trying to protect their export markets in a desperate attempt to prevent their particular economy nose diving & in the case of China (according to Premier Wen) massive social unrest. Each is approaching the problem in a different way, either by direct intervention or by quantitative easing.
The fear from investors and the reason that we have seen the strong bull trends in commodities and equities is simply that they are now seeking safe haven assets on the premise that paper based currencies could be trashed, which certainly seems the case with the US dollar. The meeting over the weekend which was supposed to garner some worldwide agreement over the "currency wars" achieved very little, other than a few lukewarm words and the motto is now "everyman for himself". The irony for the euro is that the ECB considers the European economy to be in better shape than most and is currently involved in a war of words with the US who it is now accusing of manipulating its currency whilst President Sarkozy maintains a tougher tone on QE2 considering it to be inappropriate at present.
The forex markets this week continue to be dominated by chronic US dollar weakness as evidenced in the usd index which remains heavily bearish having broken through the 200 week moving average with both the 9 and 14 week averages also having crossed the 40 week average. Should these ultimately cross the 200 week average this should add further weight to any move lower and as such we can expect to see a re-test of the 74.17 low of late 2009 and any breach here will send the index to re-test the low of March 2008 at 70.79. With the prospect of QE2 now almost certain from the FED and likely to be implemented in the next 2 to 3 weeks, the longer term trend for the US dollar remains negative and, as such, we can expect to see the major pairs react accordingly.
Pairs to watch in forex trading this week: (Based on the weekly charts)
EUR/USD
Having broken above the 200 week moving average last week, still remains bullish & despite the minor pullback over the last few days still looks set to break higher with the 9 & 14 week crossing the 40 week adding further to the bullish tone. Expect some further consolidation at the present level but any break over USD1.4029 should see the pair re-test resistance at USD1.4273.
USD/JPY
Trading once again with a heavily bearish tone with both the 9 and 14 week averages adding immense pressure. We currently trade at 82.01, well below the last intervention by the BOJ but expect them to step in again soon, as the pips are really beginning to squeak!
USD/CHF
Another heavily bearish pair which has now broken below the 0.9635 region, and with all four moving averages weighing heavily there seems little prospect of any reversal as investors continue to pile into the Swiss Franc.
GBP/USD
The pound dollar has reached a critical point as the pair runs into deep resistance at the USD1.60 price handle. Sustained dollar weakness may propel cable higher which is continuing to trade well above the three shorter term moving average giving us a bullish signal, but it may run into resistance anywhere between USD1.60 and the upper level at USD1.6746 and could ultimately stall in this region.
USD/CAD
The usd cad continues to move inexorably towards parity and a re-test of the low of early 2010 at 0.9930 seems likely with all four moving averages turning sharply lower. If this level is breached then expect to see 0.9707 in due course.
GBP/JPY
The yen continues to strengthen in the crosses as the pair continues to slide lower towards a re-test of 127.64 and any break here will open the way for a re-test of 126.71, last seen in May 2010. Again watch for BOJ intervention.
AUD/USD
The strong bullish trend for the aud usd continues as we now wait for a breach of parity with all four moving averages pointing higher with both the 9 and 14 week offering excellent support.
NZD/USD
The nzd usd has reached an interesting point, having breached resistance at the 0.7527 last week and providing this breakout continues expect to see the pair climb to re-test 0.7706 and possibly even to 0.8214 in due course. The trend is fully supported by all four moving averages.
EUR/GBP
The eur gbp continues to trend sharply higher, having broken above the 40 week moving average, and now looks set to test the 0.8862 region and possibly on towards 0.9149 in due course. With the 200 week average sloping higher this is giving the pair some bullish momentum.
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October 12 2010, 8:05pm | Comments »
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Now we are all just waiting for the FED
The Non Farm Payroll data from Friday has left the FED boxed in a corner, with world markets now waiting for the inevitable introduction of a further round of quantitative easing, now referred to as QE2. With the US, Canada, and Japan closed today for public holiday's, the forex markets have had little in the way of news, as we now wait for the FED to react to Friday's numbers, which were far worse than expected. The meetings over the weekend between the various world leaders achieved little if anything, other than some bland words about 'working together', which is code for every one for themselves, and as such we can expect the currency wars to develop into increasingly bitter exchanges, as central banks act in their own self interest to protect their export markets from a strong currency. As always the FT hits the nail on the head and explains all the issues now facing an increasingly beleaguered FED, including disinflation, inflation and deflation and the effect Friday's news has already had on the bond markets. An excellent video for forex traders, which I hope helps to provide some insight into the complex and paradoxical issues now facing the US central bank.
The US Federal Reserve is yet to act, but has talked itself into a corner. James Mackintosh, investment editor, explains, that now the bond markets have already priced in a further round of quantitative easing, so-called QE2, the Fed has lost its room to manoeuvre without risking a disappointment.
Fed talks itself into corner - just click on the link to play the video.
You can read all my latest forex trading forecasts and analysis by clicking on the link.
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October 11 2010, 11:04pm | Comments »
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Bearish trend for US dollar continues in forex trading today
The bearish trend for the US dollar shows no sign of abating, with the daily USD index chart plunging ever lower this morning. The problem for the US currency is that it is being pressured lower both from a technical and fundamental perspective. The FED policy of further quantitative easing is devaluing the currency by proxy, whilst the technical picture remains bleak, as we break below each potential platform of support on the daily chart, with all four moving averages adding additional pressure to the trend lower. The following article explains the background, and you can read my latest USD index forecast on my forex trading site, along with all the major currencies which are now benefiting from the collapse in sentiment towards the US currency.
The dollar has come under deeper attack, hitting a fresh 15-year low against the yen in spite of the possibility of further intervention from the Bank of Japan, while the Australian dollar has neared a 27-year peak and the Swiss franc has hit a record high. As monetary officials and finance ministers prepared for Friday’s International Monetary Fund gathering in Washington, investors continued to push the dollar lower on speculation that there would be little or no intervention in the currency markets ahead of the meeting.
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Investors continue to push dollar lower
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October 9 2010, 1:54pm | Comments »
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