New York Session – November 25, 2009 4:25 PM

Despite the looming holiday weekend, the price action in the NY session was nothing short of spectacular. Better than anticipated US economic data helped risky assets extend and stocks closed up 0.5% on the day. US jobless claims sank to just 466K from 505K on the back of some rather aggressive seasonal factors (because of the Thanksgiving Day holiday). The rub here is that we will likely see a rebound back towards the 500K mark next week. New home sales blew away expectations and rose 6.2% in October as many buyers expected the first-time homebuyer tax credit to expire in late November (this has recently been extended). Furthermore, the University of Michigan showed an improvement in November consumer confidence as the index rose to 67.4 from a 66.0 preliminary read. Full text »

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Initial Unemployment Claims Fall Dramatically

Signs of improvement continue on the jobs market

This week the initial unemployment claims appear to have dropped rather dramatically. Instead of dropping to 501,000 initial unemployment claims, the current number is down to 466,000. The four-week moving average was also below 500,000.

This report coincided with a report from the Federal Reserve that shows an increasingly optimistic forecast for the economy. The report also indicates that stability could be coming to the jobs market. While the situation still shows weakness, the pace of job loss has slowed, and things are not as bad as they were at the beginning of the year.

See Also

• Looking for Trends in Forex Trading
  Currency trading on the FX market

London Session – November 25, 2009 5:49 AM

 
EUR/USD finally moved back above the Full text »

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Fed On Board with Orderly Decline of the U.S. Dollar

Greenback weakens in currency trading

It’s open season on the U.S. dollar today in forex trading as gold gets ready for another surge, and as stocks get ready for a higher open. Additionally, the fact that the Federal Reserve sees the dollar’s decline as orderly and acceptable, it is an indication that dollar strength is not going to be very heavily defended.

However, the Fed isn’t all rosy on the dollar’s weakness. The body is aware of the risks associated with a declining greenback in currency trading, as Kathy Lien reports in FX360:

According to the minutes of the November 4th monetary policy meeting, Fed officials have grown increasingly aware of the risks associated with low interest rates and a weak dollar. Some of the FOMC members noted the possibility of negative side effects that might result from very low interest rates such as excessive risk taking in financial markets or an unanchoring of inflation expectations. Although the likelihood of this happening is “relatively low,” they are telling the markets that they will keep an eye on these risks.

The real news that is helping the risk trade today, though, is the fact that the Federal Reserve has revised its economic forecast to paint a happier picture of what’s ahead:

See Also

• Improve Your Forex Trading
  Kathy Lien offers 5 ways to improve your forex trading
• Economic Data and Currency Trading
  Currency trading on the FX market

Asia Session – November 25, 2009 1:50 AM

Gold was the big mover and shaker of the day in Asia as the precious metal surged to new record highs near the ,178.00 per ounce mark in cash. Early rumors that India was looking to add to the 200 metric ton stockpile it purchased last week was cited as a propellant for the commodity. Although the rumors were later denied by an Indian finance minister, the damage had already been done as the big moves helped boost the Euro and other risk currencies higher. Traders now seem to have changed their focus to the ,200.00 per ounce threshold. Full text »

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New York Session – November 24, 2009 4:40 PM

Despite the heavy lot of economic data, the NY session was lackluster in terms of the price action. Equities closed about flat on the day and the US dollar is commensurately unchanged against the major currencies. The consumer confidence report was the main highlight in terms of data. However, while the headline number beat expectations by coming at 49.5 in November (up from 48.7), the details of the report are ominous. Most importantly, the labor differential – which measures jobs plentiful minus jobs hard to get – slipped to a new cycle low of -46.6 from -45.9 the prior month. This indicator has a very robust negative correlation with the unemployment rate and suggests we could be flirting with the 11% handle in early 2010. Full text »

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Euro Can’t Maintain Bounce in Forex Trading

Currency trading with the euro

Earlier, it looked as though the euro might be able to find solid support at 1.50. After pulling back on U.S. dollar strength, it looked as though a euro bounce would turn into something more substantial. Alas, with news out of the U.S., that hope is fading as the greenback gains in currency trading.

GFT’s Boris Schlossberg reports in FX360 on some of the challenges facing the euro in forex trading:

Still, the positive IFO news was somewhat offset by the announcement from GM that it intends to cut 9,000 jobs from its Opel subsidiary. As we wrote earlier, “Employment stabilization continues to be the key to further EZ growth in 2010. The region has been able to avoid the draconian job cuts seen in the US, by utilizing a variety of job-mitigation and fiscal stimulus schemes, but analysts worry that any slowdown in demand in H1 of 2010 will precipitate another round of layoffs which would snuff out the nascent recovery.”

This morning, somewhat disappointing news about the economy in the U.S. is driving stocks lower just after the open. Things aren’t as rosy as hoped, and that means that investors are, once again, turning to the U.S. dollar as a safe haven as the high beta currencies once again struggle for purchase in forex trading.

See Also

• Economic Data and Currency Trading
  Forex trading on the currency market

Tips to Improve Your Forex Trading

Kathy Lien offers insight into currency trading

If you are interested in improving your forex trading, there are some things you can do to increase your success. Just realize that it takes time and practice to become truly proficient at currency trading. GFT’s Kathy Lien offers these 5 tips to improve your forex trading:

1. Buy high and sell higher: Lien recommends that you trade with the trend: "Therefore by buying high and selling higher or shorting low to buy back lower, you put yourself on the side of the trend which should help to improve your trading. People who fight the tape on the other hand could be extremely frustrated if they try to do this with currencies."
2. Entries and exits are both important: Many people focus too much on the entries, and forget that exiting is also an art when it comes to currency trading. Lien recommends trailing stops.
3. Look past 2:1 risk/reward: Don’t get to caught up in the idea of having to make for every you risk. In some cases, Lien suggests, a 1:1 ratio is just fine.
4. Pay attention to the fundamentals as well as the technicals: Don’t get caught up solely in reading the charts: "On a more granular level, day to day economic data can also alter the short term trend in a currency pair or trigger a breakout. So it is extremely important for people employing technical analysis to be aware of economic data that will be released so that you can properly assess the risks to your trade."
5. Do your homework: You’re the only who is on the hook for your decisions. Do your due diligence to make sure you are limiting your risk.

See Also

• Learn Forex Trading
  Looking for currency trends

London Session – November 24, 2009 6:18 AM

The move away from risk evident in Asia started to reverse in early European hours.  EUR/USD held above the USD1.4880 level and edged back above 1.4940 even though the soft tone in stocks followed through into early European hours.  As EUR/USD turned higher so did the usual barometers of the risk trade such as EUR/JPY and AUD/USD.  A run of good European data early in the session supported the mood.  The German IFO index registered a stronger than expected 93.9 with strength being registered both in the current assessment and expectations indices.   German Q3 GDP was confirmed at +0.7% q/q and UK Oct mortgage approvals data also rose.  The only fly in the ointment was the inability of French Nov business confidence to rise above Oct’s reading.  Sterling has suffered a weak session despite the better data.  The falls in cable, which have seen it testing the water below GBP/USD1.6500 this morning have been linked with a Telegraph press report which ponders the horrendous size of the budget imbalance in the UK and the difficulties that face which ever government is in power next year.  Full text »

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Asia Session – November 24, 2009 1:42 AM

Even with Japan back in action after a long three day weekend USD/JPY failed to make any waves today, once again stuck in a stagnant range of about 25 pips. However, the yen crosses were all subjected to a selloff in risk, with EUR/JPY, GPB/JPY and AUD/JPY all dropping 55 pips, 80 pips and 70 pips respectively. Full text »

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