Forex Trading Center

Some people are asking me about the secret of daily trading. The answer is there is no secret. It is there for everyone to see but the question is, can you accept what you see.

Trading the daily chart requires patience, lots of it. That is what most of us lack. Patience. If you look at the longer timeframe charts, you will see that price will stop or hover around certain areas. That is your key point. Always start or stop trading around these key point.

The next indicator I use is CCI. CCI alone is a bit of a headache. So I smooth it out with MA. With the MA, I can see the direction of trade clearly. People say MA is a lagging indicator but I dont want to be early going to a party. I like to enter when the party already started.

The last advice is, there is no such thing as holly grail. You just cannot win all the time. The best that we can do is try to win as much as possible and lose a little as possible. In the long run, it would be profitable enough to stay trading. Otherwise you need to find another business to run.

The U.S Dollar struck a one-year low against a basket of currencies on Wednesday, as investors reduced dollar holdings on views that the U.S. currency may weaken for now due to pessimism over the U.S. economy. Investors have been selling the greenback across the board as they speculate the Federal Reserve will be forced to keep its Interest Rates low for the time being to support the country’s fragile economy. Looking ahead, currency players will watch for the U.S. consumer price index (CPI) for August to be released later in the day. The CPI data has the biggest potential to move forex markets, since a weak figure could lead to lower long-term U.S. interest rates, and that might prompt more Dollar selling.

USD – Dollar Reaches Lowest from Improving Risk Appetite

The U.S Dollar declined Tuesday, pushing the currency to the lowest level in a year and reversing earlier gains versus major counterparts after a pair of economic reports said U.S Retail Sales and Producer Prices rose more than economists expected, encouraging speculation that the economy is reviving.

As the global recovery continues, and risk diversification takes place, traders could see the U.S. Dollar remain under pressure for the upcoming months. Against the Japanese yen the Dollar also gave up earlier gains to trade at 91.07 yen, little changed from 91.02 yen late Monday.

The greenback was also undermined by gains in global stock markets, which reduced the USD appeal as a safe haven. For months, the greenback has tended to move in the opposite direction as equities as investors’ willingness to buy riskier assets fluctuates. That trend has shown signs of diminishing in the past month or so, and resuming its more traditional correlation to economic data.

Traders have sold the U.S. currency heavily so far this month as optimism about a global economic recovery diminished safe-haven demand. The prospect of low U.S. yields and concerns about the widening U.S. fiscal deficit fueled Dollar selling.

Today in focus will be a slew of U.S. data to be released later in the day. The U.S. consumer price index (CPI) for August, 2nd quarter current account data, August industrial production numbers and September NAHB housing data are all due.

EUR – Pound Drops versus USD and EUR

The EUR dropped early Tuesday versus the Dollar after the ZEW German Economic Sentiment index showed weaker than expected results; however, the common currency later trimmed its losses, trading at $1.4671, from $1.4614 versus the Dollar on Monday.

The British Pound was the big mover on currency markets, dropping versus the greenback and falling to a 3-month low versus the European single currency after Bank of England (BOE)Governor Mervyn King said the Monetary Policy Committee was considering a cut in the deposit rate paid on some reserves held by commercial banks at the BOE. The GBP fell 0.5% versus the USD to $1.6498. The EUR advanced to its highest level against the GBP since June, trading at 88.94 pence

While a slow news day is expected from the Euro-Zone today, the release of the British Unemployment data at 8:30 GMT might help the Pound to regain some of its losses. The release of the Euro-Zone CPI report might weigh down on the common currency if the number is worse than expected, sparking fears of deflation.

JPY – JPY Down after Release of Encouraging US Data

Japan’s currency traded at 133.45 per EUR early morning, from 133.47 yesterday in New York. It traded at 91.02 per USD from 91.05. The Yen is being sold as investors move away from risk averse trading and into higher yielding assets following encouraging economic data from the US which signaled the recession is coming to an end.

The release of the Industrial Production report today at 13:15 GMT is predicted to show an increase of 0.6%, the most since October. This will likely contribute to further sell off of the Yen versus its riskier counterparts.

Crude Oil – Crude Prices Near $71 a Barrel

Crude Oil fell nearly 1% toward $71 on Wednesday, giving up some of the previous day’s gains of 3%, as a higher-than-expected rise in oil product stocks outweighed news signaling a U.S. economic recovery.

Though Crude Oil has more than doubled from this year’s low of $32.70 hit on January 20, it is trading 72$ below the record high of more than $147 struck in July 2008. Economists expect Crude prices to hover between $60 and $70, as demand has still not recovered to the extent that would help to sustain prices above $70.

The American Petroleum Institute said in its weekly inventory report after Tuesday’s close that crude stocks rose by 631,000 barrels last week, against the forecast for a 2.4-million-barrel drawdown. The oil market is currently focusing more on EIA data than equities or the Dollar, analysts have said.

While today’s release of US inventory data due at 14:30 GMT is expected to show a drop in stockpiles, a modest drop might not be enough to push Oil on another rally as inventories are still at their highest level.

Article Source – USD Hits 1-Year Low on U.S Economic Pessimism

The British Pound fell against the US Dollar in overnight trading ahead of a report that is set to show the unemployment rate hit a 12-year high of 5% in August. The Euro Zone Consumer Price Index and Swiss Retail Sales are also on tap.

Key Overnight Developments

• Australia Won’t Raise Interest Rates Until Next Year, Says Westpac
• Euro Flat, British Pound Lower Against USD in Overnight Trading

Critical Levels

The Euro consolidated in a narrow range below the US session high at 1.4686 in overnight trading. The British Pound moved lower, slipping as much as -0.4% against the US Dollar.

Asia Session Highlights

Australia’s Westpac Leading Index added 1.1% in July, rising to the highest level in seven months. The index fell -1.8% from a year ago, the smallest decline since October 2008. The metric seeks to forecast how the economy will perform over the coming three to nine months. Westpac chief economist Bill Evans said the upswing in the index over recent months points to “a significant improvement in [Australian economic] growth prospects in 2010.” However, Evans noted that the bank does not expect future growth will be “sufficiently robust” to warrant to raise interest rates before next February, reinforcing the cautious tone of the minutes from September’s RBA monetary policy meeting.

Euro Session: What to Expect

The UK labor market is likely to show continued weakness as Jobless Claims rise by 25,000 in August, pushing the unemployment rate (known in the UK as the Claimant Count) to a 12-year high at 5.0%. More of the same is expected going forward: a survey of economists polled by Bloomberg forecasts the jobless rate will top 9% next year. Continued job losses will trim incomes and discourage spending, threatening the economy’s ability to sustain recent improvements and potentially adding to selling pressure on the British Pound after yesterday’s damaging comments from Bank of England Governor Mervyn King. For our part, we sold GBPUSD at 1.6617.

In the Euro Zone, the Consumer Price Index is set to show inflation shrank at an annual pace of -0.2% in August, confirming initial estimates. To that effect, the reading may already be priced into the exchange rate and, barring unforeseen revisions, looks unlikely not produce a meaningful response from the currency markets. The longer-term view is not encouraging for the single currency, however: while the August reading amounts to a slight improvement from the previous month’s -0.7% contraction, the bottom line is that prices are set to decline for the third consecutive month, threatening to bring economic growth to a virtual standstill if expectations of lower prices in the future encourage consumers and businesses to perpetually delay spending and investment. This leaves the door open for traders to punish the Euro in the months ahead if it becomes clear the currency bloc is heading for a long-term period of sub-par performance and low interest rates.

Swiss Retail Sales are expected to add 0.7% in the year to July, a reading slightly lower than the previous month’s 0.9% result. Shrinking prices have boosted consumers’ purchasing power in recent months, encouraging spending, but continued deflation threatens to work against retail activity if it translates into entrenched expectations of even lower prices in the future. Rising unemployment is also setting up to be a formidable obstacle: the jobless rate surged to 3.8%in August, the highest in over three years, and is expected to hit 5% next year.

Written by Ilya Spivak, Currency Analyst
Article Source – British Pound Selling Continues With Unemployment to Set 12-Year High (Euro Open)