New York Session – February 26, 2009 5:25 PM

The price action was mixed in NY trading as the flows around tomorrow’s month end continue to be volatile. US stocks shed another -1.5% in broad terms as details of Obama’s massive budget  and trillion in proposed tax hikes led shares lower. The 7-year Treasury bond auction, the first since the early 1990s, was described as sloppy though the bid/cover of 2.1 suggests demand for US paper remains robust. Bonds were lower as demand for higher yields drove prices down. The 10-year rate added 7bps to near 3.00% while the 2-year was pretty flat at 1.08%. Gold lost another – towards 946 as profit taking continued. The precious metal briefly tested 935/930 support and this is expected to be an interesting level as we head into the weekend. Full text »

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German Consumer Confidence Rises

Euro holds mostly steady in forex trading

In a surprise bit of good news — at least for the euro zone — German consumer confidence is up. This could be an indication that things are on the verge of turning around for the euro zone economy. Or it just might be a temporary bump.

Boris Schlossberg, from FX360, takes a look at the surprising results of German consumer confidence:

The German figure also squares with the better than expected Italian consumer confidence numbers reported earlier this week indicating that conditions in the Eurozone as a whole may not be as grim as most analysts had forecast.  On the other hand the data may simply be a bounce in sentiment from grossly negative levels and could plunge once again should labor demand contract sharply.

See Also

• Euro in Forex Trading
  Currency trading on the FX market

U.S. Dollar Forex Trading Forecast

U.S. dollar rally expected to continue

The U.S. dollar forex trading forecast is expected to include more U.S. dollar strength. With U.S. stocks ending lower today, and continued concerns that the global recession will worsen before it improves, greenback continues to thrive on its safe haven status.

Indeed, with the Japanese yen falling out of favor with forex traders, it is no surprise that the U.S. dollar is likely to be the currency of choice.

While the long-term outlook for the greenback may not be as strong, there are thoughts that — at least for now – strong demand for the U.S. dollar is likely to continue.

See Also

• Greenback in Currency Trading
  Forex trading with world currencies

Japanese Yen Falls as Safe Haven Demand Wanes

Forex traders unsure of how “safe” the yen is in currency trading

The Japanese yen has long been considered a safe haven currency, in demand due to its stability. Indeed, the yen has been considered one of the safest options in currency trading. Now, though, things are changing. Forex traders are still looking for capital preservation — just not in Japanese assets.

With concerns about the stability of the Japanese economy, not to mention the political problems plaguing the current prime minister, the yen just isn’t being seen as "safe" as it used to be viewed. And, as a result, the flight to safety is increasingly being seen as a flight away from the Japanese yen.

See Also

• Japanese Yen in Forex Trading
  Forex traders and currency trading

Barack Obama Unveils 2010 Budget

2010 budget to run .6 trillion

President Barack Obama unveiled his .6 trillion budget to Congress today. It is a breakdown, rather than the fully-fleshed budget expected in April. At any rate, this year’s budget is likely to be the largest of the Obama Administration — assuming that economic stimulus measures work out.

Stock Trading To Go has an excellent budget breakdown that offers analysis of the budget by putting most of the essentials into 5 main categories:

1. Health care.
2. Expiration of the Bush tax cuts.
3. Iraq War.
4. Bank funding.
5. Reducing greenhouse emissions.

The idea is that by 1013, assuming the economy is recovering and increased revenues are coming in, the yearly deficit can be cut in half.

See Also

• More on the 2010 Budget Presented by Barack Obama
  Commentary on the new budget
• Forex News and Information
  Trading on the currency market

London Session – February 26, 2009 9:34 AM

Risk assets continued to rally in London as the market remains excited about the proposed 0 billion for the financial industry in Obama’s recently released budget. European bourses were up more than 2% on average and the buck was shunned as investors fled safe haven assets. EUR/USD added about 45 pips towards 1.2760/70 and continued to test the 1.28 barrier in early NY trading. EUR/JPY also jumped about 40 pips towards the 125 zone. This left USD/JPY relatively unchanged right under 98. The 98.20/30 intraday high thus far looks to be the next area of resistance here. Full text »

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Asia Session – February 26, 2009 1:38 AM

Another day, another beating for the Japanese Yen….The Yen hit a three month low against the US Dollar as its safe-haven status dissolved with mounting concerns that the Japanese economy is worsening. With Japanese investors now putting their money into foreign bonds, the USD/JPY pair came three pips shy of the 98.00 level after starting the session at lows of 97.30, many are looking to the near term for the pair to break the 100.00 level. Conversely, with the Japanese fiscal year end at the close of March approaching, many expect Japanese investors to repatriate funds, and that would possibly slow the wild descent of the Yen. The EUR/JPY pair began the session at 123.82 lows and gained a big figure to just over 124.88, before a slide to 124.10 in early London trading. Full text »

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New York Session – February 25, 2009 4:53 PM

The battle between risk aversion and risk taking continued to play out in the NY session. Ultimately the flight to safety won out as horrendous US housing data outdid comments from Fed Chairman Bernanke that nationalization of US banks is not the goal. Existing home sales plunged -5.3% in January to a 1997 low run-rate of 4.49 million. This was well below the expected increase to 4.79 from 4.74 last month. Months’ supply jumped to 9.6 from 9.4 and home prices slipped to a -14.8% annual rate to boot. If this wasn’t enough, the report also noted that fully 45% of sales were homes where the sellers were in distress. So the bottom in housing still eludes us. Full text »

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Getting Out When a Forex Trend has Come to an End

Ending a trade while you can still profit — or at least limit your losses

Even though trying to figure out when to enter a position can be difficult, it can be equally as difficult — and important — to realize when it is time to exit a forex trading position.

One way to figure out when to leave a position is to exit when a forex trend is coming to an end. When you see that your position is starting to reverse, that is the time to exit. Forex Strategy Secrets points this out about exiting a position:

When the trend is over get out.  Even if you cannot get out at the top or even if you have lost a little money you still need to get out.   By fighting the fact that the trade is over and hoping it will continue will only hurt you both financially and emotionally. 

If your profit is disintegrating, get out while you still have a profit. Or, if it appears that a new forex trend — opposite to the one you have been trading — is appearing, get out before you lose more than you already have. Sometimes you just have to cut your losses and start again.

See Also

• Learn More About Currency Trading
  Forex trading commentary, analysis and quotes

Risk Aversion Sends Canadian Dollar Lower in FX Trading

Loonie drops against dollar in currency trading

Risk aversion is back on the currency market, and that means that the Canadian dollar is lower in FX trading. The loonie normally moves with equities, and equities are lower this morning.

Remarks by President Barack Obama to Congress failed to sustain yesterday’s stock market rally, and as equities falter, so does the loonie in currency trading. The U.S. dollar is again preferred as traders look for a safe haven for capital preservation.

See Also

• Summary of Remarks by Barack Obama
  President Obama addressed Congress yesterday
• Loonie in Currency Trading
  FX trading with world currencies

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