Here’s an info-graphic on cornfields vs oilfields:
Unrest In Egypt To Rattle The Global Financial Markets
The global stock markets were sent crashing last Friday when the political turmoil in Egypt escalated. [Read more...]
Philippines Outlook 2011
2010 went particularly well for the Philippine economy as it is expected to have expanded by as much as 7.0% for the whole year. [Read more...]
Major Economic Reports For December 26, 2010 to January 1, 2011
Hello trader friends! Hope everyone is enjoying the holiday season. Anyway, here are the global economic releases for the last week of 2010. May the New Year bring in some more success in our trading. Good luck! [Read more...]
The Santa Claus Rally
For kids it’s usually toys that they ask from Santa Claus but for us stock market players, it’s the Santa Claus rally that most of us ask for. For those who do not know, the Santa Claus rally is the rise in stock prices in the month of December and is usually seen on December 26 to December 31 in most stock markets worldwide. However, it doesn’t happen at the exact dates mentioned but yes, it usually takes place after Christmas day and before New Year’s eve. The usual factors behind the Santa Claus Rally phenomenon includes people trying to complete trades and make adjustments for tax purposes, happiness around Wall Street that triggers buying, injection of additional funds into the market including people who are investing their Christmas bonuses and the fact that the pessimists are usually on vacation this week to gain some positivity and good vibes (agree?! lol). This year, it looks like the Santa Claus rally has [Read more...]
Gold Dispensing Machine – Buy Gold Like You Buy Coke!
Envision being able to buy gold the way you buy your favorite soda. A fantasy? Not so…
“Gold to go” unveils its first gold dispensing ATM in the world at Emirates Palace hotel in Abu Dhabi.
Watch the video after the JUMP… [Read more...]
Major Economic Reports For December 20-24, 2010
Here are the major economic releases for December 20 to 24 of 2010. Kindly see the attached calendar to see the potential market moving reports and their respective currencies. Have a great week of FX trading! [Read more...]
Quantitative Easing Explained
Looks like these guys properly explained what quantitative easing is lol. Check out the video after the JUMP… [Read more...]
US Markets Rallied Ahead of Thanksgiving!
The US equities and bonds markets bounced back yesterday following the release of several encouraging economic reports. The rally in the markets occurred a day after a sell-off occurred due to the recent military conflict between North and South Korea. Traders initially found confidence when Germany’s business climate, as measured in the German Ifo business climate index, unexpectedly improved with the index rising to to 109.3 from 107.7. The index was initially seen to weaken to 107.6. Of course, this surprise came amid the current drama in Ireland which I will talk about in my next article so watch out for that! [Read more...]
North Korea Aids the US Dollar
Anyeonghaseyo! The present political and military conditions particularly in the orient are very shaky given the recent artillery attack to South Korea by its neighbor up north. Yesterday (November 23), the world, especially South Korea, was caught off guard when NoKor bombarded Yeonpyeong Island with artillery shells, killing at least 2 and hurting dozens. SoKor, of course, was then forced to return fire and to scramble their fighter planes for defense. North Korea’s attack, by the way, came after [Read more...]
Is The US Market Bullish?
Hello financial market friends! I have here the update on my analysis on the Dow Jones Industrial Average (^DJI). This index is looking good, well at least based on its chart. The last time I mentioned about this was last October 11 during the Columbus day, kindly check this post. Also, if you want to check the one last September 22, it’s in this post. Earlier, the Fed planned to pump $600 billion into the financial system to stimulate the economy in large part by lowering mortgage and other interest rates. This could be good for the US stocks and bonds. However, it won’t be favorable for the US currency as US Dollars could turn out flooding the market. The report prompted different currencies to strengthen against the weakening US Dollar (here’s the analysis). For example, 1.00 Australian Dollar is now equal to 1.008 US Dollar when they were just at parity the other day (kindly see this post). On a side not, the Federal Funds rate was decided to be held at 0.25% which they have been doing lately and will be continuing to do until it’s sure that the US economy is growing. Although, this raises inflation concerns to other analysts. The market turned out to be extremely volatile during the Fed rate decision and the FOMC statement.
Chart-wise, my outlook on the Dow Jones Industrial Average, which is one of the US market benchmarks, could be bullish. As for my technical analysis, I spotted this 2-year cup and handle formation. By the way, a cup and handle formation is naturally bullish, it could be a reversal or a continuation pattern as well. The only way to find out if the pattern is indeed a cup and handle if the index moves past above the neckline. If it does, it could rise and find some selling pressure at the next resistance around the 12,000.00 psychological level. Furthermore, if that marker gets cleared out, the next resistance it could aim for is around the 13,000.00 area. On the opposite note, in case the ^DJI fails to resume its ascend, the significant support could be the 11,000.00 psychological level. If that fails to hold the index from further declining, the next support could be the 19-month uptrend.
Will the Australian Dollar Reach Parity With the USD?
Will the Aussie reach parity with the US dollar or even better in the months to come? Technically speaking, there’s a good chance that it would. As you can see from its daily chart, the AUDUSD pair has recently broken out from a descending right-angled broadening triangle. Having past the 0.9350 and 0.9400 hurdles, the pair could now aim for 1.0000. It could, however, encounter some resistance at its all-time high at 0.9849 which it set back in 2008. Nonetheless, a move above this level could put the AUD on track towards dollar-parity. In fact, if we project the height of the pattern from the point of breakout, its upside target is even better – 1.0600. And as long as the pair’s uptrend channel remains intact, I could say that the Aussie has some more room to move north. But with its present overbought conditi0n and the wall that it is seeing at the channel’s resistance, it could move sideways or even retrace for awhile in the near term before making its journey to the heavens.
A lot of high impact economic reports are due in Australia this week. Tomorrow (October 5), Australia’s retail sales and trade balance figures for the month of August will be on deck. Sales at the retail level are seen to have increased again by 0.5% on top of the previous month’s 0.7% gain. The country’s trade balance is likewise seen to tally handsome surplus of A$2.31 billion from A$1.89 billion due to the country’s expansion in exports to China.
Later that day, the Reserve Bank of Australia will also deliver its monetary policy decision. There, the bank is expected to raise its interest rate by 0.25% to 4.75% after 5 months of holding it at 4.50%. The 1.2% growth rate in Australia’s economy during the second quarter of the year plus the recent improvement in the country’s labor market could indeed warrant a hike in the central bank’s interest rate. A rate hike plus the overall weakness in the greenback would make the Aussie more attractive; imagine netting 4.50% (4.75% – 0.25%) just by going long on the AUDUSD.
The Decade of the Philippine Peso?
A lot of people are asking, will the Philippine peso continue to strengthen against the US dollar? Based on its monthly chart, I’d say that there’s a good chance that it will especially if the USDPHP pair breaks the 43.668 support. If and when it does, the next obvious support would not be at 42.00 as some financial analyst predict but at 40.00. Say the peso buying in tandem with the dollar selling continues and the 40.00 marker gets breached as well, then the pair’s next downside stage would be at 37.50. Actually, I do not want to alarm those who are highly leverage in the greenback. Notice, however, the huge head and shoulders pattern that could be forming already. If this pattern gets validated by a break below 40.00 then it is quite possible that the peso could recover its former glory back in its hay day and trade near the 26.00 versus the USD once again.
The question is, will the Banko Sentral ng Pilipinas (Central Bank of the Philippines) allow the Philippine Peso to appreciate that much? Well, the BSP is not a rookie in protecting the peso. It already defended the peso’s increase in valuation in the past to protect the country’s export industry, foreign direct investments, and the money that the Overseas Filipino Workers (OFWs) are sending back. Hence, it is possible for the BSP to do the same. If it does, then the greenback could rally back towards 46.00 or even 48.00 versus the peso. Still, the global market has the bigger influence regarding the peso. So, continued increase in remittances, which by the way takes up a good chunk of the country’s total income, plus the broad-based weakness in the USD (this was explained in my recent post, please see it here) would benefit the PHP. Companies all over the world are expected continue to lessen their operating costs, thus, supporting the Philippines’ BPO industry and its FDIs in general. Such would also reflect positively in the peso.
Would a higher peso valuation benefit the Philippines? The Philippines is not really an export-based country so even if the country’s export sector gets negatively affected, it would not reflect badly on its overall output. For the longest time, majority of the country GDP is from domestic consumption. Hence, an increase in the peso’s valuation would even encourage more consumption as imports would then be cheaper. Cheaper imports of course would allow local companies to better access and purchase technology that were once scarce, making the processes of the local industries more efficient. Such could also allow local companies to develop their technology which would mark the country’s move from a ‘third world’ country to at least second. Now, will that scenario happen within the next decade? Only time will tell but I’m optimistic that it will.
EURO To Rise By A Whopping 1,250 Pips Against the US Dollar?
Hiyo FX peeps! Did I get your attention? Yes. I believe that its very likely that the EURUSD pair could gain by about 1,250 pips. Now that’s a lot! As you can see from its daily chart, the fiber has recently broken out from a very nice cup and handle formation. At present, the pair is trading just above the neckline of the pattern. With the stochastics in the overbought territory, it could exchange in a range-bound fashion for awhile before moving north. Now, a move past the 1.3500 resistance could send it on the way towards its minimum upside target (computed by projecting the height of the pattern from the point of breakout at 1.4750. If all go well, it could achieve this target in about 6 months which is also the time that it took to form the pattern.
Despite the recent dip in Europe’s Purchasing Managers’ Indices (PMIs), the business climate in Germany as measured in the German Ifo Business Climate Index surprisingly jumped to its highest score in more than three years this month. The index came in at 106.8 which is over the market’s 106.3 estimate. This rise indicates that German companies can withstand the weaker international demand. On the other side of the globe, in the US, the Fed’s inclination to place another set of stimulus programs to support the slowing growth in the US’s economy has of course weakened the greenback to the benefit of the other non-dollar currencies like the EUR. This plus the rally in the US equities markets have also urged investors to move away from the USD in exchange of the higher yielding assets and anti-dollars like the euro.
Just now, the US’s core durable orders for the month of August have grown by 2.0%, which is almost twice of the 0.9% forecast. The previous month’s change was also positively revised to -2.8% from -3.8%. These numbers signify that the chances of the earlier threat of a double dip recession in the US economy have gotten lesser and lesser.
For next week, the CB Consumer Confidence in September is seen to fall to 52.5 from 53.5. But given the strong rally in the global equities markets for the past two weeks which show the manifestation of consumer confidence in the markets, it is therefore possible for the index to have a better-than-expected result. A better-than-projected mark, as we know, could spur some risk taking and EUR buying.
Dow Jones Industrial Average at Current
Hello trader friends! Today in my post is the Dow Jones Industrial Average (^DJI). As we can see, the index ended in the red a while ago as investors are wary about the Federal Reserve’s statement yesterday when they said it would keep monetary policy essentially unchanged but suggested some possible concerns about deflation. Anyway, up or down it has already been a good run for the Dow since it had gained more than 7% for this month of September. In fact, we actually thought there was going to be a double dip recession in the US market soon (kindly see this post), however the bulls proved us wrong and the 10,000.00 psychological level remained strong. This current up-move were lifted by recent US economic data and reports on the Eurozone. The US market’s rise could still continue if more positive data get on the way especially if the US unemployment rate and existing home sales coming out tomorrow turn out to be favorable. This in turn could heavily influence investors and traders’ confidence towards the market.
In my technical analysis, for this index to head further up alongside with the positive reports, it needs to first pass above the 3-year resistance line seen in the chart. If it successfully breaches that marker, the next resistance could the 11,000.00 psychological level then after that is 11,309.00. However, if this index drops, the current support that could hold on to it is the 18-month uptrend. If it slides further below that area, the next support could be the 10,000.00 psychological level then after that is 9,600.00.
Swiss Franc, Pausing Before Making Another Move North?
Hiyo FX friends! Here’s my short and sweet technical view on the CHFJPY pair. As you can see from its daily chart, the pair has broken out from a rare inverted head and shoulders continuation pattern. You see, an inverted head and shoulders pattern is generally a bullish reversal pattern although it can occur as a continuation from time to time as in this case. In any case, the upside target for the pair, judging by the height of the pattern and projecting it from the point of breakout, would be somewhere below 88.00. Sustained buying interest could push it over to that marker. At present, though, the pair’s move up north could take a halt given its overbought condition. Given this, it is possible for the pair to range or even retrace for awhile. If ever it weakens, the neckline of the previous formation should keep it afloat. Still, I could more or less say that things are looking up for the Swiss franc in the near term. Long Swiss franc anyone?
Australian Dollar To Rise By 10% Against the Yen?
It’s another manic week Forex friends! In today’s FX feature I present to you the daily chart of AUDJPY. As you can see, the pair has recently broken out (upside) from a nice symmetrical triangle formation. This breakout could swing the pair towards its previous high near the 88.00 marker. Projecting the base of the triangle from the point of breakout, the resulting upside target would be at 88.00 as well. The Aussie’s run, however, may be tempered for awhile because conditions are already overbought. The pair could range or retrace shortly before heading north again. And given it’s recent spike, it could potentially form a flag or a pennant pattern. At present, the AUDJPY pair is trading just above 80.00. Therefore, if it reaches 88.00, that would be a sweet 10% gain (1:1 margin).
The recent rally in the global equities market and gold’s rush towards fresh all-time high (see my recent post here) have helped the commodity dollars like the AUD. For this week, no high impact economic reports are due from Australia. The major releases, though, from the US, Canada, and New Zealand would more likely sway the Aussie’s short term movement. The US Fed, of course, will have its monetary policy decision on September 21. Building permits, new and existing home sales plus durable goods orders are due as well from the US. In Canada, the country’s CPI and retail sales accounts are on deck on September 21 and 22. New Zealand, Australia’s neighbor, will likewise publish its second quarter GDP growth. Risk appetite, resulting from one or all the these accounts could benefit the non-dollar currencies like the Aussie. The opposite, however, would weigh on it. Watch out for these reports!
Is the Euro Back on the Bullish Track?
Well, well, well. The EURUSD pair or the fiber as what traders call it in the streets appears to have broken out from a rectangle or consolidation. You see, the had been trending up from a low of 1.1876 last June 7 to a high of 1.3334 in August before correcting. All along I thought that the pair would already reverse but it did not. What it did was it only corrected to its 50% Fibonacci retracement level. It then continued to range or trade sideways until yesterday where it broke out to the upside when it finally breached the 1.2900 hurdle. However, the pair seems to be meeting some temporary resistance at 1.3000. If and when it moves past this number, chances are it would once again revisit its previous high just above 1.3300. Given the upside breakout, I can say that there is now a higher probability that the euro will move higher against the US dollar in the near term.
Germany’s September Zew economic sentiment index came in sour, unexpectedly falling to -4.7 (vs. 10.7) from from 14.0. The same sentiment index for the entire euro zone also slipped to 4.4 from 15.8. The slide in confidence can be attributed to the wide budget cuts done by the governments that make up the economic zone. Remember that the zone was being plagued with a credit crisis. One way to plug the countries’ deficit holes would be to drastically slash their spending. A cut in spending would obviously limit the business activity in the region but given Europe’s present fiscal situation, such move is really warranted.
Despite this, the euro still managed to outmaneuver the greenback thanks to the better than expected US core retail sales. Core retail sales in August grew by 0.6% which is twice of the market’s 0.3% consensus.
No high impact economic reports are due from the euro zone for the rest of this week. The euro, however, could take its cue from the releases from the United States. Today, the Us will publish its Empire State manufacturing index and its August industrial production. The former is seen to have reached 8.7 from 7.1 while the latter is expected to have increased again by 0.3%. The expected improvement in the Philadelphia Fed manufacturing index (from -7.7 to 0.9) which will be due tomorrow and the projected jump in the Prelim UoM Consumer Sentiment (from 68.9 to 70.3) could also induce some risk taking. Watch out for these reports.
Swiss Franc Flirting With All-time High Against the Greenback
Welcome to another day of FX trading! In today’s fx feature is the weekly chart of the USDCHF. As you can see, the pair has been losing a lot ground for several weeks now. After hitting a high of 1.1731 last May 31, it has slid since then. In fact, it had already touched the parity level early today. Still, previous supports around the 1.0000 psychological level have kept the price from falling any further. If if the 1.0000 marker gets breached, the pair could revisit its 1-year low at 0.9916. A break of this low could send it towards the pair’s all time low at 0.9635. But with investors protecting the price at 1.0000 and an oversold condition, the pair could, however, stage a rally.
Renewed confidence in the global markets have weakened the dollar’s valuation against its peers as of late. Both the DJIA and the broader S&P 500 have again logged in some beautiful gains yesterday, rising by 0.78% and 1.11%, respectively. Yesterday’s jump in confidence which was reflected in the rise in the equities markets was because of the Basel III agreement that was concluded yesterday. The Basel III is an international regulatory code that requires banks to raise their common equity to 4.5% from 2.0%. This equity will be used by the banks as buffer in case they encounter liquidity problems from say investor withdrawals and the like. In the East, China’s handsome industrial production (13.9%) and retail sales (18.2%) growth further supported the market’s optimism.
The highlight of this week for Switzerland is the Swiss National Bank’s monetary policy decision on Thursday (September 16). The SNB is expected to keep its interest rate unchanged at 0.25%. The bank, though, is very notorious in intervening in the fx market to prevent the Swissy appreciation. They do so because a higher Swissy negatively impacts their export industry. With the Swissy trading at an all-time high against the euro and flirting with historical highs versus the Us dollar, the SNB could indeed meddle in the market. If it does, then a sudden spike against the Swiss franc could occur. Nonetheless, even if the SNB intervenes, its effect would just be temporary. Market sentiment is still stronger and as long as optimism remains, the Swissy could strengthen still.
The Aussie’s Due For a Retracement
Happy weekend FX people! On today’s FX feature is an update of the AUDUSD pair which I posted last September 5 (please see it here). As you can see, the pair has continued to rise within an ascending channel. And as I’ve suggested, the pair indeed rose to mark its fifth wave (wave 5). If the Elliot Wave Principle holds true and if my wave counting is correct then as the theory suggests, the pair should be due for a retracement. Remember that the EWP predicts a correction in the prices after the completion of the fifth wave, starting with wave A and ending with wave C. And given the obvious technical resistances ahead and an overbought condition as indicated in the stochastics, the pair could indeed dip or at least move sideways. If the Aussie weakens against the US dollar, the peak of the third wave around the 0.9200 level and the channel’s support should keep it from falling further.
The Aussie along with the non-dollar currencies rose this Friday due to the better-than-expected July wholesale inventories report in the US. Wholesale inventories has risen by 1.3% as compared to the 0.4% market forecast. China’s better-than-projected industrial production (13.9% vs. 13.1%) , retail sales (18.4% vs. 18.0%), new loans (545 billion vs. 500 billion), M2 money supply (19.2% vs. 17.5%), and the slower PPI (4.3% vs. 4.6%), have also helped the Aussie. Remember that Australia is one of the biggest supplier of raw materials to China. Hence, an increasing business activity means more business for Australia. A weaker PPI, in the same way, benefits the Aussie since a monetary tightening by the Chinese government would be postponed which would allow for business to go on without additional restrictions as of the moment.
For the coming week, no market moving events are scheduled in Australia. Given the lack of economic reports from the country, investors could take this as a chance to pocket some of their profits from their long Aussie positions.
