Items Tagged With April 2006

It’s official: the US is no longer alone it its exhortation of China to further revalue the Yuan. In a press conference held earlier this week, the Finance Minister of Austria (the nation that currently holds the rotating presidency of the EU) suggested that the Yuan must be allowed to appreciate. He argued that such a step was not only in the long-term of interest of China, but would also help correct global economic imbalances. His calls for revaluation closely mimicked those of the US, with one notable difference. The Finance Minister insisted that the Yuan revaluation should be accomplished gradually, whereas American politicians would like to see it take place in one swift motion. AFX Limited reports:

The EU Commission reportedly backs a more gradual approach because of concerns that sudden yuan adjustment could weaken the dollar against the euro.

New trading leads from the G-7 meeting scheduled to be held over the weekend will decide the position of the US dollar, which is currently rangebound against other major currencies like the euro (1.2308 USD). G-7 finance ministers and central bankers will discuss if the yuan is to be strengthened as demanded by US President George W Bush. Uncertainty about US interest rates also kept the dollar hovering in a narrow trading range. Forbes.com reports:

Mitsubishi UFJ forex dealer Minoru Shioiri said: 'But even if the Chinese government were to make an additional revaluation of the currency, any action will be gradual, thereby yielding no impact on the basic direction of the Asian currencies.' 'The release this week of the Federal Open Market Committee minutes spooked the market by sparking fears that an end of interest rate hikes there is imminent,' Shioiri said.

For months, Euro bulls have used fundamental economic analysis to support their claim that the Euro was due to appreciate against the USD. They have since been joined by many technical analysts, who jumped on the Euro bandwagon after the Euro seemingly broke out of a tight range that it had been confined to for months. Forex markets have also begun to take note, using even insignificant economic indicators as a basis for Euro support. The USD, in contrast, has shown scant signs of life, despite improved prognoses for American monetary policy and a stabilizing trade imbalance. Dow Jones News reports:

The widely expected dollar demise slated for in the latter part of the year may be upon us, as the euro rallies to more than a two-month high versus the greenback and flirts with levels close to the year high.

Learn::Forex provides exclusive content for members of FXCM.  I find that out of all Guest Trading Ideas they have "keeping it simple" analysis that you have to respect.  Others have analysis that from day to day is not consistent and analysis that also can be contrued as more of an art.  (easily interpreted differently from 1 person to another)

Here is Learn::Forex's Analysis today.  See for yourself.

AUD/JPY April 12th, 2006

The pairing that has caught our attention this week is the AUD/JPY.

First lets take a look at the Daily. Two things that stand out.First, notice that we have TWO different fib pulls that are coming together and have for resistance. And second, look at the momentum.it is appearing to weaken.

Then on the 240 minute chart we find confirmation of the price action losing momentum and we also get a nice trend line to use. In SHORT there seems to be an opportunity here.anywhere from current market price all the way back to re-test the trend line and resistance zone of 87.00

We have some support at the 85.50 area with more major support coming in at 85.00 which also happens to line up with a .382 retracement fib. 

This week, China announced it would officially do away with caps on capital outflows. Previously, a business or retail investor wishing to exchange Yuan for foreign currency had to petition the government to do so. Moreover, the amount of currency that could be exchanged was capped at a low value. With this latest move, China has signaled that it is ready to move towards a floating currency system, in which individuals would be free to buy and sell as much Chinese currency as they wished. In the short run, this should help to reduce some of the upward pressure on the Yuan. Xinhua News reports:

The government…made it easier for individuals and firms to buy foreign currency and invest abroad, including allowing domestic banks to invest in financial products outside the mainland.

The Top 100 Forex Sites has been updated.  Please remember this is based on traffic reports from Alexa, a subsidiary of Amazon.   There are some new sites in the top 100 that weren't there before.  I'll actually have to get to the point where I'm keeping history so we can all see if certain sites are changing in rank from week to week.  No surprise that Saxo Bank is #1 again considering all the advertising they do.

Top 100 Forex Sites  

Thanks Marc

By Craig Karmin and Michael R. Sesit, The Wall Street Journal

At an hour past midnight, when he gets home after working as a disc jockey for a New York City classic-rock station, Marc Coppola checks the market and starts trading.

Having lost $750,000 trading stocks after the technology-stock bubble burst in 2000, his appetite for shares is greatly diminished. Instead, he is joining thousands of other individual investors by betting on the global currency markets.

Mr. Coppola, brother of actor Nicolas Cage and nephew of movie director Francis Ford Coppola, earlier this year pocketed about $1,400 on a $60,000 bet that the euro would rise against the dollar. In March, he reversed course, betting $40,000 that the euro would fall. Once it slipped to $1.30 from $1.31, he cashed in half of his investment, then soon after closed out the rest.

"I got scared out of the trade," Mr. Coppola says regretfully. "I should have said, 'the euro is going lower' and rode it down to the $1.20 area."

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There's an article on Trading Markets written by Dave Floyd titled, "How to Correctly Identify the Trend."

The article shows 3 examples where by just looking at the chart without any indicators, one can mistakenly identify the wrong trend direction.  Add a moving average and identify the slope to determine whether to buy or sell on pullbacks or buy or sell on rallies.

This article is recommended and is short and simple.

How to correctly identify the trend