Kathy Lien

Video: Comments on U.S. and Canada Employment Reports

Kathy Lien — Fri, 05 Feb 2010 15:40:46 +0000

I was on the Business News Network talking about this morning’s U.S. and Canadian employment reports. Click on the image to access the video:

CNBC Interview - Volcker Speech, ECB and BoE Meetings

Kathy Lien — Tue, 02 Feb 2010 17:40:54 +0000

I was on CNBC Europe this morning talking about Volcker’s speech today and outlook for ECB and BoE rate decisions

CNBC Interview on ISM

Kathy Lien — Tue, 02 Feb 2010 13:35:29 +0000

Had a short quick hit on CNBC Australia yesterday - I was running soooo late!

Is the Dollar Overvalued?

Kathy Lien — Mon, 01 Feb 2010 17:44:19 +0000

The U.S. dollar has had an incredible run over the past 2 months, leading many traders to wonder whether the dollar is overvalued. The answer is NO. Based upon purchasing power parity, all of the major currencies are still very overvalued against the U.S. dollar - particularly the Aussie.

What does this mean? From a valuation stand-point, the dollar still has room to rise.

U.S. GDP - 1980s Redux?

Kathy Lien — Fri, 29 Jan 2010 20:06:48 +0000

The Great Recession is now in our rear-view mirrors and with GDP growth of 5.7 in the fourth quarter, the recovery looks well underway. However, the surge in growth is unlike anything we have seen in a while. The recessions of the early 2000’s and 1990’s saw inconsistent growth after the recession ended. After the 2001 recession, growth peaked at 3.5% before falling back to 0.1% by 2002. The early 90’s recovery saw growth reach 4.5% before declining to a tepid 0.7% a year later.

However the 1980s recession may once again be our best guide for how the current recession may fare.

The recession ended in 1982 and by 1983, the U.S. economy was growing at extremely healthy rates. Between Q1 of 1983 and Q2 of 1984, average GDP growth was more than 7 percent. This is not to say the U.S. economy will replicate this pace of growth in the quarters ahead, but we have previously seen the rubber-band effect after deep recessions and there is no reason why it couldn’t happen again.

Was that Intervention in EUR/CHF?

Kathy Lien — Fri, 29 Jan 2010 19:57:22 +0000

There was a sharp move intraday in EUR/CHF that smells like intervention…but was it? SNB member Hildebrand and the Bank of International Settlement has declined to comment on the move in the Swiss Franc. The first chart shows today’s price action in EUR/CHF and the second shows the price action of EUR/CHF when the SNB intervened back in March. The move in March was much bigger - 400 pips compared to today’s 100 pip rally. Therefore I think that the move in EUR/CHF today is most likely NOT related to SNB intervention. Probably a big take profit order to buy back EUR/CHF below 1.4640.

Today’s move in EUR/CHF: 100 pip rally

EUR/CHF chart of March Intervention: 400 pip rally

Down with the Pound

Kathy Lien — Thu, 28 Jan 2010 16:07:17 +0000

Over the past few trading days, the British pound has been confined to a very tight trading range. The following chart illustrates the predicament that GBP/USD traders find themselves in right now and I believe that the breakout will be to downside with the GBP/USD testing 1.60 in the near term.

This morning, Standard & Poor’s announced that “We no longer classify the United Kingdom (AAA/Negative/A-1+) among the most stable and low-risk banking systems globally” and I have to say that this is HUGE. S&P had already lowered the U.K.’s place in its Banking Industry Country Risk Assessment gauge to Group 3 from Group 2 on Dec. 21. The risk of investing in the U.K. is now on par with the risk of investing in countries like Portugal, Saudi Arabia, Ireland, Chile and Austria. You can imagine what this means to investors looking for a place to put their money.

On top of that, the outlook for consumer spending is quite dismal. In my daily report yesterday for FX360.com, I talked about how the CBI retail sales index fell by the largest amount since August 2009 which suggests that U.K. consumers cut back spending after the holiday shopping season. There is a very good chance that this weakness will feed into the retail sales report and therefore we remain skeptical of the rally in the GBP/USD and believe that the odds are skewed towards a move down to 1.60. The latest announcement only strengthens this call.

Here’s a daily chart of the GBP/USD.

Source: eSignal

Conquering Black Diamonds

Kathy Lien — Thu, 28 Jan 2010 15:14:27 +0000

At the beginning of the year, I said my New Years resolution is to blog more so here I am trying to stick to it as much as possible.

You probably don’t know that I am a big fan of skiing but I love the exhilaration of being on the slopes and being outdoors enjoying the fresh air.

This past weekend I skied Black Diamonds in Vermont for the very first time ever and I did not one but 5 Black Diamonds! For those of you that are not familiar with skiing, there are 4 categories:

Green - the easy stuff
Blue - intermediate
Black Diamond - expert
Double Black Diamond - the really hard stuff with rocks, trees, moguls, ice and bumps

I am extremely proud of myself and I’m still reeling from the high. Unlike previous years, I have been training hard for this season - going to gym and taking spin and other aerobic classes 4 times a week. Practice and preparation is the key to all success and this applies to both skiing and trading.

When I look down at the Black Diamond slopes, I am no longer intimidated but I know that in order to replicate my performance the next time around, I have to keep up with my practice and preparation. Hopefully there are some pearls of wisdom here that applies to trading as well!

Finally, here’s a pic of me at Killington surveying the slopes before I head down.

What did the Fed change in the FOMC Statement?

Kathy Lien — Wed, 27 Jan 2010 20:24:56 +0000

I published a full analysis of the FOMC meeting on FX360.com but here’s a visual breakdown of the changes to the latest FOMC statement.

Why USD/JPY Could Continue to Fall

Kathy Lien — Wed, 27 Jan 2010 18:29:21 +0000

Last Friday, the CFTC released their weekly report of futures positioning. According to the data, which was as of last Tuesday, short positions in the Japanese Yen hit the highest levels since August 2008. At that time, the Yen weakened significantly and soon after a short squeeze pushed the currency sharply higher against the U.S. dollar.

The following chart illustrates the strong relationship between Yen positions and the JPY/USD (the inverse of USD/JPY). Right now the Yen is rising against the dollar despite the fact that traders are substantially short Japanese Yen. This means that should the Yen continue to rise, or in other words USD/JPY continues to fall, there could be an aggressive short squeeze that triggers a big move higher in the Yen and a sharp breakdown in USD/JPY.

A further rally in the Yen will undoubtedly test the resolve of Japan’s Ministry of Finance and at some point, maybe below 87, the Japanese government may feel compelled to step in and vocally criticize foreign exchange fluctuations but until then, the odds are skewed towards further losses in USD/JPY.