Posts Tagged ‘Forex Analysis’

Forex Talk In The Street~Fed Chairman On 60 Minutes!

Dr. Bernanke was on national television last evening, on CBS’ “Sixty Minutes,” discussing
monetary policy. There is no reason to get into the whys and the wherefores of his appearance on national television, but where others have taken Bernanke to task for appearing on broad, national television I shall not. I thought his discussion of policy was well made and we think it is wise to be as transparent as policy can be so that the public knows what the monetary authorities are doing and what they have done. This he did.
Dr. Bernanke explained in laymen’s’ terms what his fears regarding the economy were and what his intentions were, are and shall be. He made it quite clear that he feared that had he and the others on the FOMC not acted aggressively last year and in late ’08 the US economy and perhaps the global economy would have slid into Depression and deflation. He made no new case or cases last evening other than perhaps to indicate that if QE II proves insufficient then QE III might have to be considered. Otherwise, he explained rather than predicted and I thought he explained rather well.
Do we like the notion of QE III? No we do not; nor have we liked the reality of QE II for that matter, but we
understand Dr. Bernanke’s fears of Depression and deflation and we understand his manifest urge to be
certain that both are avoided if he can avoid them at all. As a student of the Depression, Dr. Bernanke
wants very much to make certain that he does not go down in history as having done too little to avoid either.
If that means erring upon the side of inflation, so be it.

Our duty as traders is not to argue with that decision except in academic terms. Our duty as
traders/investors is to understand what his intentions are and to trade accordingly. We need to be pragmatists first,
last as traders. It is what has kept me
alive and trading for the past 20 years. That pragmatism has served me well and
pragmatically we shall not fade the Fed. Others may; but that way leads to ruin. I still think a good position is to be short Eur/Aud We get paid for the trade and the Euro is in lousy shape as well.

Forex Talk In The Street ~Dollar Yen

I find it interesting, to note that the Yen has made its way “up” and through 84
Yen/dollar and that in the process it has broken a very, very well defined downward trend for the
dollar, a trend that was obviously in the Yen’s favor. Now that trend has been broken and not only that,
but we think the trend is reversing against the Yen and for the dollar.

Certainly Japan’s exporters would prefer this situation to the other, and so too does and shall the Bank of
Japan. The Bank was rumored to have considered intervening in the dollar’s favor, against the Yen, when the Yen/dollar rate was putting 80 to test, although it never actually
did intervene. Jawboning was sufficient to keep the Yen from strengthening further. Now, however, with the Yen weakening it would make far greater sense for the monetary authorities in Tokyo to come to the Yen’s “aid” and sell it now, for trading when the trend is in one’s favor is far easier and far wiser than it is to intervene contrary to the trend.
I would expect a pull back to 83.35, then a resumption of the trend for the Yen to Weaken. I have a target of 86.50 in the short term.

Forex Talk In The Street~Belgium Under Attack!

The problems between the French and Dutch speaking parts of Belgium reflect perfectly the differences that rend Europe itself apart, and now traders are paying heed. Note then that the price of insuring Belgian debt is higher and is rising. At the start of this year, it cost “only” $50
thousand too buy default insurance on $10 million of Belgian sovereign debt.
By May, when the Greek problem was at centre stage that rose to $150 thousand, but as the problems receded, so to did the “insurance” cost, falling back to just under $100 thousand in late June-early July. But since then that cost has been rising and in recent days it has gone on to new highs, taking out the $150 thousand high earlier this year. It is going higher still. Belgium’s problems are the same as those of the PIIGs in that Belgium debt as a percentage of GDP is now at and surpassing 100%. Worse, there is no real government at home in Brussels as problems between the two “states” of Belgium have devolved to the point where no viable, majority government has been pieced together. Further, were it not sad it would be comical in that the same North/South dichotomy that separates German philosophies and fiscal circumstances from Spanish, and French from Italian, or northern Italian from its southern component, separates the more fiscally sound northern part of Belgium from the poorer South  is the
Flemish or Dutch speaking area of Belgium, otherwise known as Flanders.The  southern part of Belgium  is the French speaking area, known historically as Wallonia. There is a very small German speaking area in Belgium’s eastern border with Germany, and Brussels itself “speaks”
both Flemish and French.

With this all being said and a slight geography and culture  lesson for our American Traders (just kidding.) Many  Eur Bulls will argue that the US states have the same problems. California is bankrupt,Michigan, or Ohio et al . However, the US  is well United with one (some will argue two) languages and always had one currency.

The difference is that when you look at the credit default swaps  the market sees vulnerability in the EUR at the moment and the market’s duty
is always and everywhere to exploit vulnerability. The market’s job is to find weak spots and attack and exploit  them, again and again and again until the weak spot implodes or until it defends itself and thwarts further assault.Aldo said to me today and I love this “Tomaso Please understand;  The market is a very harsh mistress. It always has been. It always shall be.”

Forex Talk In The Street ~North Korea At It Again!!

North Korea fired off more artillery shells in an apparent training exercise while it moved missiles into position near the sea border.

Last night defense authorities ordered journalists to leave Yeonpyeong in case of a fresh attack, while South Korean forces accidentally discharged an artillery shell that fell on their own side of the demilitarized zone.

With all this expect More pressure on the Euro and GBP. The dol yen Should open Higher to day i would expect around 84.60, The technial level it needs to Break is 85.35 then it will blast off to 88.00.

Forex~Talk In The Street~Euro Dollar Melt Down!

With guns blazing back and forth between the two Korea’s, the market quickly rushed to the USD and gold for a safe haven buy.

We Are coming close to a major technical support level in the Euro, the trend line is from the weekly charts and if breached opens the doorway to 1.3000.

The Trend line breakout price is 1.3316, now since this is a weekly line it will take a few times to get through this. However if there is a full blow war between the two peninsulas expect this to go quickly. We would then look to the lower TRNS as to gauge price action. If the situation calms down then we will look for a retrace of the Euro Back up and look to sell above 1.3600 again. Lets hope that the situation clams down and no useless loss of life occurs. Lets hope that cooler heads prevail. If and when the situation cools look to buy back gbp/yen and Euro/yen I will update those as I see them and place trades. I am confidante Vlad will as well.

Good Trading!

Forex~Talk In The Street~Ireland Again

One of today’s main topics of discussion in the markets was not just the wide net thrown by the FBI over insider-trading hedge and mutual funds, but also Ireland and its bailout. What was news at the time was that a portion of the Irish government, the Green Party, had threatened to withdraw from a coalition formed within the government thus severely weakening it.
Since then the Irish situation has escalated. From the New York Times .

DUBLIN — Prime Minister Brian Cowen said late Monday that he would step down once a series of fiscal packages and budgets were in place next month, acceding to the demands of the opposition and its coalition partner, and injecting the threat of political instability into a financial crisis that already has markets on edge.
Earlier in the day, the minority Green Party declared that the public had lost faith in the government after its acceptance of a $100 billion rescue package over the weekend and that it would pull out of the government. It called for elections early next year, when a second round of austerity measures, forced on Ireland as a condition of the bailout, will be put before voters who have already suffered through three years of recession.
“The mood in the country is for an election and the people want a new mandate — that much is clear,” said Joan Burton, deputy leader for the Labour Party.
In agreeing to step down, Mr. Cowen became the first political casualty of the sovereign debt crisis in the 16-member euro zone. While Prime Minister George Papandreou in Greece has seen his popularity wane as the cuts mandated by the International Monetary Fund have begun to bite, he came out on top at a recent by-election and seems, for the moment, to have the backing of the country.
Speaking of Greece, it seems to already be out of money. If you remember, many in the EU recently claimed it would withhold bailout bucks for Greece and others.
From Bloomberg News we read in part – Parts of Greece’s government may be forced to “shut down” as early as next week if the country isn’t able to cover a revenue shortfall after its European Union partners delayed its next tranche of aid money, High Frequency Economics Ltd. said.
“Unless the government gets funds soon after Nov. 30, it will run out of cash,” Weinberg said. “If so, the government will have to shut down, at least in part.”
Although the European banking crisis is getting worse, the bankers and their investors sure don’t have to worry about it; the EU and IMF are getting them off the hook and making taxpayers pick up the bill. Something tells me that, like in Greece, this isn’t going to go over so well with the average person in Ireland.
Portugal’s and Spain’s banking systems are getting worse as the rating agencies threaten to slash its credit ratings. If these counties buckle, Italy will surely be next.

Forex Talk In The Street~Euro Under Pressure Again ~

The fact that the EUR made its low last Tuesday at or near 1.3540 and that it has rallied all the way to 1.3750 is
impressive, taking the EUR from having been rather egregiously over-sold to the point where it is not modestly overbought. I have  noted again the 50-62% retracement region… the area I call “The Box” … of the bearish move against the EUR that took the EUR from 1.4250 to 1.3450. The market had some way yet to rally just to get to “The Box.”  However it quickly turned Down at a Fibonacci level at 1.3785 and is now trading back at 1.3575. There are Rumors on in the Market place that good old Portugal is in the mix for a hand out…

Forex Talk In The Street~The Forex Market Is The Kingdom Of Madness

The violence of the moves these days and the unanimity of the moves is unlike anything I can recall seeing in my 20+ years of watching, participating in. I mean that quite honestly. I cannot recall a period of time when all correlations
in the forex market have gone so perfectly to “one” and when they have done so with the vehemence we are witnessing presently. Make of that statement what you will and do with it as you must, but to see the dollar/EUR rate move “greenly”… i.e., more than 1% in the dollar’s favour… one day and then to see it move “red-ly” … more than 1% against the dollar… the next seems quite nearly unprecedented.(This is all do to QE by the Fed and troubles in Europe) However, to see the dollar do that vs. the EUR and then to see it do the same, and even more radically, relative to the Aussie and Kiwi dollars has to be unprecedented, but even if I am  wrong as to the certainty of this statement, I am right in stating that the violence of the moves is more than simply highly unusual. It is astonishing. The traders all all just confused. Technical Levels are broken only to reverse back…I hate to say it but it will just get  worse.

Oh course this creates great opportunities, for large gains. Here at the Forex Signals Vlad and I will do our best to exploit these moves in our favor!

Talk In The Street What the Fat Cats Are looking at today, the flavor of the days is:
All eyes of course are turned to Ireland and Europe, with everyone wondering if and when Ireland shall agree to accepting aid from the ECB and/or the IMF  . Ireland’s leaders have been wholly reluctant to take any aid and indeed have been reluctant even to acknowledge a problem that shall demand anything other than Irish action. The Market understands their reluctance, for in accepting aid Dublin will have to accept oversight. That’s how things work in the capital markets. Ireland’s leaders know that
and they know it well, and rather than accept the easy way out and take IMF funding to meeting the problems of the Irish banks, those leaders are doing what they can to buy time and hope for the better.
Today’s EUR strength, however, tells us that Ireland will succumb, however as an IMF and EU delegation is either already on the way or has already reached Dublin. Ireland’s leaders are fearful that the next words they hear from these extra-national funding sources is, ”Bend over; this won’t hurt a bit,” except Dublin knows it will hurt a lot and it will hurt for a very long time. For with the money comes a loss of sovereignty, and that hurts the Irish, for they know that the expansion they have seen was do to low Corporate Tax  rates, and low personal income  taxes. The EMU is already saying that they need to get in line with Europe’s tax structure.  Hence rates in taxes need to go up on both levels, this will create economic turmoil.

Good Trading!

Forex Talk In The Street~

The situation in Greece became worse with the announcement that Greece hid €5.3 billion ($7.2 billion) of debt from officials and from the market by
using off-market swaps and other derivatives.
Apparently the trades were executed through Goldman Sachs, and had been rumored about previously but EURSTAT exposed them yesterday. Apparently
Greece had been executing these “off market” swaps and derivatives from early in ’01 and had been utilizing them at least until sometime in ’07. The problem is that we fear our “Cockroach Rule” shall come into play, for if we’ve learned anything we’ve learned that when there is a problem such as this exposed to the light of day, there are more
problems following hard behind. This time may be different, but
somehow we doubt it.

Talk In The Street~November 15th

The dollar on the  FOREX MARKET as the new trading week begins is mixed, for it has risen proportional to some of its major and
its minor currency trading partners while it has fallen comparative to others. Try as we might, notwithstanding, we see
little in the way of consistency in how the dollar has reacted since the end of the G20 meetings, for it has fallen relative to the EUR and Sterling, but it has risen relative to the Swiss franc; in other words it knows not what to do relative to Europe generally. If there is one consistency it is that currencies that are “China related”‚Ķ that is currencies where there is more Chinese trade related interest than in others‚Ķ such as the Yen and the Aussie and Kiwi dollars‚Ķ have weakened the most relative to the US dollar; otherwise
incompatibility reigns.

Concerning the G20 meetings, the consensus is that the Presidency has suffered a series of defeats at the meetings, coming home with little that was on its agenda to accomplish. We’ll not debate too greatly with that judgement, for the US went to the meetings hoping
to come away with rather strict numeric rules regarding trade deficits, budget deficits and the like and hoping too to come home with some consensus amongst the attendees that China’s currency policies were wrong and needed to be accompanied too.
The US may not have wanted to have China named directly in the post-meeting communiqu√©, but it diindeed hope that there might be some talk of “undervaluation”of the YUAN  at the very least. It got nothing of the sort.

To that end then the meetings were a disappointment, and for President Obama, who only a year and one half ago reigned exultant, having been adorned with a newly granted Nobel Peace Prize, they were a embarrassment. Reality is a harsh mistress. From my perspective, however, these meetings are always overhyped and the best that one can accomplish is to know that the lines of communication are always made more open amongst the attending nations, and that’s all we got was lip service!
Euro $ projected Range 1.3500-1.3820

GBP$  1.6190 1.5850.