May 16, 2008
For the better part of this past week, the Euro, Japanese Yen and British pound have been trapped within a tight trading range against the US dollar. Even though the moves in all 3 of these currency pairs have been relatively significant, especially in the EUR/USD, they pale in comparison to the moves in the Australian and New Zealand dollars.
Currencies in Play Next Week:
Euro
Canadian Dollar
British Pound
Euro
The Euro staged a very strong rally against the US dollar after quietly selling off for the past 3 days. The move was due almost entirely to the US numbers as the Euro started to gain strength quickly following the University of Michigan Consumer Confidence report. Eurozone economic data was actually bearish for the currency with the trade surplus swinging into a deficit in the month of March. This provide evidence that the strong euro is finally weighing on the region’s economy. Fundamentals will be heating up for the Euro next week with German producer prices, the ZEW survey, IFO and PMI reports due for release. We actually expect most of the numbers except for the inflation reports to be Euro negative. With factory orders and industrial production turning negative, it would be a surprise if business sentiment managed to improve.
Canadian Dollar
The Canadian dollar will be a big focus with consumer prices and retail sales due for release. I expect CPI to be hot and retail sales to be weak, but that depends upon the level of wholesale sales.
British Pound
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Posted in Australian Dollar, New Zealand dollar, euro, Forex News, Canadian Dollar, DailyFX, British Pound, US Dollar
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May 16, 2008
Here is the “In the Financial Papers Radio Broadcast” (Length: 7:39 minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
Podcast Covers:
Housing Starts in U.S. Rise; Single-Family Construction Hits 17-Year Low
Fed, BOE Foreshadow End of Rate Cuts as Prices Rise
Oil Rises to Record Above $127 on Goldman Price Forecast, Chinese Imports
Crude oil rose above $127 a barrel for the first time after Goldman Raises Forecasts
London Banking-Job Seekers Face Worst Odds Since 2004, Outnumber Openings
Fannie Mae to Drop Down Payment Rules in Worst Areas
Switzerland March Adjusted Real retail sales +9.7% y/y - higher than expected
Japanese GDP stronger than expected
ECB Liebscher: 3 percent inflation is unacceptable.
ECB Constancio: difficult to predict how much Europe will decelerate.
US Fed reexamines proactive approach to managing bubbles
Economic Data Adds to Recession Worries
LIBOR Calculation Stresses Central Bankers
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Posted in Trichet, Wall Street Journal, US Economy, Forex Podcast, Gold, weak dollar earnings, Inflation, Fed Rate Cut Expectations, Bank of England, Bernanke, Oil, ECB, US Dollar, Crude Oil Prices, New Zealand dollar, Dow, FX Radio, Bloomberg, Japanese Yen
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May 15, 2008
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1. Over +1400 Pips Since the Beginning of the Year
2. 10 out of the last 10 Trades were Winners!
3. 83% Accuracy on Trade Calls
4. 35 out of 43 Winning Trades Since January
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6. 80 to 90% Accuracy on Forecasting Economic Data (Last Week’s Economic Calendar with Trade Signals )
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Our Complete Trading Account Record (Click on Image):
*We trade 2 lots, with 2 exits. Look at the progression of the live test account and the change between beginning equity and current equity.
Our Equity Curve Since January:
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Posted in BKTrader FX
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May 15, 2008
Since the beginning of the year, the US dollar has fallen 5.9 percent against the Euro and 6.7 percent against the Japanese Yen.
For many countries, including the US, a weak dollar has caused major problems ranging from deteriorating export growth to inflation. The one good thing that the weaker dollar was supposed to do is to save the US manufacturing sector. Unfortunately, today’s US economic data proved otherwise. Industrial production dropped 0.7 percent in the month of April, manufacturing activity in the NY region dipped into negative territory and even though the Philly Fed index rebounded from -24.9 to -15.6, it still remains deep in contractionary territory.
Unfortunately the depreciating value of the US dollar has failed to offset slowing demand. The automobile sector has been the hit the hardest from the double blow of higher oil prices and a weaker labor market. The US economy is continuing to struggle and there is no doubt that the Federal Reserve has a tough task ahead of them. Jobless claims increased last week while the NAHB housing market index fell to 19, one point shy of its record lows.
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Posted in ISM manufacturing, weak dollar earnings, US Economy, euro, DailyFX, US Dollar
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May 15, 2008
The Farm Bill was finally passed by the US Senate today and it stands to overhaul the entire FX industry.
As far as I understand, in the past, the National Futures Association governed the Retail Forex industry, but now under the Farm Bill, that jurisdiction moves to the CFTC (Commodity Futures Trading Commission) which regulates the commodities and futures markets in the US.
The biggest changes brought forth by the Farm Bill is the requirement for all retail forex brokers and introducing brokers to be regulated AND meet specific capital requirements.
Retail FX traders should rejoice because the wild wild west of trading is finally being reined in. According to the bill, retail forex brokers will need to increase their capital by:
“(I) $10,000,000, beginning 120 days after the date of the enactment of this clause;
“(II) $15,000,000, beginning 240 days after such date of enactment; and
“(III) $20,000,000, beginning 360 days after such date of enactment.
Assuming the bill passes by the end of June, that would give U.S. retail forex dealers until the end of October to increase their capital to $10 million. Then they would have until February 2009 to increase it to $15 million and then June of 2009 to reach the full $20 million.
Introducing will also need to get registered - their capital requirement will probably be announced in the near future.
The bill also creates a separate registration category for Forex Dealers and gives the CFTC tremendous leeway in crafting rules governing this new financial services category.
With this new found power, I expect the CFTC to come up with even more rules. Maybe tougher margin requirements, segregated customer accounts?
Over the next year, expect alot of smaller brokers that fail to meet the capital requirements to disappear. Make sure you are trading with a well capitalized Forex Broker.
The full language is now available at the House of Representatives website:
http://agriculture.house.gov/inside/FarmBill.html
Title XIII (page 548) is the part of the bill that references the forex industry. Note the following language as it pertains to adjusted net capital requirements for forex dealers:
http://agriculture.house.gov/inside…Conf/CRlang.pdf
Posted in Farm Bill FX, Farm Bill, Insight
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May 15, 2008
Here is the “In the Financial Papers Radio Broadcast” (Length: 5:43minutes). The player should load automatically. Please let me know if you like it. Contact Kathy
In the Financial Papers:
Podcast Covers:
New Zealand Dollar, One of the Weakest Pairs in the FX Market
Eurozone GDP Numbers
Factories Won’t Save the Day
Manufacturing in NY Unexpectedly Contracts
Industrial Production Weakens
US Consumer Prices
High Soybean Prices Hurt Japanese Tofu Makers
Commodity Prices Retreating, Rice Falls to Daily Limit AGAIN
Early Markdowns Mean Springtime for Shoppers
Iceland Debates Switching to Euro.
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Posted in Fed Rate Cut Expectations, Forex Podcast, Inflation, GDP, Food prices, weak dollar earnings, Wall Street Journal, US Economy, Crude Oil Prices, ECB, New Zealand dollar, euro, Bank of England, FX Radio, US Dollar
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