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| GBP/USD - Bearishness Targets Downtrend Continuation Posted: 31 Aug 2010 08:20 AM PDT
James Chen, CTA, CMT * For information on my DVD set, High-Probability Trend Following in the Forex Market, please click here.
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Forex Crunch Forex Leverage Limit 50:1 – Will US Traders Run Away? |
| Forex Leverage Limit 50:1 – Will US Traders Run Away? Posted: 31 Aug 2010 01:40 AM PDT
It took the CFTC a lot of time, but they finally finalized their ruling for forex: leverage will be limited to 50:1 on major currencies, and 20:1 on minors. The pressure against the initial 10:1 proposal worked, but the industry will still change. American traders: Will you stay with your American broker? In January, the forex industry was shocked with a proposal to limit leverage in forex trading to 10:1. Apart from traders’ comments, an IB coalition was formed to tackle proposed rules against Introducing Brokers, we saw also anger from Congressmen, and of course, forex brokers. This had fruits: The new rule by the CFTC allows a leverage of up to 50:1 on major pairs, and 20:1 on minors. Also in Japan, the limit is 50:1, and will be reduced to 25:1 next year. This is less than the classic 100:1 leverage that is common to forex trading, and less than the NFA limit of 100:1. This ruling actually allows the NFA to set even more strict rules that comply with these limitations, but harsher limitations aren’t likely. The rule will go into effect on October 18th. Despite the lower limit, this will still impact the forex industry. In his analysis of this ruling, Michael Greenberg reports that introducing brokers are “saved” for now. He also finds another interesting point:
Will traders flock out of the US and go with foreign brokers? Will they accommodate to the new rules? From October 18th, the US forex industry will change. We’ll soon see how this impacts forex traders, forex brokers and forex sites. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| EUR/USD Aug. 31 – Uptrend Channel Lost, Falling To Support Posted: 31 Aug 2010 12:34 AM PDT
EUR/USD lost ground steadily, fell below the uptrend channel and is approaching an important support. Will it collapse or bounce on this busy day? Here’s a quick update on technicals, fundamentals and community trends.
EUR/USD within new uptrend channel, that began last week. Click to enlarge. EUR/USD Technicals
EUR/USD Fundamentals All times are GMT. Most important events emphasized.
EUR/USD Sentiment
Note – This is a new and still experimental section on Forex Crunch. It’s still in development. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| Fundamental Overview – Market Movers Last Week – 8/30/2010 Posted: 30 Aug 2010 04:50 PM PDT
Guest post by ForexTraders.com The U.S. Dollar turned in a mixed performance last week without moving much against any of the other major currencies. Traders reported that the primary boost to the Dollar's fortunes versus the Euro and Pound Sterling was the news out last Tuesday that the Standard and Poor's rating agency had downgraded Ireland's sovereign debt from AA+ to AA-.
Overall, the U.S. Dollar gained +0.2% versus the Euro, +0.1% against the Pound Sterling and +0.3% compared with the Canadian Dollar. It also fell by -0.3% against the Japanese Yen and by -0.7% versus both the Australian Dollar and the New Zealand Dollar. This was very similar in size and direction to the Dollar's moves seen last week. Markets observers continued to note the verbal support for USDJPY and the sustained threat of market intervention by the Bank of Japan. Together, these factors have kept the U.S. Dollar from falling too much further against the Japanese Yen. Nevertheless, the rate managed to make yet another 15-year low last week at 83.57. Dollar Performance Mixed Last Week The largest rise in the Greenback last week against the other majors was seen against the Canadian Dollar, where the U.S. Dollar gained +0.3%. The Loonie weakness came on the back of disappointing Canadian Retail Sales and Corporate Profits data indicated the recovery in Canada was weakening somewhat. This modest but significant rise in USDCAD was followed in magnitude by the Dollar's gains versus the Euro against which the Dollar rose +0.2% on the week, with the Greenback being buoyed versus the Euro by Ireland's S&P downgrade. Although the Greenback was largely unchanged versus the Pound Sterling by rising only +0.1%, the Dollar came off most significantly against the Japanese Yen where it showed an overall -0.3% drop on the week despite BOJ intervention threats. Furthermore, a strong boost in gold prices mid-week after the Ireland downgrade sent the Australian and New Zealand Dollars significantly higher. They gained at the U.S. Dollar's expense by each posting a +0.7% rise on the week.
Forex Market Implications The forex market again did not move much last week, refusing to take the Dollar far in either direction against the other major currencies, although USDJPY did see a fresh 15-year lows in spite of verbal intervention by Japanese finance officials. Furthermore, economic data released by the United States last week continued to point to the likelihood of a double dip U.S. recession — regardless of what stimulus measures are undertaken by the Federal Reserve. It therefore continues to seem like just a matter of time before the true depreciated value of the U.S. Dollar becomes more obvious to those in the market. Furthermore, in light of the recent credit downgrade to Ireland, the Euro would not be the currency to buy against the Greenback. On the other hand, the Yen presents a good opportunity despite being close to 15 year lows, and selling USDJPY on a rally would seem to make sense, although watch for verbal or market intervention by the BOJ. Also, the commodity dollars continue to be favored, despite some recent negative news that included the hung parliament result from recent Australian elections and weaker Canadian economic data than was expected. Weekly Recap and Outlook for the U.S. Financial Markets and Dollar – 8/30/2010 The Greenback turned in a mixed performance last week, rising just a hair against the Euro, Canadian Dollar and Sterling and down against the Yen, New Zealand and Australian Dollar. The price action — which went both ways — began early in the week with news out on Tuesday that S&P had downgraded Ireland's credit rating from AA+ to AA-. Read full report Weekly Recap and Outlook for EURUSD – 8/30/2010 EURUSD traded in a limited range last week. The rate began the week by trading lower as Eurozone Flash Services PMI printed at 55.6 — as was widely anticipated — while Eurozone Flash Manufacturing PMI disappointed the market coming out at 55.0, versus a consensus of 56.3. Also, German Flash Services PMI came out higher than expected at 58.5 versus an expected number of 56.3, with the previous number revised downward to 56.5 from 57.3, and German Flash Manufacturing PMI which came out at 58.2 — versus an expected print of 60.9. Read full report Weekly Recap and Outlook for GBPUSD – 8/30/2010 GBPUSD began last week near its weekly high of 1.5616 made on Monday but then traded softer to its weekly low of 1.5369 on Tuesday. The decline was spurred by comments from the BOE's Monetary Policy Committee's newest member — Martin Weale — who gave the general impression that he thought the BOE's growth forecast might be too optimistic and that the U.K. economy also faced the risk of another recession, as well as increased unemployment, declining house prices and another banking sector crisis. Mr. Weale then went on to note that this might come from a fresh "sovereign debt crisis or it could be a new liquidity crisis in the private sector.” Tuesday also saw U.K. BBA Mortgage Approvals come out at the 33.7K level that was slightly worse than the market's expectations of 35.3K. Read full report Weekly Recap and Outlook for AUDUSD – 8/30/2010 AUDUSD gained a bit more ground in last week's trading, largely due to a rally in gold spurred by Ireland's S&P debt downgrade and weaker U.S. economic numbers. These fresh gains came in spite of the fact that the market was still engaged in processing Australian election news of a hung parliament for the first time in seventy years. The rate started the week by coming off sharply as a knee jerk reaction to the uncertain political climate resulting from the election. This saw the rate eventually trade down as far as 0.8857 before support emerged. Read full report Weekly Recap and Outlook for NZDUSD – 8/30/2010 NZDUSD gained a bit more ground last week, boosted primarily by a rise in gold prices. The rate initially started Monday off with a firm tone, but then weakened after news that New Zealand Inflation Expectations were softer at 2.6% for the quarter compared with the previous 2.8% reading. This softened the rate down to a test of the important psychological 0.7000 level that was then later broken on Wednesday as the pair traded down to its weekly low point of 0.6945. Read full report Weekly Recap and Outlook for USDJPY – 8/30/2010 USDJPY saw volatile trading last week, initially starting the week off on a firm note by making its weekly high of 85.69 on Monday. The pair then began trading lower after Prime Minister Naoto Kan and BOJ Governor Shirakawa had a phone discussion about recent forex market developments and "economic conditions at home and abroad". This prompted the nervous market to think that the BOJ may not be taking immediate market action to reverse or slow the recent strength in the Japanese Yen. Read full report Weekly Recap and Outlook for USDCAD – 8/30/2010 USDCAD saw choppy trading in the forex market last week, initially trading higher off of its low for the week of 1.0484 that was seen Monday. The rate continued rising sharply on Tuesday after Canadian Core Retail Sales came out at disappointing levels by showing a fall of -0.5% versus the expected rise of 0.1%. Also, the previous number saw a downward revision from -0.1% to -0.3%. Furthermore, Retail Sales were up by just 0.1% for the month, versus the consensus of a +0.4% rise. The previous Retail Sales number was revised down from -0.2% to -0.4%. Read full report Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| [Video] Yen Intervention, Euro Bears and Aussie Action Posted: 30 Aug 2010 03:00 PM PDT
In the weekly interview on Forex TV, I spoke with Julie Sinha about this busy week with Non-Farm Payrolls providing the big bang.. There are still chances of a coordinated intervention in the Japanese yen, the Euro bears are getting stronger on risk aversive trading and the Aussie expects a very busy week, with upside prospects. Enjoy: Another comment about EUR/USD – it fell under a short term uptrend channel on the gloomy trade on Monday. The markets will be in full gear tomorrow as British bankers return from their holidays, and the economic calendar gets very very crowded. Wednesday has some of the keys for the NFP, with the Manufacturing PMI and the ADP Non-Farm Payrolls to supply clues, especially on the private sector. Check out Forex TV for commentary on forex trading. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
| Forex Daily Outlook – August 31 2010 Posted: 30 Aug 2010 02:00 PM PDT
U.S. Consumer Confidence, U.S. FOMC Meeting Minutes and Canada’s GDP are the major events on today’s menu. Here is an outlook on the market moving events awaiting us today. In the US, Consumer Confidence Index forecasts a small increase in consumer confidence to 50.7 from 50.4 however an unexpected decline in the index would be possible due to the current deteriorating economic conditions.
More in the US, Federal Open Market Committee Meeting Minutes consisted of the Federal Board of Governors plus 5 of the 12 Federal Reserve Bank presidents set the key interest rates for the USA, and also control the money supply may have a smaller effect on the market since early information was already released in the FOMC Statements. Finally in the US, S&P/CS Composite-20 HPI measuring change in the selling price of single-family homes in 20 metropolitan areas is forecasted 3.8% rise following 4.6% rise in June and Chicago Purchasing Managers’ Index a leading indicator of economic health expected to drop to 57.3 points after reaching 62.3 points in July. In Canada, Gross Domestic Product, the main measure of economic activity and growth foreseen a modest growth in August by 0.2% m/m from the 0.1% m/m reading in July. For more on USD/CAD, read the Canadian dollar forecast. In Europe, German Unemployment Change released monthly predicted a positive change of 19K in the unemployed 1000 less than in June and also the best reading in five months. More in Europe, Consumer Price Index Flash Estimate inflation indicator predicted to rise by 1.6% following 0.1% less than July. Finally in Europe, Unemployment Rate in the Euro-Zone expected to remain 10.0%without change. For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis. In Great Britain, Net Lending to Individuals measuring change in the total value of new credit issued to consumers indicating rising confidence with a predicted rise of 0.7B following 0.6B in June. Read more about the Pound in the GBP/USD forecast. In Switzerland, UBS Consumption Indicator combines reading of 5 economic indicators including consumer confidence, consumer spending, tourism, new car sales, and retail activity climbed to 1.81 points in June, a similar rise is expected now. In Australia, Building Approvals an excellent gauge of future construction activity expected an improvement with a small drop of only 0.6% following three months of plunges 2.7% less than in June. More in Australia, Retail Sales are also on the rise predicted an increase of 0.4% after only 0.2% in June and July. Later in Australia, Current Account deficits expected an impressive reduction of 10.2B compared to the previous quarter resulting in 6.4B deficit this is the lowest reading since June 2009 and Private Sector Credit also increases by 0.3% 0.1% more than in the previous month., For more on the Aussie, read the AUD/USD forecast. In Japan, Average Cash Earnings foreseen 0.9% rise 0.6% less than in the previous month. That’s it for today. Happy forex trading! Want to see what other traders are doing in real accounts? Check out Currensee. It's free. |
| A Little Mistake That Could Ruin Your Trading Career Posted: 30 Aug 2010 06:49 AM PDT
Guest post from visionsofaffluence.com In the world of trading there are very few mistakes that can be a costly as the one I am going described to you in this article. This mistake can be so costly that I have personally seen it set traders back years and even end some careers. This is also a very common mistake as pretty much every trader I have ever talked to myself included myself. So then what is this common mistake that could be debilitating to your trading career? That’s simple; it's called moving your stops.
Moving your stops is one of the most dangerous things a trader can do so then why do so many of them do it? It's because of one of two reasons. Either its because they are so fearful of taking a loss that they keeping moving the stop back in the hopes that the market will turn and they can get out at breakeven, or its because they are so sure in their ability to predict the market that they move their stop because they just know that if they give the trade enough time eventually it will work out. Unfortunately 99% of the time both of these traders are wrong and are left huge holes in their trading accounts. To avoid the above scenario all you have to do is stick to your stops. You need to realize that they are there to protect you from losing more than you can afford. That’s why they are called stop losses because they are designed to stop you from losing more than you are willing to, and when you move them after you are already in a trade because of your emotions then you are defeating the purpose of using a stop at all. So do yourself a favor, when you set a stop do not move it under circumstances unless you are moving it up to trail a winning position. Trust me your trading account will thank you. Want to see what other traders are doing in real accounts? Check out Currensee. It's free.. |
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