Retail Sales Report Affects Australian Dollar Performance

The Australian currency, which touched the highest level in one years versus its U.S. counterpart yesterday, fell as domestic reports indicated today that the country’s economic health is not as good as perceived by investors, mainly in the sales and real estate sectors.
After the Australian government published a report indicating that home loan approvals declined for the first time since the end of last year, the Aussie declined versus virtually all 16 main traded currencies, mainly versus its New Zealand counterpart as speculations indicate that the Reserve Bank of New Zealand will not cut further its national benchmark interest rate, raising attractiveness for the kiwi currency in the South Pacific and Asian regions. Australian retail sales also declined in August, making traders to be less confident towards interest rate hikes in the country before the end of the year.
The retail sales can be understood by traders as a reason for the Reserve Bank of Australia to postpone any projects of raising interest rates in the country, which is weighing negatively on the Aussie’s outlook. Even if today was rather negative for the Australian dollar, the overall forecast for the Aussie still remains very positive, as the country is proving itself more capable of recovering than most of the other world economic regions.
AUD/USD traded at 0.8595 as of 11:01 GMT after being traded at 0.8661 yesterday. AUD/JPY traded at 79.54 from 79.99.
If you want to comment on the Australian dollar’s recent action or have anyquestions regarding this currency, please, feel free to reply below.

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Dollar Rebounds as Stocks Fall

After a sharp decline yesterday due to increased risk appetite in stocks markets globally, the dollar rebounded today as speculations led traders to understand that the current gains in equities may not reflect the real potential of world economic and corporate growth.

The U.S. dollar rebounded slightly after being traded at the lowest level versus the European common currency yesterday this year, as a report showed that consumer prices in the bloc’s wealthiest country, Germany, declined in August in the yearly comparison, refreshing investors that the economic situation in Europe is still not as favorable as markets’ sentiment towards it. High-yielding currencies linked to commodities like the South African rand and the Australian dollar also declined after the price of metals declined worldwide. The greenback also gained versus Sweden’s krona, country which had its long term debt ratings downgraded by Moody’s Investors Service.

Two main reasons are behind the dollar’s rebound today. Firstly, a corrective movement can be perceived as traders profit from yesterday’s extensive rally in high-yielding currencies, and the current economic sentiment is not as optimist as it was some months ago, when a fast paced economic rebound was a consensus among traders for the future, proved false as still many economic regions around the world face a series of different problems.

EUR/USD traded at 1.4494 as of 9:58 GMT from a previous rate of 1.4433 yesterday. USD/CAD traded at 1.0806 after hitting 1.0690 yesterday.

If you want to comment on the U.S. dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Australian Dollar Rises on G-20 Economic Stimulus

The Australian currency is trading near the highest levels in 2009 after the Group of 20 most influential countries in the world affirmed that stimulus will remain to rescue the global economy, attracting investors to higher-yielding options, like those of the South Pacific region.
The end of last week was very supportive for the Aussie to climb as the construction industry shrank at a lower pace and also jobs rose in the same sector for the first time in more than a year, helping the Australian currency to have one of the best performances as risk appetite brought investors back to higher yielding currencies. The New Zealand dollar also climbed as house prices in the country continued to rise, and both South Pacific currencies benefited from the G-20 statements indicating that further measures will stimulate the world economy, creating a bullish pattern in stocks and commodities that increased attractiveness for the Aussie even more.
Both international and domestic scenario favored the Australian dollar in the beginning of this week, helping the currency to reach almost the highest level this year, and it may climb further according to analysts. The economic stimulus provided by the G-20 is likely to increase confidence in trading markets, raising risk appetite and consequently favoring the Aussie.
AUD/USD traded at 0.8553 as of 10:41 GMT from a previous rate of 0.8521 yesterday when markets opened.
If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Euro Climbs on Growing Optimism

The euro climbed versus a number of currencies in the start of this week as investors’ confidence rose in the region, providing support for speculations regarding the end of the recession in the countries using the European common currency.
This week started with pending to the side of risk appetite continuing market trends perceived in the end of last week, when the euro climbed fueled by renewed attractiveness as countries like Germany indicate significant positive economic improvements, suggesting that the recession may end sooner than expected in the Eurozone. Today, the euro is also gaining on speculations that a report regarding factory orders in Germany will show an expansion in July, if confirmed, it will be the fifth consecutive month with positive figures in this sector. Currencies like the yen and the dollar lost the most versus the euro, as traders leave safety attracted by yielding in emergent markets.
The euro is likely to have a positive week, mainly versus the yen, which could be overpriced after last week’s rally, but it will be difficult for the European common currency to climb very sharply, considering that even if the region is publishing several positive reports, most of the bloc’s members still face recession and complications in different sectors of the economy.
EUR/USD traded at 1.4342 as of 9:00 GMT from a previous rate of 1.4303 when markets opened yesterday. EUR/JPY climbed from 133.62 from 132.94.
If you want to comment on the Euro’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Canadian Dollar Extend Gains on U.S. Optimism

The Canadian currency climbed even further before the end of this week’s session after optimism was renewed among traders with stocks and commodities climbing, After both Canada and the U.S. posted favorable reports regarding employment conditions.
After a report published in Ottawa indicating a rise of 27,100 jobs for the month of August in Canada, reverting July’s negative figures, the loonie was benefited as stocks in Toronto also rose considerably. This Friday, a U.S. report showing less than expected jobs cuts moved markets worldwide, creating bullish patterns in stocks around the world and influencing the crude oil rates, commodity which prices affect the Canadian currency directly, since the North American nation is one of the world top oil producers. The Canadian dollar had suffered since Bank of Canada officials stated that measures could be taken to weaken the currency, creating a bad sentiment for the currency, but the optimism is currently very strong, making an unstoppable bullish pattern for the loonie.
Analysts forecast that the Canadian dollar may rise to the levels previous to the national bank statements, when the greenback was trading at 1.0630, as long as optimism remains significant in equities and commodities markets, but it is hard to determine whether loonie’s bullish pattern will find support to extend its gains since the Bank of Canada already stated its position against a strong national currency.
USD/CAD closed the week at 1.0860 from 1.1039 on Thursday.
If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Brazilian Real Benefit From U.S. Job report

The Brazilian report had a rebound towards the end of the week after U.S. employment conditions start to show small but essential signs of recovery, suggesting that one of Brazil’s most important trading partners is on the way out of recession.
After losing more than 5 percent in the end of the past week and in the beginning of the current one, Brazil’s real found support in renewed optimism as stocks improved and fewer jobs were cut in the U.S. in the month of August, suggesting that the world’s wealthiest country is recovery, which attracted investors to return to high-yielding options.
USD/BRL traded at 1.8555 as of 20:07 GMT from an opening rate of 1.8675.
If you want to comment on the Brazilian real’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Swedish Krona Declines on Extended Loans

The Swedish currency declined today versus the euro and most of the 16 main traded currencies as the national central bank maintained interest rate in its historic record low of 0.25 percent leaving space for speculations that the country financial system is still facing a complicated situation.
The krona declined today versus several currencies after the Riksbank affirmed that it will offer more than $10 billion to Swedish bank to avoid the current banking crisis in the country, maintaining also the current interest rates at a record low of 0.25 percent, in order to stimulate credit and consumption to rescue the country’s economy from recession. The negative news for the Swedish currency also came with a statement from the nation’s central bank indicating that interest rates in the country will remain at extremely low levels through the next year, declining attractiveness for investors to beat in Swedish assets.
Even if the Swedish economy starts to give signs indicating that the worst moments are already behind, the situation remain very uncertain, and the expected maintenance of the rates at the record low level came together with an extremely dovish tone on Riksbank statement, shunning investors from Sweden and decreasing attractiveness for the krona, which may help Swedish products’ competitiveness, selling to markets at lower prices.
EUR/SEK traded at 10.2955 from 10.3550 in the intraday comparison.
If you want to comment on the Swedish krona’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Euro Gains Before ECB Meeting

The euro rebounded today after a negative performance during the beginning of the week as speculations regarding the future of the Eurozone economy improved, indicating growth beyond previous forecasts, spurring the attractiveness for the euro today.
The European central bank will decide its current benchmark interest rates which are expected to be maintained at the same level, but optimism among traders indicate that ECB officials are likely to upgrade growth predictions for the Eurozone as the economy starts to improve slowly as seen in report during the past month. The euro also benefited from optimism in equities and commodities markets today, stopping a seven day decline versus the Japanese yen as investors returned to purchase riskier assets abandoning options in Japan. The euro also gained against some high-yielding currencies, on speculations that some countries like Germany, may rebound quicker from the recession.
The ECB metting today is going to provide support for the euro to gain, according to specialists. Previous reports published in July mainly regarding Germany and France are likely to be mentioned by the ECB as signs of recovery in the region, which will attract more investors to purchase euro-price assets. If the Eurozone continues to perform well, interest rates are likely to be hiked in the medium term future.
EUR/USD traded at 1.4325 as of 10:27 GMT from a previous rate of 1.4217 in the intraday. EUR/JPY traded at 132.34 from 131.66.
If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Pound Declines on Disappointing Manufacturing Numbers

The pound declined today versus the most of 16 main traded currencies after a report in the country indicated that manufacturing production declined beyond economists expectations, adding pessimism concerning the recession length in the United Kingdom.

The United Kingdom has indicated through its latest economics reports that the current recession in the country can be considered more serious if compared to most of the main relevant economic regions around the world, declining appeal for the pound’s outlook, which traded today in the lowest level versus the euro in two months. Today, a manufacturing report published in Britain came below 50, indicating a contraction and going against expectations, sice most of economists were expecting a positive performance fueled by the to-be-confirmed economic revival in Europe. Following the pound’s decline, stocks in Britain also declined, indicating a flow of capital out of the British Isles.

Analysts evaluate the current fundamentals in the United Kingdom as negative factors weighing on the pound’s performance, since Bank of England’s policies are being unable to revive the nation’s economy, raising concerns that the recession will be longer and deeper in the U.K. than previous forecasts, which is certainly decreasing attractiveness for the British currency.

GBP/USD traded at 1.6214 as of 12:58 GMT from a previous rate of 1.6313 in the beginning of the day. EUR/GBP is in its highest rate in more than two months being traded at 0.8825.

If you want to comment on the Great Britain pound’s recent action or have any questions regarding this currency, please, feel free to reply below.

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Pound Remains Supported As U.K. GDP Revised Higher, But Downside Risks Remain

The pound built upon its recent gains on the back of an improved second quarter GDP reading reaching as high as 1.6340. The second reading of growth was revised higher to -0.7 from -0.8% as private consumption and government spending were stronger than initially estimated. This was reflected in the improvement in the index of services to -0.6% from -1.0%. However, we saw consumer confidence hold steady at -25 according to the Gfk survey which missed estimates of -24. This could raise concerns as consumers may be reluctant to return to their normal spending habits if they remained concern over future growth. The GDP figures also raised some concerns as we saw exports decline from -1.6% to -2.7% and gross fixed capital spending shrink to -4.5% from -3.8%. Although both components saw significant improvements from the first quarter the lack of demand from abroad and investment in new projects should continue to keep labor markets depressed and consumers retrenched. Therefore, we could see the improvement in consumption levels flattened going forward which could limit the scope of a U.K. economic recovery. Any upside potential for the pound may be limited by these concerns. We still see potential for the GBP/USD to test 1.600 and beyond as the head & shoulder’s formation unfolds. A break above resistance at 1.6459 the 50-Day SMA could change our bias. The Euro spent the majority of the overnight session consolidating its gains from yesterday despite a jump in Euro-Zone economic confidence to 80.6 from 76.0. Growth in the second quarter from the region’s largest economies Germany and France has raised hopes that they could lift the region out of its current recession. A sharp improvement in the service sector from -18 to -11 made the biggest contribution to the incr4ased optimism. A slight rise in consumer confidence to -22 from -23 was a positive but it missed estimate s of -21which could fuel concerns that consumers remain shell shocked from the credit crisis and will continue to curb spending until they see stronger evidence of a recovery. The EURUSD’s failed test of 1.4400 could be a sign that the pair may remain range bound between 1.4000-1.4500 and a test of the lower bound may be ahead. The U.S. dollar has firmed after yesterday’s sell off when we saw investors cast aside doubts that a recovery was unsustainable and continued to feed their appetite for risky assets. The consistent improvement in fundamental data globally has led investors to increase their bets, which continues to lead to dollar weakness as they exit the safe haven of U.S. Treasury bonds. Equity markets remain supported in Asian and European trading and with U.S. futures pointing toward a higher open we could see dollar weakness resume. Expected positive readings in personal income and spending of 0.1% and 0.2% respectively should continue to feed optimism. Indeed, rising stock markets have started to lift the hopes of the consumer which have been weighed by labor market concerns. The final University of Michigan consumer confidence reading for August is expected to be revised higher to 64.0 from 63.2. Will The EUR/USD Remain Above 1.4000? Join us in the ForurmRelated Articles:

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Euro Forecast Dims on S&P 500 September Effect

The Euro saw yet another week of incredibly choppy trade, finishing the week almost exactly unchanged despite surging near year-to-date highs against the US Dollar. The last week of summer trading produced brief moments of sharp price moves and uneventful price action at moments in between. Relatively wide bid/ask spreads on major currency pairs underlined that market conditions remained illiquid—making short-term currency forecasts all but impossible. We expect that market conditions will improve through the first week of September trading, and it will be important to watch whether the Euro and US Dollar embark on new trends to start the trading year. The vaunted “September effect” typically stipulates that stock markets typically fare worst through September, and a fall in risky assets would likely benefit the safe-haven US Dollar. In the past 10 years, the US S&P 500 has lost an average of approximately 30 points through September—by far its worst tally in any month of the year. Past performance is hardly a guarantee of future results, but it will nonetheless be important to watch for a turnaround in recently high-flying risky asset classes. The very fact that the S&P 500 has set fresh year-to-date highs through end of week trade underlines the risks of noteworthy pullback, and this may be one of the most important FX market themes in the week ahead. A busy week of European economic event risk likewise promises eventful price action through the coming days. The combination of European and US employment figures could finally provide clear impetus for sustained Euro/US Dollar moves. German and EU officials report on regional unemployment on Tuesday the 1st of September—setting the tone for the subsequent month of fundamental data. Both are expected to show continued deterioration in unemployment rates and underline downside risks to economic growth. Subsequent Euro Zone Gross Domestic Product revisions are expected to show a modest downgrade to second quarter expansion numbers, but the true fireworks will likely come on the following day’s European Central Bank interest rate decision.The ECB is very widely expected to leave interest rates unchanged—ostensibly leaving little risk for major volatility. Yet recent price action has taught us to expect the unexpected, and markets will be paying close attention to any shifts in rhetoric from the regional central bank. Officials will likewise release their new economic outlooks for the Euro Zone, and any surprises could likewise produce reactions in the Euro itself. Last but most certainly not least, traders should keep a lookout for US Nonfarm Payroll results on Friday. Continued improvements in US employment numbers leave economists expecting a slowdown in job losses. Yet any surprises could easily cause substantial Euro/US dollar moves. – DR

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Forex News Trader

How do the majority of profitable Forex traders truly profit in the FX market? One way… they trade the news!

Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.
Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.
Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade - as the odds will now be tipped in your favor.
Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market (FOREX). Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.

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How to trade forex news intelligently

Forex news trading has become the norm amongst all forex traders nowadays. Basically all forex markets are now based on the forex news trading which influence how the forex market prices fluctuate day to day. All traders tend to spend their valuable time on forex market news so as to be able to make a big financial gain. Although this is not always the case with forex news but at first this may seem very easy but it certainly requires discipline and patience so as to risk your capital. Of course just like any other forex trading events all these have got their own risks and so as the forex news trading. It is not guaranteed that every favorable forex news that you obtain will certainly give you bog financial gain the reverse can also be true.
There are several forex news releases that will significantly move markets and these are as follows, Non-Farm Payroll, CPI (consumer price index), Trade Balance, Retail Sales, PPI (Producer Price Index), Interest Rate decisions, GDP (Gross Domestic Product).
These forex news releases often cause a strong effect on the market and they certainly cause a significant movement in the market. It also creates a surprise in the numbers of the market and if the numbers are in line with the expectations this will cause a market now to make a huge movement.
Forex News Trading Strategies
Make it a point that you fully understand the factors that influence the forex trading system, get the latest news about forex trade and understand how to adopt various trading strategies. The more you fully understand how the forex trading system works is the more you will yield great fortune for yourself. It may seem very difficult at first for beginners but you definitely have to do a lot research so as to succeed.
Depending on the forex broker you are able to get margins as low as 0.05% and as high as 4%. For the aggressive forex traders, making use of leverage can yield great profits. Forex traders are able to control their amount of currency through the use of margin accounts. Having a margin account with a forex broker will also give you the opportunity to borrow money from your broker so as to control currency lots.
The common trade news strategy is waiting for a surprise event to happen and then traders try to beat the spike. Of course this is not an easy task as it may sound and most traders are faced with two obstacles;
1) Obtaining the numbers before market movements. 2) Searching for a broker who will execute your orders before market movements.
There are several services available that can deliver numbers to you quickly every month at a favorable fee and one of the very best services is the Bloomberg terminal and this service is very expensive making it exclusion for the small traders. With the use of these services you will certainly get your money back guaranteed because they deliver facts that are accurate so as to enable you to trade and obtain a big financial gain in the market you would have entered corresponding to the forex news releases you would have received. With these services you will certainly find it very easy to trade your capital on any positive forex market and all that you have to do is wait and observe how much gain related to your capital you would have received.
There are several strategies that you can employ for forex news trading and another strategy is known as the ‘fade’. The fade is whereby traders make a speculation on the market that it will significantly move in the opposite direction after a spike. The price would move downwards in the short term after the spike and hence you would have to find the top and this is not an easy task as it requires a lot of practice and discipline.
You can either trade the announcements themselves, or wait a few minutes for the market to settle before re-entering any positions. For example, if an announcement is extremely positive for a particular currency, let's say the dollar, then you may decide to immediately go long on that pair, for example the USD/GBP (or go short on the GBP/USD). Alternatively you could wait a few minutes, and see what your technical indicators say before entering a position.
These announcements can often lead to large breakouts so this is something worth looking out for. You will often find the price consolidates around a certain level in the hours leading up to a big announcement, so if a breakout occurs in the hours immediately after an announcement, it could be a good opportunity get back in and ride the breakout.
You also need to make sure that you only get the best and the most accurate forex news you could possibly get your hands on. One way you can do so is by checking for primary references indicated right before the news itself is presented. If it's from media authorities such as the AP, AFP, or Reuters, then you can be sure that these are authentic pieces of news information. Regardless of which website you see these news, so long as you see such media names written on the article it means that the source of it is credible enough. These media companies place ownership on their articles no matter where it may be published.
Trading purely on news release is harder than it seems, but the task is made easier and more profitable with the use of indicators, such as a breakout indicator as a bollinger band or a breakout of a candlestick or a price bar. Statistics have shown news release can trigger movements that range in size from 33 to 124 pips, leading to trading opportunities.
Conclusion
Forex trade news are very appealing due to the short amount of time that you would have done but just like other forms of trading the forex news trading requires a lot of discipline and patience. This may seem very easy as it may sound but in order for you to make a big financial gain from your capital a lot of work has to be done. However, a lot of practice will certainly guarantee you in making a huge profit margin from your investment.

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Daily Report: Doll Recovery Lacks Momentum, Sterling Still the Weakest

Dollar recovered yesterday on the back of sharp retreat in crude oil touching 75 level. Nevertheless, the momentum is so far mild and the greenback is still likely to extend recent fall against Euro. Yen is still staying in range even though stocks in developed markets continue to extend rally. Nikkei made new high at 10668 before closing at 10639, following new high of 9620 in DOW. The impact of stocks was somewhat counted by falling treasury yield which might have completed brief recovery earlier this week already. We'd continue to favor some more downside in yen crosses together with treasury yield. Sterling remains one of the weakest currency this week and is vulnerable against euro and Swissy. Looking at GBP/CHF, yesterday's break of 1.7388 support suggests that a double top reversal pattern is formed (1.8111, 1.8087). The three wave corrective rise from 1.5111 bottom might have completed too and we'd be looking at the prospect of at least some near term fall to 1.6620 cluster support (50% retracement of 1.5111 to 1.8111). EUR/GBP's rise from 0.8399 was confirmed to have resumed for 0.8866 resistance. Meanwhile, GBP/JPY is also trying to get rid of 153.43 support to resume fall from 163.05. After all, we'd expect to pound to continue to under perform other major currencies.

Released overnight, Japanese trade surplus shrank more than expected to 0.19T yen in July while Corporate services price index dropped more than expected by -3.4% yoy. German import price dropped slightly more than expected by -0.9% mom, -12.6% yoy. Focus will turn to German Ifo, US durables and new homes sales. In addition, crude oil inventories, which is expected to show -2.1M drop, will probably trigger some volatility in crude oil as well as dollar.

Looking at the dollar index, consolidation from 77.76 is still in progress. While some more upside might be seen, short term outlook remains bearish as long as 78.67 minor resistance holds. The current fall from 79.51 is possibly resuming whole decline from March high of 89.62 and might extend further to 77.43 and below. Nevertheless, strong support is expected above 75.89 key medium term level that finally bring reversal to conclude whole fall from 89.62 as well as medium term consolidation from 88.46. Break of 78.67 will be an important sign of stabilization and turn short term outlook neutral while break of 79.51 will revive the case that the index has already bottomed out at 77.43 already.

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USD Drifts Lower on Mixed Data

The major currencies were mixed in the Thursday session as US equities edged up marginally into positive territory, following a sharp rebound in the Shanghai Composite – which rallied by 4.52% overnight. The dollar eased lower against the euro and pound but largely remained confined within its recent range while the yen also relinquished some of its recent strength. The Philadelphia Fed manufacturing index improved by more than forecast in August, expanding to a reading of 4.2 and beating estimates for an improvement to -2.0 from -7.0 in July. Meanwhile, the leading economic indicators index fell short of consensus forecasts for an unchanged monthly reading at 0.7%, instead slipping to 0.6%. Weekly jobless claims were also slightly higher than the prior week, edging up to 576k from 558k previously.The economic calendar for Friday is light, with just the release of existing home sales due out at 8:30 AM. Existing home sales are seen increasing by 2.3% to 4.99 million units in July, versus 4.89 million units a month earlier.

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Bank of England Votes 6-3 to Expand Asset Purchases, Governor King Dissents

The Bank of England Minutes showed the MPC unanimously agreed to keep the benchmark interest at the record-low, but voted 6-3 to increase the scope of the asset purchase program by GBP 50B to GBP 175B earlier this month.
Governor Mervyn King, along with Timothy Besley and David Miles pushed for a GBP 75B expansion in an effort to support an economic recovery, with the statement going on to say that ‘all members agreed that substantial further asset purchases were needed over the next three months’ as policymakers expect inflation to remain below the 2% target until 2012. The board maintained a dovish outlook for price growth and projects inflation to slip below an annual rate of 1.0% this year, and went onto say that ‘insufficient stimulatory monetary policy’ could hamper the prospects for a sustainable recovery as the outlook for future growth remains uncertain. Meanwhile, the central bank noted that ‘the most immediate downside risks to the economy seems to have receded,’ while the rate of money growth remained surprisingly weak, and the BoE may take further steps to steer the economy out of the recession as price pressures remain subdued.

As a result, the British pound tumbled lower against its currency counterparts following dovish outlook held by the central bank, and slipped back below the 50-Day moving average (1.6464) to retrace the previous day’s advance against the U.S. dollar. However, the overnight decline looks to have stalled at an intraday low of 1.6375, with the pair holding above the weekly low (1.6275), and a rise in U.K. retail sales may push the GBP/USD higher over the next 24 hours of trading as growth prospects improve.

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Euro: How Strong is the Economic Recovery?

The euro was exceptionally volatile last week; but this wasn’t unusual given the pace that the rest of the currency market was running at. What was unusual though was the sharp selloff through Friday. Was this merely a sympathy move to EURUSD? Does weak inflation really have that much influence over price action? Or perhaps there are larger fundamental concerns putting pressure on the market. Though there is smattering of event risk in the week ahead; the world’s second most liquid currency will likely find its pace through the same forces that have driven the US dollar, Japanese yen and commodity bloc: risk appetite and outlook for growth.

For some fundamental traders, the euro’s tumble through the end of this past week probably comes as a surprise after the better than expected GDP numbers Thursday. Seemingly leading the western world in its slow recovery from its worst slump since WWII; Germany and France reported growth of 0.3 percent through the second quarter (against forecasts for contractions of 0.2 and 0.3 percent respectively). As the two largest member economies of the Euro Zone, this could be construed as clear evidence that the region’s recovery could surpass that of the US, UK or Japan in tempo and scope. However, such a qualification should be made with a greater breadth of analysis. The advance reading of the Euro Zone’s 2Q GDP reading (advanced because nearly half of the member economies’ readings were not yet available for inclusion) reported a smaller-than-expected contraction of 0.1 percent through the three month period; but nonetheless the fifth consecutive decline. Holding the headline numbers back from posting expansion, Italy contracted 0.5 percent and Spain reported its sharpest decline on record. In the end, everything in FX is relative; so on the whole, the modest contraction in the euro space matches the same moderating clip that the US reported. At any rate, the approaching milestone of reaching positive growth is losing its influence over fundamental traders as the evidence for a stagnate period of expansion into 2010 and beyond piles up.

Another enduring concern for traders is the stability of Europe’s financial markets. While nationalistic interests has led Germany and France to take an optimistic outlook for their respective economies and calls to work down deficits, there are many economies under the EU umbrella that are the brink of experiencing market failure. The IMF has projected Ireland’s banking system could lose as much as 35 billion euros through the coming year and some Eastern European countries are struggling to balance their economy recovery with the requirements attached to their massive loans. If there were one threat that surpassed all others, it would be the outstanding loans euro-denominated loans from the Eastern European region. During the boom years, these countries borrowed – in euros – from their western neighbors. In fact, some economies have debt in excess of 100 percent of GDP including Hungary, Bulgaria, Latvia and Estonia. As large swaths of these loans come due, the threat of default grows. It may not seem so; but stability is still fragile. A sovereign insolvency could easily catalyze a greater credit event that seizes the rest of Europe and perhaps the world.

While the bigger themes play out on the market; we will also have a few notable economic releases that can provided predictable periods of volatility. There will be two themes to follow for the week. This month’s investor sentiment readings from the ZEW surveyors is expected to benefit from recent growth reports and the extension of the capital market’s recovery through July and August. The PMI data due at the end of the week, in contrast, may have a little more lasting influence on the fundamental bearing of the euro. After the quarterly GDP numbers, these monthly figures are the next best thing to a growth report. Is the Euro Zone really heading for a stagnant recovery? – JK



Written by: John Kicklighter, Currency Strategist for DailyFX.com

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US Dollar: Is This the Turn Markets Have Been Waiting For?

The US Dollar fell near fresh year-to-date lows versus the Euro and other major counterparts, but a sharp end-of-week reversal suggests that the downtrodden Greenback could stage a larger recovery. Impressive S&P 500 rallies played a large role in dollar weakness. A late-week US University of Michigan Consumer Confidence nonetheless proved sharply disappointing, and the key risk sentiment barometer turned notably lower into the week’s close. The strongly-correlated safe-haven US currency continues to take its cues from risky assets, and a true turnaround in stocks could herald an accelerated USD correction. We feel that a sustained US Dollar rally is almost inevitable, but timing the turn remains extremely difficult and we’ve thus far been early in our calls for Greenback strength. Increasingly one-sided sentiment nonetheless that Friday’s USD rally could be the start of a bigger move. Limited US economic event risk in the week ahead leaves volatility expectations noticeably lower, but the dip hardly precludes short-term breakouts. Last week’s string of top-tier economic reports underlined the fact that forex traders still care about economic data, but market reactions are not always intuitive. Indeed, the dollar has frequently rallied on a number of disappointing US economic data releases. The strange dynamic owes itself to the USD’s strong link to risk sentiment and the S&P 500. When the S&P gapped lower following a clearly worse-than-forecast University of Michigan Consumer Confidence report, the US Dollar rallied sharply against the Euro and other key counterparts. If we can expect similar price action in the days ahead, US Dollar bulls should hope that domestic economic sentiment has likewise taken a turn for the worse. Recent Consumer Confidence figures suggest future consumption-linked reports may similarly disappoint. Foreseeable highlights in the week ahead include Treasury International Capital (TICs) data, Housing Starts and Building Permits reports, and an end-of-week Existing Home Sales release. The first report may prove especially interesting to recently-skittish US Treasury Bond traders, as it will underline the health of foreign demand for US Dollar asset classes. Much was made of a “failed” US Treasury auction at the end of July, where demand for 2 and 5-year Treasury Note was sharply lower than expected. Commentators suggested that supply of US Government debt had far outstripped demand and Treasuries tumbled on the news. Recent 30-year bond auction results nonetheless showed healthy demand for long-term debt—that which is particularly susceptible to fears of excessive government deficits and creditworthiness. We here at DailyFX could not help but notice that the news coincided with the Fed’s aggressive balance sheet expansion on the week. Indeed, the Fed’s Quantitative Easing measures have explicitly purchased Treasuries and likely overstated the health of demand for US debt. The TICs report will provide a breakdown of foreign purchases and demystify the source of robust 30-year bond demand, and any signs of weakness in foreign purchases could have noteworthy effects on the US Dollar and domestic stock markets. Prominent housing data could likewise drive volatility in the US S&P 500 and the Greenback, but results for the choppy data series are especially difficult to handicap. We will clearly keep a close eye on the S&P and other risky asset classes through upcoming trade. Whether or not the US dollar can finally stage a comeback will likely depend on the trajectory of financial risk sentiment. - DR

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Household wealth drops for 7th straight quarter

WASHINGTON (MarketWatch) - The net worth of U.S. households fell by $1.3 trillion in the first quarter, a seventh straight decline that has seen their wealth drop by nearly $14 trillion, the Federal Reserve reported Thursday. Household net worth fell at a 9.9% annual rate in the first three months of the year to $50.4 billion, the lowest in more than four years. U.S. families have lost 22% of their wealth since the peak. Households and businesses reduced their outstanding debt in the quarter. Total private-sector debt fell at a 0.4% annual pace, the first time that private-sector debt had declined since the Fed’s records begin in 1952. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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China moves to block Hummer sale: report

LONDON (MarketWatch) — Chinese authorities have moved to block the sale of General Motors’ Hummer brand to a Chinese company, the BBC reported, citing Chinese state radio. The sale to Sichuan Tengzhong Heavy Industries had been announced earlier this month as part of the bankrupt automaker’s recovery plan. Chinese authorities cited environmental concerns and Sichuan Tengzhong’s inexperience in building automobiles in moving to block the sale, the BBC reported. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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FOREX-Yen up on profit taking, pound jumps on UK data

LONDON, Aug 5 (Reuters) - The yen edged up on Wednesday as traders locked in profits from gains in currencies perceived to be higher-risk, while the euro hovered below its strongest level of 2009 hit against the dollar early in the week.

The dollar was little changed against a currency basket as the safe-haven U.S. currency found its footing after plumbing its weakest level of the year on Monday due to escalating risk demand, but risks were seen tilted in favour of more selling.

Sterling clocked a nine-month high versus the dollar on strong UK services sector data, but overall, investors were hesitant to take on big positions before policy decisions by the European Central Bank and the Bank of England on Thursday, which may offer more clues on their plans for quantitative easing.

"A lot of objectives in cross/yen have been reached," said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank in London, noting that the Australian dollar had breached 80 yen, while sterling/yen has rallied above 160 yen.

"As a result we're seeing some profit taking," he said.

The euro offered limited reaction to purchasing managers' indices for euro zone services sectors, which generally showed improvement in July. [ID:nLAG003648]. Traders also brushed off a bigger-than-expected fall in retail sales in the region in June.

At 0946 GMT, the euro EUR= slipped a touch to $1.4385, but stayed near $1.4445 hit on Monday, its strongest since December.

Against the yen, the euro EURJPY=R slipped 0.1 percent to 136.95 yen, retreating from around 137.70 yen hit on Tuesday, its highest in nearly two months.

The dollar JPY= was down 0.1 percent at 95.15 yen.

The pair barely budged after comments from China's central bank on Wednesday said it would keep a close eye on currency moves and make the yuan more flexible. [ID:nBJC000426]

The dollar index .DXY was flat at 77.752, not far from 77.451 hit on Monday, its lowest since September. Continued...

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Forex News Trader

How do the majority of profitable Forex traders truly profit in the FX market? One way… they trade the news!

Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.

Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.

Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade - as the odds will now be tipped in your favor.

Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market (FOREX). Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.



Our Forex Trading goal is to provide our visitors with the best trading strategies available. We work exclusively with Forex brokers who specialize in news trading, and also include extensive reviews on the best in the business. Any relevant and helpful information related to Forex news trading can be found on this site.

There are many trading methods that exist to help you succeed as a trader, but there also many factors you need to consider before you execute your trades. Each news event moves differently. What we do is provide you with techniques and systems on how to trade these major news events. How can you maximize your gains and limit your loses? Not easily done, unless you truly know what you are doing.

Forex News Trader will teach you the moves you need to make. In volatile or fast moving markets, such as news trading events, it is imperative to be completely focused and on top of your game. You need to constantly learn new styles and techniques if you want to stay ahead.

Whether you profit, or end up like the other 95% of traders, depends on your ability, knowledge, patience, and how the market moves that day. With such a large world market there are numerous opportunities to pull profits on a consistent basis.

If you’ve spent thousands of dollars to learn strategies that do not work - you are not alone. In fact, in a recent poll of over 5,000 active traders, the majority have spent over $3,500 on education. Some people drop more money into Forex courses then into their own trading account. We offer insider strategies that will give you a huge edge to succeed in the Forex market. You can also learn our Forex Trading Systems and expand your wealth even further.

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China’s forex reserves rise to $2.13 trillion

China's reserves rose at a record pace in the second quarter topping $2 trln. The rise in China's forex reserves may increase the risk of inflation. China added $178 bln in reserves during the second quarter. The rise in reserves suggests that "hot" money (speculative capital) is pouring into China as investors anticipate an economic rebound. The increase in reserves comes as China's economy is recovering, the money supply is rising and bank lending rose at a record pace in June. China's June M2 money supply growth rose 28.5%. The price of China's real estate and equities has risen sharply over the past few months. The rise in lending, money supply, equities and asset prices generate concern about the risk of inflation in China. In response to this risk, the Central Bank of China implemented a modest tightening of monetary policy Wednesday stating that the accommodative phase of monetary policy is over.
The Bank of Japan (BOJ) concluded a two-day monetary policy meeting Wednesday and elected to hold rate policy unchanged at 0.1%. The BOJ also reduced the expansion of its quantitative ease at today's policy meeting to three months from six months. The BOJ introduced an expansion of quantitative ease earlier in the year. The BOJ elected to increase purchases of corporate bonds and commercial paper to boost liquidity to combat the impact global financial crisis on Japans economy. The addition of liquidity by the BOJ is starting to have impact. The BOJ says that Japan's economy has stopped worsening. By reducing the timeframe for expansion of quantitative ease the BOJ appears concerned about the long term impact of expanding liquidity. The reduction in the time frame for the Bank of Japan's expansion of quantitative ease is a sign that the Bank of Japan is preparing for an eventual exit strategy from accommodative monetary policy. The BOJ forecasts a -1.3% core inflation rate for fiscal 2009. Infation is not a risk in Japan but as the Japanese and global economy recover, the BOJ will need to take back stimulus and exit quantitative ease. This is a modest positive for JPY.
Today's report of record rise in China's reserves and the actions taken by the Central Bank of China and Bank of Japan may have significant impact on global equity, commodity markets and the USD. The increase in China's reserves may be used to buy commodities. The reserves may also be diversified into non-USD denominated assets. This could fuel higher commodity prices and a weaker USD. The BOJ's decision to reduce the timeframe for quantitative ease is a signal that the Bank of Japan sees the global recession nearing an end. If this is the case, equity markets and commodity markets may continue their current rally supported by improving risk sentiment and optimism about the global economy. The commodity currencies may experience increased demand. The actions taken by the Bank of China and Bank of Japan suggest the risk of global deflation has been reduced by prior central bank actions to boost liquidity and governments to increase fiscal spending. Central bank officials in China and Japan are concerned about the impact of the stimulus plans. The central Bank of China's next policy move will be to tighten policy and the BOJ is setting the stage to exit quantitative ease.

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Euro Rises on Manufacturing Report Figures

The euro posted the first climb versus the U.S. in four days as this Friday a report indicated that the European manufacturing and services contracted at a slower pace, and German business confidence improved.

The Eurozone currency is ending the second week of gains versus low-yielding currencies like the Japanese yen and the U.S. dollar as a rally in stocks that started in the beginning of the month raised confidence among traders to take riskier positions in currency markets, which until then, were influenced by concerns regarding the global slump and its consequences. Today a report indicated a consecutive climb for the German business sentiment, suggesting that the biggest economy in the European Union is finding its way out of recession, adding optimism to the Euro outlook. The pound declined versus the euro as the quarterly GDP figures slumped more than estimates, reflecting on pessimism towards the second most traded currency in Europe.

German financial analysts are happy to affirm that reports in the region are finally coming with confident figures. Today’s German business sentiment surpassed expectations and helped stock markets in Europe to climb, attracting investors to purchase euro priced assets. United Kingdom’s GDP figures also helped the euro to gain regionally, since evidences that the Eurozone is economically healthier than Great Britain add attractiveness for the euro outlook.

EUR/USD traded at 1.4245 as fo 12:06 GMT after being traded at 1.4122 hours earlier. EUR/GBP traded at 0.8645 from 0.8580.

If you want to comment on the Euro’s recent action or have any questions regarding this currency, please, feel free to reply below.


This entry was posted on Friday, July 24th, 2009 at 1:08 pm and is filed under Euro. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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U.S: A Long Way Out Of The Crisis

The economic grow is weak the United States with some areas improving better than others. The real estate market, as an example, has found a bottom at current levels, while the unemployment rate remains high and could increase in the future. Deleveraging is not over and small/medium size businesses are now under pressure. CIT group could not refund USD 1 billion in debt that will mature in August and the company should now accept USD 3 billion loans from bondholders to avoid bankruptcy. CIT¡¦s meltdown would have spread into the retail industry, since about 60% of the footwear and apparel products rely on the company. In effect, economic data remains inconsistent and fragmented. After having slumped 1.2% in May, industrial production declined only 0.4% in June (-0.7% expected). Nonetheless, capacity utilization printed 68.0%, which corresponds to the worst number in history. Retail sales rose 0.6% in June, versus May¡¦s gain of 0.5%, supported by the increase of 2.3% in auto sales. However, sales were up only 0.3% excluding motor vehicles.

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Dollar Down as Risk Appetite Spurs Demand for Yield

The greenback posted a negative performance today as a decreased demand for safety made investors to leave the U.S. currency attracted to riskier assets in emergent markets.

The dollar lost today against several emergent market currencies as North American companies like Apple Inc. posted higher-than-expected earnings, raising investors’ confidence to purchase emergent market currencies like the Russian ruble, and commodity linked currencies like the Canadian dollar.

USD/CAD traded at 1.0990 as of 20:10 GMT after peaking at 1.1105 in the intraday chart.

If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.



This entry was posted on Wednesday, July 22nd, 2009 at 9:14 pm and is filed under Canadian Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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Greenback Drifts Lower on Shift to Risk

The dollar fell against the majors at the start of the week, sliding to a 6-week low against the euro at 1.4248 and a one-month low versus the Canadian dollar at 1.1023. The greenback came under pressure amid gains in the US stock market, which was prompted by news that troubled lender CIT would be bailed out by bond holders and thus avert bankruptcy.

The economic calendar saw the release of the June leading economic indicators, which declined by less than expected to 0.7%, beating calls for a decline to 0.5% versus 1.2% in May. The data slated for release this week will see May home prices, weekly jobless claims, June home sales and the July University of Michigan consumer sentiment survey.

The major fx pairs are likely to remain confined within range in the upcoming week with only a handful of reports slated for release. The key highlight will be Fed Chairman Bernanke’s Congressional testimony, which begins on Tuesday. Markets will be looking to Bernanke’s comments to Congress on how the FOMC will begin to rein in quantitative easing in order to quell nascent inflationary fears.

This article contains the following sections:



Loonie Jumps to One-Month High


Euro Bounces above 1.42

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Top Forex TV Economic News

Top Forex TV Economic News »

London Like-for-like Retail Sales Rise In June
07/20/09 09:21 am

(RTTNews) - Retail sales in central London in June were up 4.7% year-on-year on a like-for-like basis, the British Retail Consortium said Monday. A year ago, sales were up 9%. The increase in the sales was broug... Full Story »


U.K. NHS Must Prepare For Financial Freeze From 2011
07/20/09 08:59 am

(RTTNews) - U.K.'s National Health Service must prepare for financial freeze from 2011, the King's Fund and Institute for Fiscal Studies said in a joint report on Monday. U.K.'s ruling Labor Party and the Oppos... Full Story »


Foreign Acquisitions Of Canadian Securities Double, Reach 5-year High
07/20/09 08:55 am

(RTTNews) - Transactions in securities resulted in substantial inflows of funds to Canada in May, Statistics Canada said in report released Monday morning. Foreign acquisitions of Canadian securities reached a ... Full Story »


Canadian Wholesales Sales Drop To Lowest In More Than 3 Years
07/20/09 08:48 am

(RTTNews) - Canadian wholesale sales fell less than forecast in May to its lowest level since December 2005, according to data released Monday by Statistics Canada. Wholesale sales in current dollars fell 0.3%... Full Story »


U.K. Conservatives Would Abolish FSA, Make BoE Responsible For Financial Regulation
07/20/09 08:18 am

(RTTNews) - U.K's conservative government would abolish the Financial Services Authority and would hand banking regulation back to the Bank of England if the party comes into power next year, party leader David Cameron ... Full Story »


Contribution Of Manufactured Goods In India's Exports Down 18% In 9-Years- Assocham
07/20/09 07:56 am

(RTTNews) - The contribution of manufactured goods in India's total exports dropped by 18% during 1999-2000 and 2008-2009, reports PTI quoting a study by industry body Assocham. The rising competition and deman... Full Story »


Dollar Falls Further Versus Euro, Sterling Monday Morning
07/20/09 07:54 am

(RTTNews) - The dollar extended its losses from the previous week Monday morning in New York as potential gains for US stocks increased risk appetite for higher-yielding currencies. Green shoots on the economic ... Full Story »


BoE Report Says Mortgage Lending May Continue To Strengthen
07/20/09 07:37 am

(RTTNews) - Monday, the Bank of England's latest Trends in Lending Report said total net mortgage lending in May had its lowest flow since the monthly series began in April 1933. However, major UK lenders repor... Full Story »


UK Gross Mortgage Lending Rises In June: CML
07/20/09 07:16 am

(RTTNews) - Monday, the Council of Mortgage Lenders reported that gross mortgage lending in the UK rose 17% month-on-month to GBP 12.3 billion in June. However, gross mortgage lending was 48% lower than the sam... Full Story »


U.K. Conservatives Would Abolish FSA
07/20/09 07:01 am

(RTTNews) - U.K's conservative government would abolish the Financial Services Authority and would hand banking regulation back to the Bank of England if it comes into power next year, party leader David Cameron said Mo... Full Story »


UK M4 Money Supply Falls In June
07/20/09 06:07 am

(RTTNews) - UK's M4 money supply fell 0.2% month-on-month in June, after rising 0.2% in the previous two months, the Bank of England said Monday. Economists expected a growth of 0.4%. Year-on-year, the M4 money... Full Story »


Slovenia May Industrial Turnover, New Orders Rise On Month
07/20/09 05:59 am

(RTTNews) - Monday, a report by the Statistical Office of the Republic of Slovenia said the industrial turnover rose 3.2% month-on-month in May, reflecting a rise in turnover from both the manufacturing as also mining a... Full Story »


Hong Kong's Apr-Jun. Jobless Rate Edges Up
07/20/09 05:44 am

(RTTNews) - Hong Kong's seasonally adjusted jobless rate edged up to 5.4% in the April to June period from 5.3% in the preceding three months, the Census and Statistics Department said Monday. The rate came in line econ... Full Story »


Australia May Producer Prices Continue To Fall
07/20/09 05:23 am

(RTTNews) - Austria's producer price index fell 1.2% year-on-year in May, slower than a 1.5% fall in the previous month. The latest decline in producer prices was not as steep as in May, when they dropped at the fastest... Full Story »


FIIs Pump $6 Bln. Into Indian Markets During The Year
07/20/09 05:08 am

(RTTNews) - Several Foreign Institutional Investors (FII) pumped over $6 billion or about Rs.29,940 crore into Indian markets from January to July, reflecting their confidence in Indian markets, reports PTI, citing SEBI... Full Story »


U.K. Economy To Shrink 4.4% In 2009, Biggest Fall Since 1945: ITEM Club
07/20/09 05:02 am

(RTTNews) - The British economy is expected to record the biggest single year contraction since 1945, the Ernst & Young ITEM Club said Monday. In its latest economic outlook, the think tank is forecasting the ec... Full Story »


Dutch Consumer Confidence Stabilizes In July
07/20/09 04:04 am

(RTTNews) - Monday, the Netherlands' Central Bureau of Statistics said in a report that the consumer confidence indicator remained unchanged at minus 24 in July for the second consecutive month. The index stabilized in ... Full Story »


Iceland Announces Measures To Capitalize Three New Banks
07/20/09 03:53 am

(RTTNews) - The Iceland government on Monday announced a plan to capitalize the three new banks - Islandsbanki, New Kaupthing and New Landsbanki - created following the collapse of the main Icelandic commercial banks in... Full Story »


Dutch May Trade Surplus Decreases
07/20/09 03:53 am

(RTTNews) - Monday, a report by the Netherlands' Central Bureau of Statistics said the trade surplus narrowed to EUR2.5 billion in May from EUR2.7 billion in the previous year. The value of exports dropped 21% ... Full Story »


U.K. Economy To Contract At Biggest Pace Since 1945: ITEM Club
07/20/09 03:12 am

(RTTNews) - Monday, Ernst & Young's ITEM Club said it expects the U.K. economy to shrink 4.4% in 2009, the largest fall in a single year since 1945. The estimate for 2009 was worse than the 3.5% decline predicted in Apr... Full Story »

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Forex News Trading

Traders on the Foreign Exchange market, Forex market for short, can potentially make thousands of dollars based on the volatility and fluctuations of a country’s currency. To better themselves and have a leading advantage over other traders, some Forex traders and investors participate in a practice known as news trading. The risks are very high, but the potential gains can be worth thousands of dollars and many traders and investors use this technique.

The technique of news trading is quite simple. It is the trading of foreign currency immediately before or after an important economic news announcement. After such announcements, there is a high possibility that market prices will fluctuate, either for the better or worse, depending on the announcement. For example, if the U. S. Federal Reserve announces another increase of the interest rate, many traders might invest in the U.S. dollar as it is expected that its value will appreciate. The main advantage of news trading is the potential for a country’s currency to make huge gains or losses in very little time. Within minutes of an economic announcement, a country’s currency can gain or lose one hundred points almost instantly. The potential of huge profits attracts Foreign Exchange traders and investors, however there are various risks associated with news trading.

Like any investment, there is always a risk, and news trading on the Forex market is no different. Though the potential profits are huge, the losses are also equally as large. The dangers of news trading come from the fact that a trade must be made quickly or else you are going to lose. If you are caught on the bad side of a trade, your money will be gone quicker than you can blink your eye. You will lose money so fast that there won’t even be time for you to manually close your trades, leaving you with nothing. Stop-loss orders are also potentially dangerous as there is a high probability of slippage because of the sudden price fluctuation.

Though some investors and traders might get lucky trading news, there is only a small probability that you will make a profit. Even if you are an expert news trader, you should still be very, very cautious when participating in this practice. Successful news trading depends solely on how you get your news. The most successful news traders are the ones with the fastest news feeds and those that are able to quickly place their trades immediately after an announcement has been made. Even using other forms of news trading, such as placing orders above or below the market price is still a guessing game, and those traders in the market who base their trades on guesses, won’t have much money after a short time.

For many Forex traders and investors, their trades are dictated by technical indicators and price indexes. Hours are spent researching every indicator, taking every risk into account and then making a decision based on everything they have studied. However, for a Forex news trader, none of this matter, and the only thing they take into account is economical news announcements.

News trading is possible because the Forex market is always open, unlike many financial markets. In a financial market, securities trades of certain stocks are suspended when an important company announcement is being made. These announcements are usually made after the market has closed for the day. However, because the Foreign Exchange market is open 24 hours, any economic announcement will have direct affects on the currency of that country, and maybe others as well. In the Forex market, there are eight major currencies that are traded, as well as over seventeen derivatives to be traded as well. This means that on any given day, there will always be economic announcements from any of the major traded currencies. The major trader currencies are as follows:

U.S. Dollar (USD)
Great British Pound (GBP)
Euro (EUR)
Japanese Yen (JPY)
Australian Dollar (AUD)
Swiss Franc (CHF)
Canadian Dollar (CAD)
New Zealand Dollar (NZD)
Because of the availability of each currency, currency pairs, and its derivatives, such as USD/JPY, EUR/USD, AUD/USD, as well as several others, each currency can be traded at any given time because these currencies are globally traded.

Any Forex news trader or news investor will have to have the latest most up to the moment news announcements. Even if the news announcements are only a couple of minutes old, this can have devastating effects for any trader who has risked any sum of money. Most news traders like to keep an eagle eye on any news regarding economical activity, but most importantly news dealing with interest rates changes, FOMC rate decisions, retail sales figures, inflation indicators such as the consumer price index (CPI), producer price index (PPI), unemployment figures, industrial production announcements, boost in business and consumer confidence, as well as business sentiment surveys. Manufacturing sector surveys, trade balance release details, and foreign purchases of U.S. Treasuries may also prove useful for a news trader to better make decisions regarding when or when not to trade.

However, it should be remembered that these news announcements can have ranging impacts on a country’s currency, and after an announcement, the volatility of a currency may greatly fluctuate. It is important to take advantage of news that creates movements in volatility that will last for a few minutes or even hours. Trading on the Forex market based solely on news is a difficult and sometimes dangerous practice. However, there are some indicators that can make a news trader’s job easier, such as breakout indicators (Bollinger bands, breakout of a candlestick bar, or a price bar). Research has proved that news announcements can impact a currency’s value quite severely, in some cases it can gain or lose anywhere from 33 pips to 124 pips, opening up the ideal trading opportunity looked for by news traders. If a news trader is able to act quickly enough, even the smallest news release can be turned into a potential profit of thousands of dollars. However, it is important to remember the volatility of such announcements, and although the profits seem endless, the losses can happen too.

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Forex News Trader

Forex News Trader

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US Dollar, Japanese Yen Higher as Oil Leads Commodities Lower Overnight (Euro Open)

The US Dollar and the Japanese Yen rose as oil prices led commodities lower in overnight trading, pointing to ebbing risk appetite and boosting the safety-linked currencies. Further gains may be ahead as European stocks react to dour earnings reports from Carrefour and Accor. May’s Euro Zone Trade Balance report is also on tap.
Key Overnight Developments
• Oil Leads Commodity Prices Lower, Boosting Safety-Linked Currencies• Euro, British Pound Turn Lower Against US Dollar in Overnight Trading
Critical LevelsThe Euro saw a bit of selling pressure in the overnight session, losing as much as -0.4% against the US Dollar. The British Pound followed suit, dropping by as much as 75 pips to test a low of 1.6362 to the greenback.
Asia Session HighlightsWith no market-moving data on the economic calendar and a muted session across Asian stock exchanges, lower commodity prices served as the guide for forex price action, pointing to ebbing risk appetite and boosting safety-linked currencies. Most notably, crude oil sank -1.2%, losing slipping below $62/barrel. Trade-weighted indexes of the average values of the US Dollar and the Japanese Yen added as much as 0.2% and 0.6%, respectively.Euro Session: What to ExpectThe Euro Zone Trade Balance is expected to post a flat result in May after showing a surplus of 2.7 billion euro in the previous month. The same period saw consumer confidence advanced for the second consecutive month to the highest since November 2008, suggesting import volumes may print a bit higher than April. That said, there seems to be some room for an upside surprise considering the Euro lost a over 6% on average against the currencies of the region’s main trade partners, making European-made goods comparatively cheaper for overseas buyers all the while discouraging purchases of foreign products.
Turning to risk trends, European stock exchanges may be weighed after Accor SA, the continent’s biggest hotel operator, said second-quarter sales fell 9% as the global downturn saw companies trim business travel expenses while consumers cancelled vacation plans. Similarly bad news comes out of Carrefour SA, Europe’s biggest retailer, who said that profits dropped 1.2% in the three months to June to register the second consecutive quarterly decline on sluggish French and Spanish spending. Such news will weigh on recent optimism about the prospects of a global economic recovery, boosting the safety-linked US Dollar and Japanese Yen.
To reach Ilya regarding this article or subscribe to his email distribution list, please contact him at ispivak@dailyfx.com.
For the most up-to-date forex analysis and news, visit: forexstream.dailyfx.com
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