(RTTNews) - The US dollar reached 1.3812 against the euro around 8:40 am ET Tuesday, the lowest level since March 17. On the downside, the greenback may test support around the 1.3830 level.
by RTT Staff Writer
For comments and feedback: contact editorial@rttnews.com
NEW YORK (AP) - Stocks rose Tuesday following news that activity expanded in the U.S. services sector last month.
World markets also rose after the central bank of Japan suprised investors by slashing interest rates to near zero.
The Institute for Supply Management reported that the U.S. services industry grew slightly faster in September as demand from customers improved. It was the ninth straight month of expansion in services, which have been growing at a slower pace in the U.S. relative to the much smaller manufacturing sector.
In corporate news, Mexican broadcaster Grupo Televisa said it would invest $1.2 billion in Univision Communications, expanding a license deal between the Spanish-language media heavyweights. Televisa's U.S. shares rose 9.4 percent.
The Dow Jones industrial average rose 168.93 points, or 1.6 percent, to 10,920.20 in early afternoon trading. Caterpillar Inc. and chemical maker DuPont posted the biggest gains in the Dow, and all but two of the average's 30 components were up.
The Standard & Poor's 500 index rose 20.54, or 1.8 percent, to 1,157.57. The index hadn't traded above 1,150 since mid-May, not long after stocks reached their highest levels of the year in late April.
Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, cites another factor in today's upward swing: Even when stocks have fallen lately, the S&P 500 has managed to stay above 1,130, a key technical barrier that it had broken through on Sept. 20. He said that has given jittery investors confidence to buy.
"A lot folks who have cash on the sidelines are being drawn into the market because they don't want to be left behind," Pavlik says. "I think there's potential to get to 1,200 by the end of the year."
The Nasdaq composite index rose 47.69, or 2 percent, to 2,392.21.
In a surprise move, Japan's central bank cut its key interest rate to virtually zero and is looking to buy government bonds in an effort to boost the faltering Japanese economy. Japan has been struggling with a strong currency and falling prices, and authorities there intervened in currency markets last month to weaken the yen, but the impact was short-lived.
U.S. traders have their eyes set on some key economic and corporate reports this week, including earnings reports Thursday from PepsiCo Inc. and Alcoa Inc. On Friday, the Labor Department delivers its monthly jobs survey, the most important report on the economic calendar.
Investors are also hoping for more action from the Federal Reserve to boost the U.S. economy, and got more encouragement from remarks by Fed Chairman Ben Bernanke late Monday. Bernanke said the economy could be helped by another round of asset purchases by the central bank, and hopes are building that the Fed could announce new measures at its next meeting Nov. 2-3.
Stocks were also trading higher in Europe. Britain's FTSE 100 rose 1.6 percent, Germany's DAX index rose 1.5 percent, and France's CAC-40 rose 2.4 percent. Hong Kong's Hang Seng index rose 0.1 percent.
About five stocks rose for every one that fell on the New York Stock Exchange, where volume came to 490 million shares.
Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $8,105 a tonne at 0949 GMT from a close of $8,064 on Monday.
"Further dollar weakness is certainly driving things and that is really a response to strengthening euro," Daniel Brebner, analyst at Deutsche Bank, said. "The market is reacting to further monetary accommodation out of Japan.
"We've seen very strong pricing in the precious metals and there's a bit of a sympathetic move on the base metals complex because they do react to macroeconomic policy."
The Bank of Japan on Tuesday pledged to pump more funds into the struggling economy and keep interest rates virtually at zero, surprising markets and stealing a march on the Federal Reserve in providing a fresh dose of economic stimulus.
The dollar index hit an 8 1/2-month low against a currency basket as demand for the euro put the US currency under broad selling pressure.
Metals tend to benefit as the dollar falls, because a weaker dollar makes them cheaper for holders of other currencies.
Gold rallied to an all-time high, lifting silver to its highest in 30 years as worries about the eurozone economy highlighted bullion's perceived safe-haven appeal.
Markets in China, the world's top consumer of base metals, are closed until Friday for National Day holidays.
Looking ahead Tuesday's macro calendar, the Redbook weekly US retail sales index and the ISM non-manufacturing index are due later.
Investors will also look out for a key jobs report later this week for further clues on the pace of recovery in the world's largest economy.
If the economic data remains lacklustre, it will likely reinforce bets that the US Federal Reserve will embark on more quantitative easing, which should erode dollar values further and bolster the appeal of metals as a hedge against inflation.
Copper, used in power and construction, is expected to retrace to $7,980, as a small double-top formed around $8,178 per tonne.
"This week should be fairly quiet with China out. Prices are running hard, and to me look a little frothy. Once the excitement about LME Week fades I think we'll see selling," said Ben Westmore, commodities economist at National Australia Bank.
"Copper at $8,000 is just too high to justify from a fundamental perspective. These levels will be hit on more sustainable basis mid to late next year."
Each year the metals industry assembles in London around the second week in October for a series of conferences, meetings and receptions that surround the event.
Market balances in copper have been tightening for many months now, with stocks in LME warehouses tumbling more than 30 per cent since the middle of February. Tuesday's data showed LME stocks down 350 tonnes to 374,100 tonnes.
Among other metals, aluminium traded at $2,355.25 a tonne, down from Monday's close of $2,363.
Earlier, trade was disrupted by an input error resulting in the cancellation of more than 200 lots of aluminium. Prices of aluminium fell by more than 3 percent for a few seconds before recovering after what traders described as a "big figure typo."
Battery material lead traded at $2,283.50 from $2,277, while stainless steel ingredient nickel traded at $24,100 versus $24,140.
Tin traded at $25,450 versus $25,200 and zinc at $2,237 versus $2,230 at the close on Monday.
Now that there are hundreds of Forex margin brokers, millions of free Forex trading tips webistes and literally hundreds of thousands of Forex day trading strategy "home based business" Forex traders, we can say that virtually anyone with an internet connection can trade Forex with the pros.
In any power trading strategy, a proven trading method will mean that through Forex strategy testing and by using trading risk management, no more than one or two per cent of a total account value is put at risk in a single trade. This is key in the path to big Forex profits. Any trader beginning out will look at the trading methodologies available to them and decide to create trading rules for their Forex trading strategy.
Forex trading (currency trading) initiates should be aware therefore not only of technical and fundamental analysis and predicting Forex prices, but also of how to be a trading strategy tester and to have strong Forex trading rules that help them to make the big Forex profits they are seeking. The alternative is to have more experienced Forex trading systems used by more experienced traders end up causing you to lose all your money in your Forex business - the harshest possible outcome.
Having the following in place could assist you in getting started right away in Forex trading (currency trading): a Forex trading software platform; a free Forex trading strategy (or a paid for one for that matter); an understanding of fundamental and technical analysis and a trading risk management system. From these elements (and also the support of a daily Forex strategy briefing from a margin broker or some other site) you can start Forex trading in the fx market with your own Forex trading strategy rules.
Learning currency trading online needs to begin with sound trading risk management and how to manage your trading account balance by making intelligent risk decisions with your trading account. The risks can be higher with Forex because the moves in a week can be equivalent to a month in stock moves. Volatility is to be expected.
Currency trading strategy rules for a Forex business can be developed by amalgamating Forex trading systems of others or simply garnering a Forex education to include: fundamental and technical analysis; trading money management (risk management); a daily Forex strategy briefing from a "third party" and a way of creating Forex forecase signals (in other words a means of predicting future Forex prices from perhaps a technical setup on a currency pair or simply from Forex strategy testing that has been carried out.
Forex strategy testing can either be done through using a practice account through your broker or by paper trading your strategy. A third option is to use software such as Forex strategy tester which can run a simulation of what could happen if you trade by your rules with some limitations on accuracy.
Free Forex trading strategy tips are available from Forex ebooks webistes all over the web. The truth is that the Forex trading fx market needs to be treated as a business that runs like a Forex trading machine as much as possible. This is key if you are to make big Forex profits in live trading. Lack of regulation means that anyone can sell a "scalping trading strategy" or so-called "foolproof trading method" and make themselves out to be an expert or even say they are a long term bank trader when they are not. There is a need for caution therefore when deciding on where to get your Forex education because not any Forex trading guide is actually going to help in your predicting Forex prices in the near, medium or long terms.
It behooves you to go out and look at what is on offer from Forex trading websites and learn more about the global currency markets after you have read this article. Some sites are listed in the resource box at the end to start you off. Trading Forex online then presents challenges. The rest of this article will address those challenges. In order to trade effectively, a Forex trading guide is needed for the initiate in to the Forex markets to be able to learn online currency trading, understand trading risk management and how to manage money, discover technical and fundamental analysis, how these types of analysis of the market differ and how to apply them in creating a Forex trading machine.
This means that after all the cogs are set in place you will have a Forex trading machine that enables you to its like a professional and make decisions based in the moment and on the facts that are presented to you, rather than guess or gambling work - although there is invariably an element of risk, your job is to eliminate the risk as much as possible in applying your trading strategy.
To make this happen, you will start to think about what you may need in order to implement your trading strategy. For example, will you be needing a daily Forex strategy briefing from either a paid service or a free provider of its strategy briefings - such as perhaps your broker or a third party service. In your technical analysis will you be utilising traditional indicators such as those involved in a bands trading strategy (Bollinger Bands), will you rely on charts created by a its platform or other currency price forecast type service or will you be professional analyst charts to make your decisions?
A proven trading method is hard to come by. There are educators who have been trading Forex for banks and other institutions for many years. However they are still going to find it incredibly difficult to pass on their years of knowledge, at least not in the time most people want to go from knowing nothing about Forex trading (currency trading) to being an expert and making money with its as a business.
In sum, it is multidimensional. There are several aspects of absolute importance. These include strategy, both in terms of trading and money management, education - both initial and ongoing and focusing in on mastering a specific area whether that be a particular currency pair or aspect within the field - such as global economics of a particular country.
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The Euro pared the previous day's decline to reach a high of 1.3792 on Tuesday, and the single-currency may continue to push higher going into the North American trade as the U.S. dollar weakens against most of its major counterparts.
Talking Points
Japanese Yen: Weighed By Risk Appetite Pound: Service-Based Activity Expands at Faster Pace Euro: Retail Spending Falters U.S. Dollar: ISM Non-Manufacturing on Tap
The Euro pared the previous day's decline to reach a high of 1.3792 on Tuesday, and the single-currency may continue to push higher going into the North American trade as the U.S. dollar weakens against most of its major counterparts. As the EUR/USD continues to hold above 1.3500, the 50.0% Fibonacci retracement fromthe 2009 high to the 2010 low, the euro-dollar may make another run at 1.3890-1.3900, the 61.8% Fib, over the next 24 hours of trade as investors raise their appetite for risk. With market sentiment continuing to dictate price action in the foreign exchange market, the single-currency looks poised to push higher throughout the day as equity futures foreshadow a higher open for the U.S. market.
However, as market participants wait for the European Central Bank interest rate decision scheduled for Thursday, we may see soft resistance around 1.3800, and the exchange rate may hold a narrow range in the days ahead as investors weigh the prospects for monetary policy. Meanwhile, the economic docket showed service-based activity in the Euro-Zone expanded at a slower pace in September, with the PMI reading coming in at 54.1 from an initial forecast of 53.6, while the composite index crossed the wires at 54.1 amid earlier projections for a 53.8 print. Moreover, retail spending in the region unexpectedly slipped 0.4% in August to mark the first decline in four-months, and the central bank is likely to maintain a cautious outlook for the economy as the recover tempers off. If we see the ECB turn increasingly dovish, comments from President Jean-Claude Trichet is likely to weigh on the exchange rate as interest rate expectations falter, and the central bank head may tone down his outlook for the recovery given the ongoing weakness within the private sector.
The British Pound tipped higher for the third-day, with the exchange rate rallying to a high of 1.5913, but we expect the GBP/USD to hold steady ahead of the Bank of England interest rate decision due out later this week. As price action remains confined within the narrow range carried over from the previous week, the pound-dollar should continue to trade above 1.5700, the 38.2% Fibonacci retracement from the 2009 low to high around, in the days ahead unless we see a dramatic shift in risk sentiment. Nevertheless, service-based activity in the U.K. unexpectedly expanded at a faster pace in September, with the PMI increasing to 52.8 from 51.3 in the previous month, and the recent developments could lead the BoE to focus on the risks for inflation as the economic recovery slowly gathers pace. However, if the central bank refrains from releasing a policy statement, the GBP/USD is likely to face muted price action, which should leave the exchange rate range bound until the MPC releases its meeting minutes on October 20.
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Copper rises on weak dollar, tin at contract high 
* Euro jumps against dollar
October 5, 2010
Tin rose to a contract high at $25?800 a tonne on persistent supply worries from top exporter Indonesia.
Benchmark copper for three-months delivery on the London Metal Exchange traded at $8?142 a tonne at 13:15 SA time from a close of $8?064 on Monday.
"Further dollar weakness is certainly driving things and that is really a response to strengthening euro," Daniel Brebner, analyst at Deutsche Bank, said. "The market is reacting to further monetary accommodation out of Japan.
"We've seen very strong pricing in the precious metals and there's a bit of a sympathetic move on the base metals complex because they do react to macroeconomic policy."
The Bank of Japan pledged to pump more funds into the struggling economy and keep interest rates virtually at zero, surprising markets and stealing a march on the Federal Reserve in providing a fresh dose of economic stimulus.
The euro jumped against the dollar on reported Asian buying, pushing the greenback to an 8-1/2 month trade-weighted low.
Metals tend to benefit as the dollar falls, because a weaker dollar makes them cheaper for holders of other currencies.
Gold rallied to an all-time high, lifting silver to its highest in 30 years as worries about the eurozone economy highlighted bullion's perceived safe-haven appeal.
Looking ahead Tuesday's macro calendar, the Redbook weekly US retail sales index and the ISM non-manufacturing index are due later. Investors will also look out for a key jobs report later this week for further clues on the pace of recovery in the world's largest economy.
If the economic data remains lacklustre, it will likely reinforce bets that the US Federal Reserve will embark on more quantitative easing, which should erode dollar values further and bolster the appeal of metals as a hedge against inflation.
TIN SUPPLY WORRIES
Market balances in copper have been tightening for many months, with stocks in LME warehouses tumbling more than 30 percent since the middle of February. Tuesday's data showed LME stocks down 350 tonnes to 374?100 tonnes.
Tin traded at $25?700 a tonne versus $25?200 at the close on Monday. Indonesia's refined tin output may fall nearly 6 percent this year as heavy rains hit mining and more easily mined onshore reserves are being depleted, an analyst at the International Tin Research Institute said.
The combination of supply constraints in Indonesia and falling global stocks, together with resurgent demand from the electronics sector are likely to support tin prices this year and next, after gains of nearly 40 percent so far in 2010.
"The supply side is clearly an issue," said Societe Generale analyst David Wilson. "Indonesian exports have disappointed so far this year, due to a combination of the government's crack down on illegal mining, plus the impact of severe weather conditions limiting supplies."
"Demand has been strong from the solder sector -- demand in Asia for white goods has grown. Stocks (also) look tight."
Traders also cited last week's shutdown of a plant by China's second largest refined tin producer.
LME tin was indicated at an $11.50 premium or backwardation for the December contract against the benchmark three months. November against December was offered at a $4 premium, up from $2 on Monday.
Among other metals, aluminium traded at $2?361 a tonne, down from Monday's close of $2?363.
Battery material lead traded at $2?300 from $2?277, while stainless steel ingredient nickel traded at $24?365 versus $24?140. Zinc traded at $2?268 versus $2?230 at the close on Monday. - Reuters
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B. Williams quotes 5 bullets killing a trend, whereas I exemplify their insufficiency and I add up 11 more thereto, not denying the above 5 of them.
B. Williams idealizes the Elliott wave theory, whereas I show that the combination of fives and threes is none the idealizable, otherwise a mankind 100-year development project could have long been elaborated on the basis of Elliott waves pattern, leading to exasperation at the fact that humanity progress does not follow Elliott and Williams. The other thing is that nowadays brokers have mastered the job of manufacturing more waves out of the 5 initially.
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It all could be funny unless it were sad. But IT IS sad, because the above examples are scaring in number. Bearing it in mind, do, go again through excerpts from distinguished scholars books:
- Awesome Oscillator (AO) serves us keys from the Wonderland;
- Accelerator Oscillator (AC) gives us with significant superiority over other traders;
- using AO is similar to reading tomorrow's "Wall Street Journal", while using AC is reading of the day-after-tomorrow's issue thereof;
- by using AO solely, one may attain profits even without any knowledge of current rate; should the oscillator turn down, one may merely ring one's broker and say: "Sell at the market price!".
As You have guessed, these are extracts from B. Williams's "New aspects of Exchange Trade". Have You read the thing? And now, please, give a glance to the a foregoing figure, depicting the way, the vaunted Williams's indicators may entail an abyss of losses.
But what truly makes my blood boil is as follows. B. Williams is a professional psycho therapist and his narrative style is none of an incidental one. This is a suggestive method by virtue whereof he attempts to demonstrate the exclusive, correct and faultless nature of his trading technique. The "faultlessness" is to be discussed in an individual chapter, and my only claim here is that I can easily draw hundreds of examples, where one can bump into loss by way of following Williams's indicators.
By myself, I am an advocate of theory of chaos. But this theory is disclosed by Williams in a very primitive and a superficial manner, which fact results in his blind follower losses. As to the author, he resorts to propaganda methods instead of providing a clearcut distinction between the cases, where the above theory is 100% effective and those, where it is not.
Williams could have explained to his admirers directly, that in these certain instances the theory is to be relied upon, while in these instances it is not to. The difference is in this, this and this. In the former instances one should necessarily enter, whereas in the latter instances one should abstain from entry. But the guy haven't done the job (due to either not being desirous or to not having sufficient knowledge).
I was a success in finding out distinct operability criteria of the Williams's technique. To achieve this, I had to improve the Alligator, by virtue whereof I enabled my students to easily pinpoint the difference between the Williams No.1 option (a trend, encouraging profits) and No.2 option (a flat, inflictive of losses).
By the by, it is supportive of the chaos theory methodological correctness and of imperfect Williams's method structure, plotted on the basis thereof. Instead of acting upon the trader's consciousness Williams resorts to forbidden subconscious programming procedures, thus stimulating man's inherent and acquired instincts as if saying: "If You wanna get rich, follow me! My method empowers one to trade without a single glance at a price! The Awesome Oscillator constitutes a key from a Kingdom!" Etc., etc., etc...
Hence, only 1 of 20 Williams's followers exhibits Forex-earning capabilities in a most favorable environment. Thus, under this statistics, B. Williams is better not to be idolized, the way he has been by the crowd of his admirers. On the other hand, other Forex maestros' trading techniques are far worse than that of B. Williams. So, let's continue illustrating Forex truisms being erroneous in live trading.
- The "Theory of Chaos" of B. Williams. The author has not advised what should be added up thereto. A separate chapter here is dedicated to the issue.
- Trader's psychological problems. I haven't found any revelations pertaining to THE WAYS OF ELIMINATING THESE PROBLEMS.
- The issue of a stop-loss order is certainly important: even under trend hedging is an indispensable protective shield against market surprise. But is the problem too far complicated to require a dozen pages' elucidation? Has the author beheld any secret? Wah! He hasn't noticed anything but he still has repeated all that wanders from book to book on Forex.
Once I was stunned by a question put forward by one of my students after having read B. Williams's "Trading Chaos": what's the use of giving so much attention to the stop-loss problem and above all what's the good of chewing over the role of safety cushions in the automobile industry as though readers are down with minority?
Doubtlessly, it's funny reading that Williams has never violated traffic regulations, priding himself on the occasion. Any psychiatrist could tell a hell lot about such a personality type, although, I should admit that Williams is American, not Russian.
Drawing picturesque, memorizing examples, each scholar is right to insist on protective barrier placement as a loss killer. But there is hardly anyone to introduce certain novelty into the issue and to disclose the secret as to what there should be in the trader's store besides a stop-loss to insure against his deposit melting and extra losses. A separate chapter here is targeted at the issue.
I have shortly come across an aphorism: "Genius is not to the effect, that nothing can be added thereto, but it is to the effect that nothing can be deleted there from".
If You go through numerous books on Forex at this aspect angle, You are sure to surprisingly find out that 90-100% of their contents may be subject to withdrawal. WHY?
BECAUSE nothing new and 100% correct is offered therein. Instead, reiteration is going on of what is familiar to any professional, since everyone is itching to exhibit one's originality by way of retelling: a paramount authority of FA over Forex exchange rates; continuation and reversal patterns; a stop-loss importance; a divergence being a component of a trend reversal, etc., i.e. book-to-book travelers.
"An outstanding Forex trading techniques" and "a genius scholar", etc., making their appearance in books' abstracts and annotations are off springs of 1% originality added up by an author to 99% of common knowledge.
Sale is publisher's primary target, giving birth to "genius" mediocrities and plagiarism. Standing separately among these books are opuses by B. Williams, being admired and scrutinized regularly by the majority of scholars and by myself. But EVEN HE cannot be qualified as "genius" with account to the above formula. He is rather "eccentric" than "genius".
The thing is not, that his technique is addenda-allowing (this fact backs the correct Williams's choice of the chaos theory to be applied to Forex) and I easily managed to add 11 trend-assassinating bullets to the 5 of Williams. The thing is that a number of Williams's postulates ARE WRONG and thus loss- inflictive. These can be and should be subject to removal.
CONCLUSION: I guess, it's understandable by now, that script-writing has turned to be business for scholars, incorporating additional advertising and additional charges for their students. However, the above is not worth millions Forex losers sacrifice.
Much more respect-triggering is Warren Buffet, having made a minimum of USD40 bn at the stock market without writing any books on his trading tactics. W. Buffet is the world's second-rich man after Bill Gates, although this fact being thoroughly doubtable. B. Gates is supposed to declare the whole of his income obtainable from the Microsoft Corporation, whereas W. Buffet, being a trader, is sure to deem himself entitled to show the Inland Revenue what he really wants to.
The difference is fairly evident. The profit obtained from US companies, constituting the Gates official fortune major portion, may be kept track of, as well as the offshore profits may sometimes be properly checked. But Buffet's profits attractable at all. Do You expect a man, lending his own daughter a sum of USD20 against a receipt, to allow ALL of his profits to be taxable by state? Or a moderate portion of profits is sufficient, yeah? It is entirely his job, whereas we are to learn to gain at least a spoonful of what he has acquired during 40 years of his activity at the stock exchange.
Thus, to cut it short: a classical Forex literature exhibits but an anti-scientific unsystematic nature, constituting a "crise de genre" and triggering losses among 90% of beginners, abandoning Forex market.
In what does science differ from a philistine and amateur effort? In a systematic and objective nature, in a methodology perspective. In there any of the above to be found with scholar literature on Forex? No, but instead there is in abundance:
A. Tautology and absence of new approaches. From book to book world-distinguished scholars feed traders (as if the latter were silly little chaps) with stories about R&S levels importance, technical indicators, continuation and reversal patterns, etc., which is as interesting and instructive for a professional trader as ABC reading is for a professor of philology.
B. Absence of integrity. Individually, it is all clear: Elliot waves, Fibonacci levels, resistance levels, reversal patterns, etc. But what's the way it all is interconnected and integrated? In what way it is influential over each other? What is primary and what is secondary? Imagine a doctor diagnoses and cures patients without a slightest idea of interaction of digestive, cardio-vascular and other systems.
This is what exactly happens to Forex beginners. They are sure to have learnt something, but they are being muddleheaded instead of having a systematic knowledge. Medical students undergo a course of anatomy. Geologists and military men make use of topographic maps. And what do Forex beginners have to this end? You are free to interrogate any scientist if he has knowledge of parts of science without having knowledge of the whole. Guess, what he's gonna answer? And now give consideration to what is being currently published on Forex and being accessible to anyone. Thereafter You will easily "evaluate" the "outstanding contribution" made by each of Forex scholars.
4. Methodology and techniques subjectivism and absence of objectivity. See live scholar, Th. Demark's "Technical Analysis As An Emerging Science" recommending to manually draw R&S lines from the right to the left instead of so previously doing from the left to the right. The book's preface qualifies it to be "refined techniques built during a quarter of a century of a laborious scrutiny of market tendencies and projecting methods". And thereinafter: "Demark's empiric-data strictly scientific approaches are in striking difference from an artistic intuitive one thus constituting a rational basis for dynamic systems, mechanically outputting market signals." But, with having not disclosed his system's essence, is Demark aware that his subjective Forex trading suggestions may happen to entail severe mistakes. Yeah, he substantiates his viewpoint in chapter "Why price projections may not go into effect": "...due to no technique being perfect". Good a science with "no technique being perfect"!
Demark is looking rather a philosopher, than a trader with his tirade being nothing but a sophism, made use of as back as in ancient Greece to provide grounds and protection for any kind of absurd.
In accordance to Demark, "a mistake becomes obvious the next day as soon, as the first deal price is registered". I am itching to ask the scholar: "How many points may a currency travel in a wrong direction during an earth day?" I am answering myself: 100 pts or 200 pts or more. Demark diagnoses: "This instance evidences a breach, indicative of a new opposite tendency". Well, I've got it.
Once there is loss, one should loss-close and enter oppositely.
Take a look at the picture below:
Fig.10. EURUSD H1 chart as of March, 22 - April, 18, 2005 manifesting a month-long flat. (See Note below)
How many days should one per-Demark loss-close with the rate repeatedly swiveling as though to Demark's ill luck? The scholar has to be asked, how large should a trader's deposit be to survive Demark's experiments, being ranked "refined techniques" and "strictly scientific approaches", "cardinally different from others' ", less scientific ones, as I can guess.
The opus author will again fall soothing upon You: "One oughtn't to expect herein outlined technical methods and indicators to offer profits and not to entail losses. Forex trading involves both: a profit opportunity and a loss risk. Preceding results are in no way guarantor of perspective success". Further on, with greater cynicism and hypocrisy: "Should You be seeking a trading panacea, put this book aside: it's in no way helpful to You". Well, what's the use of buying the book at such price?
Demark, by the way, gives the interpretation of his book's objective to be "fuelling readers with methodology, encouraging one to systematize various TA techniques". Great! I thought, it were a new discovery of Forex regularities to be delivered to traders. But it looks, like the scholar has plunged himself into systematizing earlier 50%-correct discoveries without taking any pertinent responsibility.
Hence, no avail to purchase the book and to litter one's brain therewith, since Forex rates enjoy 50/50 up-down travel chance, even under the probability theory.
Thus, not too much understandable, where Demark's scientific approach manifestation is to be searched, whereas the essence of things is incomprehensible once the reversal results come evident after an earth day only with no reference to his book.
John G. Murphy, another Forex scholar, outlines in the preface, that the "less art - more science" slogan is specially topical now that greater entities begin taking interest in this area.
As to myself, I have truly appreciated the preface writer Murphy joke as being filled with subtleness and tristesse.
Now, pertaining to science-to-practice correlation and theoretical conclusions implementation... How many scholars of those hundreds referred hereto resort to live examples while teaching long and short entries and close ups thereof? Very few of them:
- B. Williams "Trading Chaos", "New aspects of Exchange Trading";
- J. Murphy "TA of Futures Markets"
- S. Nisson "Japanese candlesticks. Financial markets graphic analysis"
- A. Elder "Basics of Exchange Trading"
- L. Williams. "Long-Term Secrets of Short Term Trade"
- Ch. Lebo, D. Lukas "Computer Analysis of Futures Markets"
- D. Swagger "TA, Comprehensive Course"
... and hardly few more.
Disappointing enough, but it is fairly lucid why 90% of beginners mutate into failures and abandon Forex.
By way of getting familiar with the SYSTEM, one will suddenly realize how smooth are Forex artifacts to get apparent one from another, e.g.: M5 Elliott waves constituting M15 wave I, this wave being but H1 and H4 corrective within certain Fibonacci levels.
One gets clear vision of what all the Forex-traded currencies are doing now and what they are going to in half a day. Williams did have grounds to claim, he needs several tens of minutes to analyze tens of charts. He DID have understood Forex as a system, though he has offered but the system components portrayal in his books. Depending on where utilized, the Alligator may appear to be responsible either for a profit or for a loss. But Williams has not even taken pains to present a differentiation between the Alligator being a profit assistant and the Alligator being a loss bringer.
The above is conditioned by the Williams Alligator being a great TA tool, but pertaining to a certain AREA OF Forex only. Other areas require other TA facilities. I will do my best to teach You to effect proper estimation of long-term and super short-term entries being appropriate for the moment.
I will also dwell on why it is not difficult to add extra 11 trend-killing bullets to the 5 of Williams's; why it is easy to build up a currency travel vector daily projection. The whole thing is minimized to several criteria, being constantly effective irrespective of currency intentions. As a result, You will not have to monthly pay quacking mountebanks' impotent daily forecasts.
But now let's move on with Forex scientific criteria. Stagnation and dogmatism are alternative attributes of Forex folios' anti-scientific substance. Have You ever come across a criticism of any Forex-oriented theory? I mean a weighed objective criticism, assigning credits to the author for elaborating a revolutionary theory, which has by now got obsolete due to a number of objective reasons and thus requires improvement, i.e. replacement.
For instance, I have found nothing of the kind in relation to the 100-year old Dow theory, originally incorporative of benign principles. But life goes on, and there seems no reason to head-hammer life-rectified Dow's postulates:
- a long-term trend (primary, basic as per Dow) being several years long. Curious enough to spot a currency pair to stand open for so a long period;
- a medium-term trend (intermediate tendency) being several months long. As per Dow, the MTT is opposite (corrective) to the basic trend;
- a short-term trend, not exceeding 3 weeks and incarnating minor fluctuations within the intermediate tendency;
- intraday trend being per-Dow midget ripples, not worth paying attention to.
You are now welcome to take a close look at the figures below, as of October, 2004 through March, 2005.
Fig.11. EURUSD D1 chart. (See Note below)
Fig.12. GBPUSD D1 chart. (See Note below)
CONCLUSION: This theory of Dow's might be deemed effective rather till late 80s, than presently.
Nowadays, with 3 pips spread, 50-200 pips pullbacks and trends not exceeding a week, the Dow theory
MUST BE recognized as being despairingly obsolete and trader-hostile, since, under a 3-pip spread, it is, certainly, top of recklessness and stupidity to stand open for months or years. A different trend classification is to be called for, meeting updated Forex environment standards.
I guess there's no need to continue being proponent of the fact that presently Forex theories are obsolete in their majority, with this sort of methodology being requisite for analysts rather than for traders. As opposed, I hold it more appropriate to forward my entry and exit technique to traders willing to conduct successful and loss-safe trading.
By way of prompting: please, attempt to view Forex as a system inclusive of components being familiar to You: Elliott waves, reversal patterns, Fibonacci levels, MAs, ally currencies, etc. All the above staff is integrally intercommunicative rather than existing individually, the way, each organ is in the human body.
I DID have understood it, and I realized the way B. Williams is able to analyze tens of currencies within tens of minutes in order to execute correct long and short entries.
It may look surprising to someone, but a qualified doctor is capable to diagnose Your body hazards after a short examination and talking to You. The doctor has actually examined but several organs, but his knowledge system has empowered him to jump at wider conclusions, as Williams at Forex.
GROSS TOTAL. Steady and regular Forex profits are real opportunity. There is hardly another area which enables one to knock up a fortune without having rich aged relatives abroad, without having to join one's native country's throughout corruptible authorities or else. If You have discovered THAT ANOTHER area, You are free to get engaged therein. Then, Forex is not likely to be requisite.
Note:
Full text of this article and pictures of examples http://www.masterforex-v.su/
If you wish to be trained on Trading System Masterforex-V - one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/
Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year.
President of Masterforex-V Trading Academy.
Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
http://www.masterforex-v.su
http://www.masterforex-v.org
* Euro jumps, pushing dollar index to 8-1/2 month low
* Traders cite Asian euro buying; U.S. QE worries hit dollar
* Dollar trims earlier gains vs yen triggered by BOJ moves
* Aussie slides after RBA surprises by not raising rates
(Updates prices)
By Jessica Mortimer
LONDON, Oct 5 (Reuters) - The euro jumped against the dollar on Tuesday on reported Asian buying, pushing the greenback to an 8-1/2 month trade-weighted low, while the yen trimmed earlier falls against the U.S. currency.
The yen fell after the Bank of Japan cut its key overnight rate target to 0-0.1 percent from 0.1 percent and said it would create a pool of funds to buy assets in the face of evidence yen strength was hurting Japan's economy. [ID:nTOE69305D]
Analysts said the BOJ's moves were not sufficient to halt the downward trend in dollar/yen, however, with the U.S. currency pressured by falling U.S. bond yields and expectations the Federal Reserve will implement fresh quantitative easing.
The yen's falls stalled just ahead of 84.00 yen per dollar, and it turned flat on the day in tandem with gains in euro/dollar, leaving intact expectations more Japanese intervention will be needed to curb yen gains versus the dollar.
"The yen falls after the BOJ decision looked unlikely to last. When rates were so close to zero anyway a further rate cut will make very little difference," said Elsa Lignos, currency strategist at RBC.
At 1108 GMT, the euro was up 0.7 percent at $1.3765, off a session high of $1.3794. Resistance was seen at $1.3809, a 6-1/2-month high, and traders cited options barriers at $1.3825.
Traders reported Asian central bank buying of euros against the dollar, while a U.S. bank was also seen buying, driving it up sharply from below $1.3700.
Asian central banks have been diversifying their currency reserves away from the dollar, particularly towards the euro.
RBC's Lignos said the euro bounced above a trend support line, currently around $1.3650, which runs back to where the recent rally began in mid-September.
"If some people were thinking of changing their bullish euro view, this latest move may have changed their mind."
The euro's sharp gains pushed the dollar index as low as 77.975 <.DXY>, its weakest since late January, while the dollar hit a 2-1/2 year low versus the Swiss franc .
Talk of the United States adopting more QE grew after Chairman Ben Bernanke said on Monday more Fed asset purchases could further ease financial conditions. [ID:nN04133934] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on trade-weighted FX exchange rates
http://r.reuters.com/qun86p
Reuters Insider show on BOJ reaction:
http://link.reuters.com/tuh86p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Analysts said the fact the European Central Bank has not hinted at policy easing measures was seen as positive for the euro, which shrugged off a Moody's warning it may cut Ireland's debt ratings. [ID:nLDE6940AV]
AUSSIE SLIDES
Against the yen, the dollar was flat on the day at 83.30 yen , reversing a climb to a session high of 83.99 yen after the BOJ decision. Options at 83.30 yen and 80.00 yen due to expire later helped anchor the dollar in the European session.
The yen fell against other currencies, however, with the euro up 0.6 percent at 114.75 yen.
"The BOJ's move will cap yen appreciation, but they will need to come in and intervene if dollar/yen is to go beyond 85/86 -- or would need to see a trough in U.S. rates and yields which is the main driver of dollar/yen downside," said Societe Generale currency strategist Kit Juckes.
The dollar hit a 15-year low of 82.87 yen last month, prompting Japanese authorities to intervene to stem yen gains for the first time in more than six years.
The higher-yielding Australian dollar fell 0.8 percent to $0.9600, slipping from a two-year high hit last week after the central bank unexpectedly left rates on hold at 4.50 percent.
The decision surprised the market, which had priced in a 74 percent chance of a hike, although analysts said Australia's hefty yield advantage would support the Aussie.
(Graphic by Scott Barber)
Forex (Foreign Exchange, Forex currency exchange) simply means the buying of one currency and selling another at the same time. In other words, the currency of one country is exchanged for those of another. The currencies of the world are on a floating exchange rate, and are always traded in pairs Euro/Dollar, Dollar/Yen, etc. In excess of 85 percent of all daily transactions involve trading of the major currencies.
Forex trading requires a constant monitoring. You can win the forex market if you can monitor the forex market all the time and should be able to analyze it. Trading forex needs a lot of research. Forex trading needs full time effort. Its not so easy to win the forex market just by being a part time trader.
Whether it is full time trader or a part time trader, forex market needs a lot of technical analysis and fundamental analysis. Doing fundamental analysis is really very easier than doing the technical analysis.
A technical analysis is founded on three suppositions:
1. Movement of the market considers everything;
2. Movement of prices is purposeful;
3. History repeats itself.
Basically technical analysis should be viewed as the study of historical prices at the market in order to forecast or even know with greater probability in what direction the future prices will move. Technical analysis needs various technical indicators, different types of charts, graphical methods and analytical methods.
Technical analysis needs a lot of time, concentration and patience. At the end of technical analysis, you get an idea when to buy the forex and when to sell the forex in order make the profits.
As a part time trader, you cannot keep much time for technical analysis. It's the work of full time traders. But in that case, how could a part time trader win the forex market?
Forex market is growing faster and faster than any other market in the world. Many latest tools have also evolved for the forex market. The solution for the part time traders is to get the forex trading signals.
Trading signals are time-tested indicators of trends in the forex market. Breakouts, support levels and resistance levels, envelope patterns, currency pairs near moving averages, stochastic lines, oscillators, Fibonacci levels - application of these indicators enable forex traders to make a profitable entry into the market. There are about 26 such indicators - reason enough for investors to rely on seasoned forex brokers.
In other words, Forex Trading Signals are selling and buying recommendations given by any third party. Such parties could be brokers, brokerage firms, analysts, traders, forex related software tools, etc. Different parties offer different signals, tips, and trends for trading in forex markets. It is best to collect daily Forex signals from reliable sources. A combination of fundamental and technical analysis forms the foundation of accurate Forex signals.
In the other way, the part time traders should either subscribe for signals with any forex expert organization or they should have some software tool which would do the technical analysis for them and give the signals.
If you subscribe for forex signals with any forex expert organization, the forex signals cost anywhere from $50 to $200 a month. It's up to the individual trader to decide if the cost is worth it. Don't think that signals can take the place of trader education: they are advice, and if you don't have the knowledge to analyze the advice, you should go back to the books before using a signal service.
Now coming to the forex trading software tools, there are some tools which will be available to you provided by your forex broker and also some independent tools (automated forex trading systems) which are independent on any of the brokers. These automated forex trading systems generate the signals for the day that when to buy the forex and when to sell the forex and automatically place orders for your broker without your presence
Coming to the automated forex trading systems that generate the trading signals, they are more handy. Generally the tools that are provided by forex brokers, they will be restricted to only particular currencies, but that would not be the case with the independent automated forex trading systems. These tools will be available in the internet market and that too for a low and affordable price. There is no need for you to pay every month for these tools; it's just a one time purchase. There tools generally doesn't cost more than $100.
The main advantage of these automated forex trading systems is that there is no need for you to depend on any other forex signal providing organizations or on the forex brokers who serves you. There are many chances that your forex brokers systems may also get down due to some other reasons. They can even trade for you even while you sleep!
To catch up with fast growing forex market and to make good profits in forex trading, I prefer the automated forex trading systems. These automated forex trading systems will be of more useful to both part time and full time forex traders.
Click here to get more information on Automated Forex Trading Systems
Venu Modalavalasa is a forex expert advisor since 1998.
The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today's forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.
Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.
Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.
Forex Option Defined - A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option "premium."
The Forex Option Buyer - The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as "assignment" or being "assigned" a spot position.
The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.
On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option's strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option's strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.
Foreign currency options expires worthless if, at the time the foreign currency option expires, the strike price is "out-of-the-money." In simplest terms, a foreign currency option is "out-of-the-money" if the underlying foreign currency spot price is lower than a foreign currency call option's strike price, or the underlying foreign currency spot price is higher than a put option's strike price. Once a foreign currency option has expired worthless, the foreign currency option contract itself expires and neither the buyer nor the seller have any further obligation to the other party.
The Forex Option Seller - The foreign currency option seller may also be called the "writer" or "grantor" of a foreign currency option contract. The seller of a foreign currency option is contractually obligated to take the opposite underlying foreign currency spot position if the buyer exercises his right. In return for the premium paid by the buyer, the seller assumes the risk of taking a possible adverse position at a later point in time in the foreign currency spot market.
Initially, the foreign currency option seller collects the premium paid by the foreign currency option buyer (the buyer's funds will immediately be transferred into the seller's foreign currency trading account). The foreign currency option seller must have the funds in his or her account to cover the initial margin requirement. If the markets move in a favorable direction for the seller, the seller will not have to post any more funds for his foreign currency options other than the initial margin requirement. However, if the markets move in an unfavorable direction for the foreign currency options seller, the seller may have to post additional funds to his or her foreign currency trading account to keep the balance in the foreign currency trading account above the maintenance margin requirement.
Just like the buyer, the foreign currency option seller has the choice to either offset (buy back) the foreign currency option contract in the options market prior to expiration, or the seller can choose to hold the foreign currency option contract until expiration. If the foreign currency options seller holds the contract until expiration, one of two scenarios will occur: (1) the seller will take the opposite underlying foreign currency spot position if the buyer exercises the option or (2) the seller will simply let the foreign currency option expire worthless (keeping the entire premium) if the strike price is out-of-the-money.
Please note that "puts" and "calls" are separate foreign currency options contracts and are NOT the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The foreign currency options buyer pays a premium to the foreign currency options seller in every option transaction.
Forex Call Option - A foreign exchange call option gives the foreign exchange options buyer the right, but not the obligation, to purchase a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."
Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.
The Forex Put Option - A foreign exchange put option gives the foreign exchange options buyer the right, but not the obligation, to sell a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."
Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.
Plain Vanilla Forex Options - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic forex option contracts that are traded through an over-the-counter (OTC) forex options dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or a forex put option contract.
Exotic Forex Options - To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.
Intrinsic & Extrinsic Value - The price of an FX option is calculated into two separate parts, the intrinsic value and the extrinsic (time) value.
The intrinsic value of an FX option is defined as the difference between the strike price and the underlying FX spot contract rate (American Style Options) or the FX forward rate (European Style Options). The intrinsic value represents the actual value of the FX option if exercised. Please note that the intrinsic value must be zero (0) or above - if an FX option has no intrinsic value, then the FX option is simply referred to as having no (or zero) intrinsic value (the intrinsic value is never represented as a negative number). An FX option with no intrinsic value is considered "out-of-the-money," an FX option having intrinsic value is considered "in-the-money," and an FX option with a strike price at, or very close to, the underlying FX spot rate is considered "at-the-money."
The extrinsic value of an FX option is commonly referred to as the "time" value and is defined as the value of an FX option beyond the intrinsic value. A number of factors contribute to the calculation of the extrinsic value including, but not limited to, the volatility of the two spot currencies involved, the time left until expiration, the riskless interest rate of both currencies, the spot price of both currencies and the strike price of the FX option. It is important to note that the extrinsic value of FX options erodes as its expiration nears. An FX option with 60 days left to expiration will be worth more than the same FX option that has only 30 days left to expiration. Because there is more time for the underlying FX spot price to possibly move in a favorable direction, FX options sellers demand (and FX options buyers are willing to pay) a larger premium for the extra amount of time.
Volatility - Volatility is considered the most important factor when pricing forex options and it measures movements in the price of the underlying. High volatility increases the probability that the forex option could expire in-the-money and increases the risk to the forex option seller who, in turn, can demand a larger premium. An increase in volatility causes an increase in the price of both call and put options.
Delta - The delta of a forex option is defined as the change in price of a forex option relative to a change in the underlying forex spot rate. A change in a forex option's delta can be influenced by a change in the underlying forex spot rate, a change in volatility, a change in the riskless interest rate of the underlying spot currencies or simply by the passage of time (nearing of the expiration date).
The delta must always be calculated in a range of zero to one (0-1.0). Generally, the delta of a deep out-of-the-money forex option will be closer to zero, the delta of an at-the-money forex option will be near .5 (the probability of exercise is near 50%) and the delta of deep in-the-money forex options will be closer to 1.0. In simplest terms, the closer a forex option's strike price is relative to the underlying spot forex rate, the higher the delta because it is more sensitive to a change in the underlying rate.
John Nobile - Senior Account Executive
CFOS/FX - Online Forex Spot and Options Brokerage
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Oct. 5 (Bloomberg) -- U.S. stock-index futures and most European stocks rose amid speculation that central banks will keep stoking economic growth as the Bank of Japan cut interest rates and pledged asset purchases. The yen weakened, while gold and tin reached records.
Futures on the Standard & Poor’s 500 Index gained 0.3 percent at 12:10 p.m. in London, while the Stoxx Europe 600 Index advanced 0.1 percent, snapping six days of losses. The yen weakened 0.6 percent against the euro. Australia’s dollar depreciated 0.9 percent against the U.S. currency after the nation’s central bank unexpectedly kept its main interest rate unchanged. Gold climbed to $1,328.25 an ounce, silver reached a 30-year high and tin rose to as high as $25,800 a metric ton.The Bank of Japan’s decision to create a fund to buy bonds and other assets comes as policy makers in the U.S. and the U.K. consider similar steps to support their flagging economies. European services and manufacturing slowed last month and retail sales unexpectedly declined in August, industry and government reports showed, adding to signs the recovery is losing momentum amid budget cuts. Greek stocks rallied as Moody’s Investors Service said it’s “impressed” by steps to overhaul the nation’s public finances.“A new round of quantitative easing is likely,” Paul McCulley, a portfolio investor at Pacific Investment Management Co., wrote on the company’s website. “The bottom line for the U.S. is a growth trajectory so slow you’d nearly call it stalled.”Buy AssetsThe yen fell against 13 of its 16 most active peers, the Nikkei 225 Stock Average climbed 1.5 percent and yields on 10- year Japanese notes matched a seven-year low after the Bank of Japan cut the overnight call rate target to a range of 0 percent to 0.1 percent, the lowest level since 2006, from 0.1 percent. Policy makers will set up a 5 trillion yen fund to buy government bonds and other assets.The Aussie dropped against all 16 of its most-traded peers, weakening 0.9 percent to 79.95 yen. Reserve Bank of Australia Governor Glenn Stevens kept the overnight cash rate target at 4.5 percent, as forecast by six of 25 economists surveyed by Bloomberg News. South Korea’s won weakened 0.5 percent versus the dollar after the government said it will audit banks’ foreign-exchange trading, spurring concern policy makers will step up efforts to curb the currency’s appreciation. Brazil doubled a tax it charges foreigners on investments in fixed- income securities yesterday to limit capital inflows.Euro, SwissThe euro appreciated 0.6 percent to $1.3769 and strengthened 0.4 percent to 86.78 U.K. pence. The Swiss franc climbed to a record against the dollar for the second consecutive day, jumping 0.6 percent to 96.57 centimes.Almost two stocks rose for every one that fell on the Stoxx 600. EFG Eurobank Ergasias led a rally in Greek banks, climbing 3.3 percent. Banco Santander SA, Spain’s biggest lender, gained 1.2 percent. TUI Travel Plc, Europe’s largest tour operator, surged 4.3 percent after saying bookings for this winter have improved. E.ON limited gains, falling 1.8 percent as HSBC Holdings Plc and Banco Santander SA cut their recommendations on Germany’s largest utility.The gain in U.S. futures indicated the S&P 500 may pare yesterday’s 0.8 percent decline. Apple Inc. rose 1 percent in Germany after Jefferies & Company Inc. advised buying the shares. Chevron Corp., the second-largest U.S. oil company, climbed 1 percent after saying it will start buying back its stock at a rate of $500 million to $1 billion a quarter as it continues investing in petroleum projects.Default SwapsThe 10-year U.S. Treasury note yield fell 2 basis points to 2.46 percent, while the yield on similar-maturity Japanese securities reached 0.895 percent, matching a seven-year low set in August.Credit-default swaps insuring European government debt rose. Contracts tied to Portuguese bonds climbed 5 basis points to 412, Ireland was up 7 basis points to 442.5, Italy increased 3 basis points to 198, Greece added 5 basis points to 744.5 and Spain was 2 basis points higher at 229.5 from 227, according to data provider CMA.Silver rose as much as 1.4 percent to $22.2625 an ounce, the highest price since Sept. 24, 1980. Crude oil climbed 0.7 percent to $82.04 a barrel on the New York Mercantile Exchange.Turkey’s ISE National 100 Index advanced 0.7 percent to a record and yields on benchmark two-year lira bonds fell 6 basis points to 7.97 percent, the lowest level since October 2009. Moody’s Investors Service changed the outlook on Turkey’s Ba2 local and foreign-currency government bond ratings to “positive” from “stable,” saying the economy has returned to pre-crisis levels and debt management improved.--With assistance from Michael Shanahan, Paul Armstrong, Daniel Tilles, Claudia Carpenter and Michael Patterson in London. Editors: Justin Carrigan, Paul Sillitoe
To contact the reporter on this story: David Merritt in London on dmerritt1@bloomberg.net
To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net
The euro rallied overnight against the U.S. dollar on the back of positive comments by Moody's Investor Services concerning Greece, while the Eurozone final PMI services for the month of September topped expectations.
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Fundamental Headlines
- Bank of Japan Cuts Key Rate - Wall Street Journal
-EU Urges China to Let Currency Appreciate - Wall Street Journal
- Yen Hit as Tokyo Cuts Rates to Almost Zero - Financial Times
-European Services, Manufacturing Cool as Retail Sales Decline - Bloomberg
- Crude Oil Rises on Port Closures, Speculation of Growth in U.S.- Bloomberg
EURUSD: Retail sales in the 16 member euro area unexpectedly fell in August for the first time since April. Figures dropped 0.4 percent after climbing 0.1 percent in July as food, drinks, and tobacco weakened 0.7 percent, while non food products tapered the decline, rising 0.3 percent. Meanwhile, the annual rate rose 0.6 percent, missing expectations of 1.3 percent. Also on the docket during the overnight trade was the final Eurozone PMI services index which topped economist's forecast. At the same time, Moody's Investor Service said that it is impressed with Greece's efforts to reform its finances. In turn, European shares halted its 6 day decline, and lead the euro to continue its northern journey against the U.S. dollar as the exchange rate maintains its ascending channel. Going forward, I will keep a close eye on the pair, and wait for a break below the range before placing a short position as my bias remains to the downside. Despite the optimism building in the bloc, governments will implement tough austerity measures to battle their high budget debts. This will weigh on growth, and cause the single currency to come back under pressure. To discuss this and other reports, please visit the EUR/USD forum.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical's, Weekly Spotlight, and Forex Trading Weekly Forecast
DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.
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TORONTO - The Toronto stock market headed for a slightly higher open Tuesday as commodity prices advanced in the wake of a move by Japan’s central bank to effectively cut its main interest rate to zero per cent in an effort to weaken the yen.
The bank also said it may set up a five trillion yen (US$60 billion) fund to buy government bonds and other assets and hopes that its moves will help prop up the faltering Japanese economy. Economic performance has been particularly weighed down by the recent appreciation of the yen, which has in turn hurt the export trade.
The Canadian dollar edged up 0.03 of a cent to 97.88 cents US.
U.S. futures signalled a positive open as the Dow Jones industrial futures gained 17 points to 10,724, the Nasdaq futures moved 6.5 points higher to 1,983.5 and the S&P 500 futures were up 2.5 points to 1,137.3.
Oil and metals prices headed higher. The November crude contract on the New York Mercantile Exchange rose 41 cents to US$81.88 a barrel.
The December bullion contract on the Nymex gained $11.40 to US$1,328.20 an ounce while the December copper contract in New York was up four cents to US$3.71 a pound.
The main piece of economic data Tuesday will be the September U.S. non-manufacturing survey from the Institute for Supply Management.
Investors expect the survey to echo last Friday’s broadly positive manufacturing report, with the headline index improving to 52 from August’s 51.5. Anything below 50 would indicate a contraction and stoke fears that the U.S. economy is heading for a double-dip recession.
“Today’s reading is likely to remind us that the U.S. economy has lost growth momentum through recent months but, significantly, it argues against the downside risks highlighted in some quarters being realized,” said Adrian Foster, an economist at Rabobank.
But the main focus of the week will be Friday’s monthly U.S. nonfarm payrolls report for September. Expectations are modest in the extreme with economists expecting the economy created only about 5,000 jobs last month.
The data could have a bearing on whether the Fed takes further action to stimulate the U.S. economy.
Canadian employment data for September will also be released on Friday.
Stocks pulled back on Monday following some disappointing news on the economy. Factory orders fell slightly more than expected in August and contracts for new homes remained far below last year’s pace.
There was also nervousness heading into third quarter earnings reports. Aluminum giant Alcoa Inc. kicks off the quarterly earnings season in the U.S. on Thursday.
In Asia, the biggest gainer was Japan’s benchmark Nikkei 225 stock average, which reversed early losses to close 1.5 per cent higher after the Bank of Japan cut its key interest rate to a range of zero to 0.1 per cent.
Elsewhere in Asia, Hong Kong’s Hang Seng index added 0.1 per cent, South Korea’s Kospi was fractionally lower and Australia’s S&P/ASX 200 shed 0.4 per cent.
London's FTSE 100 index added 0.15 per cent, Frankfurt's DAX rose 0.1 per cent while the Paris CAC 40 gained 0.78 per cent.
Jean Coutu Group (TSX:PJC.A) nearly tripled its profits in the second quarter as the Quebec-based pharmacy chain continued to recover from the effects of its investment in Rite-Aid. The Montreal-area company, which is Quebec’s largest pharmacy operator and one of the largest in Canada, reported profits of $42.6 million, or 18 cents per share, for the three-month period, which met expectations. Revenue increased 2.2 per cent to $622 million.
Breakwater Resources Ltd. (TSX:BWR) says employees at its Toqui mine site in southern Chile have gone on strike after negotiations with the company broke down. The Toronto-based base metals producer said there is no estimate on how the strike will affect production.
Workers at Cameco’s (TSX:CCO) Key Lake and McArthur Lake operations have voted 97 per cent in favour of a strike if needed to support contract demands, the United Steelworkers said Monday. Cameco is one of the world’s largest uranium producers with uranium mines, mills, conversion plants and exploration projects in Saskatchewan, Ontario, the United States and Australia.
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(RTTNews) - The dollar went back on the defensive Tuesday morning after the Bank of Japan unexpectedly lowered its key interest rate to zero in hopes of jump starting the nation's economy.
The Japanese also announced they would put in place a 5 trillion yen ($60 billion) asset purchase program to buy up government bonds, treasury bills and corporate bonds.
"The central outlook for the economy, and prices, have worsened more than had initially been predicted," Masaaki Shirakawa, the governor of the Bank of Japan, said after a two-day policy meeting.
If the move was intended to weaken the unusually strong yen against the dollar, it had virtually no impact.
The dollar slipped back to Y83.30, edging closer to a 15-year low of 82.86 set earlier this month. The markets seem to be betting the Federal Reserve will announce an aggressive round of quantitative easing by year's end, at the latest.
With risk appetite picking up on the BoJ move, the dollar also weakened against the euro. The buck erased its gains from the previous session by slipping to $1.3780, and remains close to a sixth month low of $1.3805 set over the weekend.
Eurozone retail sales fell 0.4% in August from July, Eurostat said on Tuesday. Economists had expected retail sales to grow 0.2%, following a 0.1% rise in July.
Growth of business activity in the Eurozone private sector slowed to a seven-month low at the end of the third quarter, survey data from Markit Economics showed Tuesday.
The final composite output index dropped to 54.1 in September from 56.2 in August.
The dollar managed gains against the aussie after Australia's central bank left rates unchanged at 4.5%, defying expectations for a rate hike. The buck improved to a weekly high of 0.9540 before leveling off.
Looking ahead to today's economic news from the US, the Institute for Supply Management, or ISM, will release the results of its non-manufacturing survey at 10.00 a.m. ET. Economists expect the non-manufacturing index to increase to 51.8 for the month from 51.5 reported for August.
Friday's jobs monthly jobs report is expected to shed significant light on the troubling employment situation in the US.
by RTT Staff Writer
For comments and feedback: contact editorial@rttnews.com
(RTTNews) - During early New York trading on Tuesday, the New Zealand dollar edged higher against its major counterparts.
The NZ dollar advanced to 0.7474 against the greenback by 8:30 am ET, the highest level since November 18, 2009. On the upside, 0.7580 is seen as the next possible resistance for the New Zealand dollar.
After moving broadly sideways, the New Zealand dollar rose to as high as 62.24 against the yen before inching lower around 8:30 am. The kiwi-buck pair is presently worth 62.14 with 63.0 seen as the next likely target level.
Simultaneously, the New Zealand dollar breached above the 1.29 level against the Australian currency for the first time since September 20. If the kiwi strengthens further, likely resistance level is seen at 1.2830.
The New Zealand dollar also reached as high as 1.8468 against the euro before reversing its course around 8:20 am ET. The euro-kiwi pair is presently quoted at 1.8501.
by RTT Staff Writer
For comments and feedback: contact editorial@rttnews.com
