EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: buy.
EUR/JPY trend: hold.
GBP/JPY trend: hold.
| Floor Pivot Points | |||||||
|---|---|---|---|---|---|---|---|
| Pair | 3rd Sup | 2nd Sup | 1st Sup | Pivot | |||
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The reports about conditions on the US job market sent the dollar tumbling down as claims for jobless benefits increased, instead of decreasing as was expected, and nonfarm payrolls dropped a lot more than was forecast. The report about consumer credit showed better valued than Forex traders expected, but it was…
Pacific Investment Management Co.’s Bill Gross said the Federal Reserve is unlikely to raise interest rates for two to three years.
Gross, Pimco’s founder and co-chief investment officer, made the comments in a radio interview today with Tom Keene on Bloomberg Surveillance. A yield of 0.50 percent on two-year Treasury notes signals that investors should buy longer-maturity securities, he said.
Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.
Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.
Private payrolls that exclude government agencies rose by 71,000, less than forecast, after a gain of 31,000 in June that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 rise in private jobs, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and the jobless rate held at 9.5 percent.
Industrial production in Germany, Europe’s largest economy, unexpectedly declined in June led by a drop in investment goods such as machinery and trucks.
Production fell 0.6 percent from May, when it rose a revised 2.9 percent, the Economy Ministry in Berlin said today. Economists had forecast a gain of 0.5 percent, the median of 25 estimates in a Bloomberg News survey showed. From a year earlier, production increased 10.9 percent when adjusted for the number of work days.
Economic growth in the euro region, Germany’s biggest export market, may weaken as governments cut spending to trim budget deficits and restore investor confidence. At the same time, Europe’s sovereign-debt crisis has pushed the euro down 8 percent against the dollar this year, making exports to countries outside the 16-nation currency bloc more competitive.
Canada unexpectedly lost jobs in July and the country’s unemployment rate increased because of a drop in full-time jobs at schools and in the finance industry.
Employment fell by 9,300 jobs in July, the first decline this year, following a 93,200 increase in June, Statistics Canada said today in Ottawa. The jobless rate rose to 8 percent, from 7.9 percent. Economists surveyed by Bloomberg predicted 12,500 new jobs and a jobless rate of 7.9 percent, according to the median of 22 estimates.
Canada’s economic growth is slowing this quarter to about half the pace in the first three months of the year when low mortgage rates and temporary tax credits sparked spending, according to the Bank of Canada. The central bank last month said the risks to the recovery are “elevated” in part because consumer spending could slow more than expected.
Canada’s economy grew at a 6.1 percent annualized first- quarter pace. Canada “is recovering, although we aren’t out of the woods yet,” Finance Minister Jim Flaherty told reporters yesterday in Ottawa.
This morning’s much anticipated Non Farm Payrolls report disappointed the market which sent the US dollar careening lower. While the unemployment rate held steady at 9.5%, this is probably more of a function of discouraged workers leaving the workforce. For the month of July, the US economy lost 131K jobs, nearly twice the expectation of a 65K loss.
In addition, the revisions to last month’s data came in nearly twice as bad as reported in what is becoming a familiar pattern. But the US isn’t the only country with bad employment figures today.
In Canada, the unemployment rate rose .1% to 8% as the Canadian economy lost 9.3K jobs, which is the first loss in 2010.
This report sent equity index futures and commodities lower, as well as the US dollar. Under a “normal” risk-aversion scenario, one might expect Dollar strength. However, there may be a “silver lining” in this jobs report, as the creation of private sector jobs came in higher.
So what started out as risk aversion, may be flipping around to risk appetite due to Dollar weakness.
In the forex market:
Aussie (AUD): The Aussie is actually higher after the initial downturn due to risk aversion, but now Dollar weakness is driving the market. (click chart to enlarge)
Kiwi (NZD): The Kiwi is taking back some of yesterday’s losses after their bad employment figures. Money that flowed from the Kiwi to the Loonie is slowly making its way back. (click chart to enlarge)
Loonie (CAD): The Loonie is the biggest loser this morning as they lost jobs last month for the first time all year. As seen in the above chart, the Loonie benefited yesterday from Kiwi weakness, but is now giving it all back as the situation looks weaker in North America. Adding to Loonie weakness is lower oil prices, though it is rebounding as I write.
Euro (EUR): The Euro started the morning session somewhat weaker but quickly grabbed a bid on the NFP report and is now higher. German industrial production figures came in lower than expected, but that news quickly took a back seat to Dollar weakness.
Pound (GBP): The pound is trading much like the Euro this morning after the UK reported their own weaker industrial production figures.
Dollar (USD): If it weren’t for the Loonie, the Dollar would be the worst performer this morning. Keep in mind that as the US economy weakens, so will the Canadian economy as the US is the largest importer of Canadian goods and services. NFP data was disappointing, but the silver lining I mentioned above could provide hope.
Yen (JPY): The Yen is the strongest pair today as risk aversion and Dollar weakness is driving the markets. USD/JPY is approaching the 85 “line in the sand” level—the place most think will encourage intervention.
As you can tell, the jobs reports in the US and around the globe are important drivers of economic growth and the picture is beginning to look more bleak as uncertainty over government decisions has induced hesitancy.
Until we adopt pro-business policies here in the US, it’s going to get worse. Just as the Treasury Secretary “predicted” the other day. This is akin to jumping off a building and stating, “this might hurt”.
However, there is still some good economic news around the globe, and in the end, the fiscally responsible will be rewarded. If the US doesn’t want to be the recipient of it, so be it.
Thankfully, the forex market allows me to move money quickly to those regions that deserve it!
Tags: AUD, Aussie, blog, cad, dollar, dow, economic, economy, EUR, Euro, forex, forex market, forextrading, gbp, Il, jpy, Kiwi, loonie, lower, news, nzd, oil, pair, pound, rate, ssi, time, USD, Yen
Hello!
I’ve got great news for all you Forex Megadroid users. The megadroid developers have released a new version – v1.30 to be specific.
The improvements are:
1) a small fix to the AutoGMTOffset feature
2) improvements to the strategy (I can’t wait to see how the new improvements perform!)
3) improved DLL access speed
4) a small fix to the Journal tab messages
*Note: No reason to download manual. Pdf. manual is still 1.21*
It would be good idea to remove both original files and install new.
Also from the MegaDroid people:
“Beginning next week, older versions of Megadroid will
display warning messages regarding the update and
shortly, older versions will cease to function so ensure
that you have the latest version running at all times.
This is especially important if you run Megadroid via
one of the many VPS services.”
So make sure you upgrade if you haven’t already!
By the way Forex MegaDroid is one of the few commercial forex robots that I 100% recommend – I’ve been using it on two live accounts with great success! If you want to find out more details about Forex MegaDroid or get your own copy I invite you to hop on over to their homepage. See the link below:
Cheers,
Alan
Share and Enjoy:
Next week, the Open Market Committee (OMC) of the Federal Reserve Bank will hold its monthly meeting. Even without checking futures prices, it’s obvious that the probability of an interest rate hike is nil. [In fact, the odds of a rate hike in November have already converged to 0%]. Why, then, are investors keenly awaiting the outcome of the meeting?
In a nutshell, they will be watching for two things. The first is any changes in the statement released at the close of the meeting. According to James Bullard, President of the St. Louis Fed, “If any new ‘negative shocks’ roiled the economy, the Fed should alter its position that interest rates would remain exceptionally low for ‘an extended period.’ ” If the OMC determines that the prospects for continued economic recovery are good, and/or the inflation hawks get their way, we could see subtle – but meaningful – changes to statement.
More importantly, the Fed must make a decision regarding the other tools in its monetary arsenal. Of immediate concern is what to do with the more than $200 Billion in mortgage bonds (representing less than 20% of the Fed’s total purchases of MBS) that mature in the next six months. The original plan was to allow the securities to mature and take no new action, as part of a gradual exit from the credit markets. As a result of changing economic conditions, however, the Fed is debating rolling the cash over into new mortgage securities or Treasury Bonds.
Inflation hawks (at the Fed) are skeptical and have vowed to press for the start of the unwinding the Fed’s portfolio. They have the support of traders in the MBS market, who insist that, ” ‘The MBS market currently does not need added Fed support.’ ” Meanwhile, “Treasury-market participants suggest the central bank should use the money to support small businesses or commercial real estate.”
Analysts are divided as to what the Fed will do. According to Nomura Securities, “We expect the Fed to at least stop the passive contraction of its balance sheet.” According to another analyst, “The temptation to jump from a decision to maintain the balance sheet’s size at current levels to a new round of easing is understandable but probably premature.” Based on the economic data, both sides have legitimate cases. On the one hand, the economy is still in recovery mode. On the other hand, unemployment remains stubbornly high, and certain leading indicators would seem to suggests a return to recession, which means there is pressure for the Fed to act. ["Since Fed officials last met in June, data on consumer confidence and spending have softened and job data haven't improved. But overall financial conditions have improved somewhat, with a rebounding stock market"].
Currently, it is expected that the Fed won’t hike rates until the end of 2011. In addition, while it probably isn’t ready to embark on a fresh round of quantitative easing, it is more likely than not that it will channel the cash from the expiring bonds back into the markets. As far as forex markets are concerned, the Dollar will remain unmoved if the Fed conforms to these expectations. Dovishness – such as an expansion of quantitative easing – will almost certainly hurt the Dollar, while the flip side – exiting the credit markets and/or hinting towards rate hikes – would give the Greenback a solid boost.
Today, we bring you an interview with Roland Manarin, founder of Manarin Investment Counsel and Manarin-On-Money. Below, he shares his thoughts on risk management and the EU Sovereign Debt Crisis, among other topics.
Forex Blog: How would you summarize your general approach to investing?
In the management of retirement assets, I subscribe to global diversification using low-cost, asset-class funds that adhere to Modern Portfolio Theory. From an economics perspective, I follow the Austrian model.
Forex Blog: Which risks do you currently perceive as most problematic and which are therefore most important to monitor?
There are always risks but for me a concern is the massive amount of malinvestment in the world financial system. What’s the next spasm to show up? A bond bubble burst? A major shift in velocity shooting inflation upwards? I’m no good at trading, and in today’s world I wonder if anyone is. There is no one investment plan that is safe but some are safer than others.
Forex Blog: What is your assessment of the sovereign debt crisis in EU?
I stress broad diversification because I think the world’s financial markets are in the hands of major risk-addicts so as an investor, I must be prepared for anything. I could be wrong, but it appears we are nearing the collapse of the European welfare state.
Forex Blog: Are you optimistic about the near-term prospects for US economic recovery?
I want to be but what shakes my confidence is America being on the same road as Europe.
Forex Blog: Do you think the Fed is close to raising interest rates?
Who knows? If you can tell me what moves Bernanke and Co. are going to make in the near term, I would feel very good about where to invest my money for maximum return. But we don’t so everything is just a guess.
Forex Blog: Do you think there is a risk that failure to unwind its quantitative easing program could drive inflation?
I think malinvestment and currency debasement could drive inflation.
Forex Blog: Considering the recent surge in volatility, what approach do you think Central Banks should take to managing the value of their respective currencies? Do you think intervention is necessary/desirable?
The federal government/Federal Reserve model of intervention typically follows a simple model: Tax, spend, borrow, print, subsidize, regulate, go broke. I don’t think that would be desirable.
Forex Blog: What’s your advice to investors that want to beat the market during this period of uncertainty?
Don’t try. Few pros have the long term track record of outperforming the market. Instead adopt a simple, diversified plan that will allow you to get through this historic turning point we are living through in fine shape.