News releases almost every day

With all of these countries to choose from, there are easily five to ten economic news releases almost every day! Also, the great thing about focusing on news releases is that they are scheduled in advance, so you know exactly when you can schedule your trading hours.
You may be thinking that five to ten news releases per day may be a lot to keep up with, but you really do not have to pay attention to every single report – you can pick and choose. There are a few key reports, most of which come out every month, that produce a significant amount of pip movement.
For this lesson, we will focus on U.S. news and economic reports, mostly because the U.S. dollar is involved in a majority of currency trades, and therefore tends to have the most significant impact on the currency markets. Here is a list of some of the top U.S. market moving reports:
Employment Growth
Interest Rate decisions
Trade Balance
Gross Domestic Product
Retail Sales
Durable Goods
Inflation reports (Consumer Price Index and Producer Price Index)
Foreign Purchases report (TIC Data)
Every country has a set of major reports similar to this list and can be as potentially volatile. Again, since these reports are scheduled in advance there are plenty of websites on the Internet with schedules and potential volatility rankings.

The Progess Made Week-Over-Week

Emboldened by new highs and early signs of rising yields, risk appetite has pushed to a new high for the year. However, the progress made week-over-week was very limited. Once again, investors and traders have reached the point where caution and skepticism has stalled the steady appreciation that the markets have otherwise carried on with since February. Perhaps we have come to the next tipping point in speculative interests where stable fundamentals are needed to draw in the next wave of funds to feed the capital gains of those that have already taken the plunge. And if there were ever a single piece of event risk that could confirm or rebuff forecasts for a stable, bullish market and a revival of yields; it would be the quarterly growth data. Heading into this heavy round of economic data, we can see the hesitation in price action. For the currency market, the dollar may still be on its bearish path; but its pace of descent has clearly cooled. EURUSD is arguably the benchmark for the pace and direction of the top funding currency candidate; but AUDUSD is better for measuring market sentiment. Despite being spurred on by the RBA’s aggressively hawkish monetary policy stance, the pair has stalled this past week at 0.93. This is unusual considering the fundamental contrast seen between the US and Australian dollars. Even the more accessible and popular equities market is showing indecision. The benchmark Dow Jones Industrial Average has loosely been confined to a 10,100 to 9,900 range since last Wednesday. It seems, regardless of what direction sentiment eventually takes, we will soon find some resolution on direction.
In the past weeks and months, we have seen multiple instances of congestion after a leg of bullish price action; and inevitably, optimism picks up where it left off. The is the nature of any market. A trend will eventually grow exhausted; and that offers the opportunity for continuation or a reversal. The speculative rally that the markets have been able to run for most of the year is still running well beyond the reasonable limits of the fundamental backdrop; but a few developments may have actually furthered confidence and ensured the next round of sidelined capital finds its way into the speculative arena. The outlook for yield has taken a notable turn for the better over the past week. The RBA took another broad step into hawkish territory recently when Governor Glenn Stevens said that he would tolerate further appreciation in the Aussie dollar in his efforts to rein in monetary policy. And, though this was the most unabashedly hike-oriented language to come out of the central bank circles; we have seen a subtle shift amongst many authorities. The BoE is expected to announce its intentions to take a break from its quantitative easing efforts at its next rate decision in November and the Fed is testing reverse repos in the money markets as a way to remove liquidity from the market without collapsing bank balance sheets. The next fundamental milestone is the third quarter GDP numbers. China has already confirmed an impressive pace for the period; but the United Kingdom’s reading will be the first for an industrialized country. What’s more, since the UK is considered the underperformer of the G-20, it could define the lowball estimate for global growth. Next week, the stakes are raised with the activity report for the US.

The Bank of England held the benchmark interest rate at 0.50%

The Bank of England held the benchmark interest rate at 0.50% and maintained its GBP 175B asset purchase program in October, with the British pound advancing for the second day to reach a high of 1.6095 during the European trade, and long-term expectations for higher borrowing costs may drive the currency higher over the near-term as the MPC expects the emergency program to end in the following month. At the same time, the central bank said that the scope of the APF will be kept under review as the economic outlook remains uncertain, and the GBP/USD is likely to remain range-bound in the coming weeks as investors weigh the outlook for future policy.
Nevertheless, former BoE Deputy Governor John Gieve said the MPC may look to expand policy next month in order to avoid the risks of a “false dawn,” and speculation for further easing could lead the British pound to retrace the advance from May as Governor Mervyn King holds a cautious outlook for the economy. Moreover, former MPC dove David Blanchflower argued that the central bank needs to increase the scope of its asset purchase program to boost confidence and went onto say that the board should consider changing the discount rate, and noted that November will be “the big meeting.” Meanwhile, the overnight advance looks to have lost steam ahead of the 20-Day moving average at 1.6174, and is likely to hold the narrow range from the end of September as investors weigh the prospects for a sustainable recovery in the U.K.
The EUR/USD retraced the previous day advance and rose to a fresh weekly high of 1.4789 on the back of U.S. dollar weakness, and the pair is likely to face increased volatility going into the U.S. trade as investors await the press conference with ECB President Jean-Claude Trichet at 12:30 GMT. The European Central Bank held borrowing costs at the record-low to shore up the economy, and policy makers may hold an improved outlook for the region as Germany and France emerges from the worst economic downturn since the post-war period. Meanwhile, industrial outputs in Germany increased 1.7% in August amid expectations for a 1.8% rise, while the annual rate of production slipped 16.8% from the previous year to top expectations for a 17.0% decline, and the data reinforces an improved outlook for the region as Europe’s largest economy emerges from the worst recession since the post-war period. However, as policy makers anticipate growth prospects to remain subdued throughout the second half of the year and continue to see a risk for a protracted recovery, the ECB may hold a dovish policy stance going forward as the outlook for future growth remains highly uncertain.
The greenback weakened across the board and slipped to a fresh yearly low against the Australian and New Zealand dollar following a risk in risk appetite, and the reserve currency may continue to lose ground going into the North American trading session as the economic docket is expected to reinforce a weakening outlook for the region. Initial claims for jobless benefits are expected to fall to 540K in week ending October 3rd from 551K in the previous week, while continuing claims are expected to rise to 6105K from 6090K, and the data is likely to reinforce a weakening outlook for private spending as households continue to face a weakening labor market. At the same time wholesale inventories are expected to contract 1.0% in August after slipping 1.4% in the previous month, while chain store sales are projected to weaken for the fourteenth month in September, and businesses may continue to scale back on production and employment over the coming months as they face fading demands from home and abroad.

The Swiss Franc was one of the worst-performing

The Swiss Franc was one of the worst-performing currencies to end the week’s trade, as a broad rally in key risky asset classes decreased flight-to-safety demand for the European currency. Recent Swiss National Bank forex market intervention likewise stayed fresh in many traders’ minds, and markets are understandably reluctant to force major CHF appreciation. The week’s Consumer Price Index inflation figures only reinforced fears of further SNB FX intervention; prices fell more than expected in the 12 months ending in September. Central bank officials have made it relatively clear that they will continue to fight Swiss Franc appreciation in the face of broader deflationary pressures in the domestic economy. Absent a material shift in CPI, we can reasonably expect the SNB to continue defending the key SFr 1.5000 mark against the Euro. Broader US Dollar weakness has left the USD/CHF lower in recent weeks, but our overall forecast for the CHF remains neutral on the persistently looming threat of SNB intervention.
Another relatively lackluster week of economic event risk leaves the Swiss central bank as the primary attraction for Swiss Franc in the days ahead. A Swiss Retail Sales report is the only real exception, but this report seldom forces major moves across CHF pairs. Traders should instead keep an eye out for important shifts in global financial market risk sentiment. Equity market bulls continued to rule the roost through last week’s trade and forced fairly universal gains across global indices. A continuation of such strength would almost certainly prove bearish for the Swiss Franc, but continued risk sentiment gains are hardly guaranteed. Despite strong year-to-date performance across key risky assets, it remains relatively clear that fortunes can and do improve at a moment’s notice. Swiss Franc traders should accordingly be on the lookout for any such deterioration in financial market risk sentiment and its effects on the safe-haven Swiss currency. - DR

The British pound may face increased volatility

The British pound may face increased volatility over the next 24 hours of trading as market participants anticipate the Bank of England to hold borrowing costs at the record-low and maintain its GBP 175B asset purchase program, and the central bank may continue to hold a neutral policy stance going into the following year as the expansion in monetary and fiscal policy works its way through the real economy. The final 2Q GDP reading reinforced an improved outlook for the nation as the economy contracted at a slower pace than initial expected, with private-sector spending crossing the wires stronger than projected, and the extraordinary efforts taken on by the government should help to stem the downside risks for growth and inflation as the International Monetary Fund raises its economic forecasts and expects the growth rate to rise 0.9% in 2010. Moreover, the Nationwide consumer sentiment survey jumped to its highest level since April 2008 as the index increased to 71 in September, while mortgage approvals rose to 52.3K in August to mark the ninth consecutive monthly advance, and the government anticipate economic activity to pick up throughout the second-half of the year following the rebound in economic confidence. At the same time, consumer prices increased 0.4% during the same period, with the core rate of inflation holding at 1.8% for the second month, and policy makers are likely to hold an enhanced outlook for the economy as the MPC projects price growth to be “higher in the short-term” than the board had initially anticipated. However, the National Institute of Economic and Social Research turned increasingly pessimistic towards the economy and expects GDP to hold flat during the three-month through September as businesses continue to scale back on production and employment, while Governor Mervyn King maintained a weakened outlook for the economy and saw a risk for a slower recovery as the banking system remains fragile. As a result, the central bank may look to expand monetary policy further over the coming months to foster a sustainable recovery as households face a weakening labor market paired with tightening credit conditions. Nevertheless, Deputy Governor Charles Bean argued that downward wages pressures have helped to limit the drop in employment, and stated that the “rate of job losses might be starting to ease off” as policy makers anticipate economic activity to pick up going into the following year, and the enhanced outlook for the labor market paired with the rebound in household sentiment should continue to support the stabilization in the housing market as home affordability in the U.K. improve. As a result, the BoE is likely to remain on watch over the coming months as the central bank attempts to avoid a double-dip recession while maintaining its mandate to ensure price stability.
Trading the given event risk may not be as clear cut as some of our previous trades as the BOE retains a cautious outlook for the economy but nevertheless, long-term expectations for higher interest rates could drive the exchange rate higher as economic activity improves. Therefore, if the central bank maintains its current policy and holds an enhanced outlook for growth and inflation, we will look for a green, five-minute candle following the release to confirm a buy entry on two-lots of GBP/USD. Once these conditions are met, we will place our initial stop at the nearby swing low, or a reasonable distance taking volatility into account, and this risk will determine our first target. Our second objective will be based on discretion, and we will move the stop on the second lot to breakeven once the first trade reaches its target in order to lock-in our profits.
In contrast, fears of a slower recovery paired with the weakness in the banking system may lead the central bank to take further steps to shore up the ailing economy, and price action following an unexpected expansion in monetary policy could set the stage for a short GBP/USD trade. As a result, if the BoE increases its asset purchase program to GBP 200B, we will favor a bearish outlook for Cable, and will follow the same strategy for a short pound-dollar trade as the long position mentioned above, just in reverse.

Japanese Yen volatility may surge

Japanese Yen volatility may surge in the coming week as the currency’s recent gains test policymakers’ disposition about direct intervention into currency markets. The economic calendar is generally uneventful in the days ahead, with the interest rate announcement from the Bank of Japan the only somewhat notable item on the docket. With rates firmly in place at 0.10% for the foreseeable future and no indication that the bank is in a hurry to alter its unconventional easing programs, the meeting would be another non-event (as has been the case in recent months) if not for the Yen’s rapid appreciation over the past two weeks. Indeed, the Japanese unit seems finally ready to take up directional momentum after a trade-weighted index tracking its value against other top currencies broke higher out of a range that had contained it since early March. A rising currency does not bode well for Japan as the world’s second-largest economy begins to show fragile signs of recovery from the worst of the global economic downturn, trimming export demand and crushing any would-be rebound before it ever gains meaningful traction. This leads us to the inevitable question: will Japan intervene to drive down the Yen?
Japanese authorities’ last foray into currency market intervention was a campaign spending a whopping 35 trillion yen over 15 months ending in March 2004. For his part, newly minted Finance Minister Hirohisa Fujii has been back and forth with his stance on intervention over recent weeks, initially arguing that it was not the government’s job to mettle in exchange rates only to backtrack and say that the Ministry of Finance could act on the Yen if its moves were seen as “abnormal”. In the meantime, a handful of smaller Asian nations including South Korea, Hong Kong, Taiwan, Thailand, the Philippines and (possibly) Indonesia moved to buy US Dollars against their local currencies last Thursday. This gives Japan a greater incentive to enter the markets, fearing that orchestrated depreciations of other Asian currencies will give their countries a disproportionate advantage in courting overseas buyers. Japanese Prime Minister Yukio Hatoyama is set to make high-profile visits to China and South Korea over the weekend, pushing for the creation of an East Asian Community along the lines of the EU. Deeper economic cooperation is seen as the first step to such an outcome, and Hatoyama coordinating currency policy could be very high on the list considering Seoul’s recent actions.
So far, Japanese authorities have shied away from stepping into FX markets despite a drop below the 90.00 figure in USDJPY, a level that had been seen by many market participants as the threshold of policymakers’ comfort zone. This suggests that perhaps the new DPJ administration has not yet made up its mind on currency policy and will perhaps attempt to talk down the Yen before resorting to a more direct approach. Two obvious opportunities to issue such comments present themselves during Hatoyama’s talks with the Koreans and the Chinese and the Bank of Japan policy meeting. Indeed, BOJ Governor Maasaki Shirakawa would likely be seen as a more credible voice if speaking against Yen strength, which stands to produce a greater reaction from the market. Beyond these, traders will likely pay close attention to comments from any key players in the Japanese establishment, hinting at choppy volatile price action in the days ahead

The economic outlook continues to improve for Australia

The economic outlook continues to improve for Australia. Most recently, both the government and the Central Bank released five-year growth forecasts, both of which show a modest recovery in 2010. “By 2011-12, the commodity-rich economy will again be firing on all cylinders with growth of 4.5%, well above the long-term growth rate of around 3%.”
This positive development coincided with the release of similarly upbeat economic data: “Retail sales surged 2.2 percent in March from the previous month, four times as much as economists forecast. Home-loan approvals jumped 4.9 percent, the sixth consecutive gain.” Meanwhile, unemployment shrank for the first time in months, and consumer confidence is once again rising. While the economy is forecast to shrink by .75% in the current fiscal year, this compares favorably with other industrialized countries.
The sudden turnaround can be attributed to a couple factors. First of all, the pickup in China’s economy is stimulating demand for natural resources, which had been slack for the last year. If not for simultaneously falling commodity prices, Australia might have even achieved positive economic growth for the year.
The government’s stimulus plan and spending initiatives have also played a role, although the extent cannot be measured accurately for a few months. “The government claims that measures in its budget will inject a further A$8.8 billion into the economy in 2009-10, adding to around A$50 billion in fiscal measures already announced since October 2008.”
The outlook for the Australian Dollar, meanwhile, is not so rosy. The 425 basis points in cumulative rate cuts that the Royal Bank of Australia (RBA) effected over the last year have lowered the interest rate differential with other industrialized countries. While the RBA has indicated that it will pause before cutting rates further, interest rate futures reflect the expectation that rates will be lower twelve months from now. “Economists say the RBA is open to cutting interest rates again if consumer and business confidence appear threatened, but for now it is content to let monetary and fiscal stimulus measures take hold.”
To be sure, the uptick in risk tolerance has been good for the Australian Dollar, igniting a 25% rise since March. The currency now stands at a 7-month high against the US Dollar. But the increasingly modest differential is now causing some analysts to question whether it is a reasonable risk to take, especially against the backdrop of volatility and a high correlation with global stock prices. “What’s the point of picking up a 3 percent interest-rate differential by being long Aussie and short Japan in a world where the exchange rate can move by that much in two days?” Asks One analyst rhetorically.
This same analyst is actually recommending investors to use the Australian Dollar as a funding currency, and go long on higher-yielding currencies, such as the Brazilian Real. This particular trade would have netted a respectable 5.9% return in 2009. How quickly the roles have reversed!

Much of the rally in the Kiwi, then, represents

In other words, the interplay between risk appetite and risk aversion continues to dominate the forex markets, as traders move to calibrate the split of funds between so-called safe haven currencies and the riskier alternatives, among which the New Zealand Dollar is certainly counted. Much of the rally in the Kiwi, then, represents a correction, as investors acknowledge that the near 50% slide from-peak-to-trough was an overreaction.
Going forward, however, the Kiwi will have to rest on its own feet, as new themes move to the fore of investors’ minds. Specifically, they will begin to look more closely at the New Zealand economy, and demand evidence of a recovery. “Reserve Bank of New Zealand Governor Alan Bollard told a business audience the world has ‘avoided a repeat of the Great Depression. Now, we and the world, appear to be on our way to recovery. New Zealand looks likely to start recovering ahead of the pack.’ ”
At the same time, the most recent economic data showed an economy in freefall, as “New Zealand’s economy shrank for a fifth straight quarter…The economy contracted 2.7 per cent in the January-March quarter.” While forecasts vary, GDP is expected to fall by at least 2.1% in 2009, with a modest pickup expected in 2010. Investors are betting that the recovery will be driven by rising demand for commodities, which will help to buoy New Zealand exports. Once again, this conflicts with the data, which shows an annualized trade deficit of $3 Billion. Despite a fall in imports, the country is still importing more than its exporting. This could be a product of the stronger currency, which all stakeholders agree is not conducive to economic growth. In the end, the economy’s best chance for recovery lies in a resumption of debt-induced consumption and residential construction, the very forces which caused the current downturn. Says Mr. Bollard, “Reliance on past experience of strong house price inflation and easy credit will be untenable.”
Given the uncertain prospects for growth, combined with moderating price inflation, the RBNZ can be expected to hold interest rates at current levels for the near-term. “Bollard will leave the benchmark interest rate unchanged at a record low 2.5 percent on July 30, according to all 10 economists surveyed by Bloomberg.” Based on swap rates, the markets feel similarly, and are pricing a mere 25 basis point hike over the next twelve months. With such a dubious prognosis, one has to wonder whether the Kiwi’s rally is really sustainable.

The economic picture remains nuanced

As has been the trend in forex markets of late, the currency’s rise cannot be attributed to an improvement in fundamentals. The economic picture remains nuanced (that is putting a positive spin on it), and definitive proof of recovery has yet to emerge. “We really are trawling pretty deep to try and get any snippet of information that might have some backhanded relevance as far as Australia goes,” said one analyst.
As a result, fundamental analysts have been forced to wait for a “more precise picture about the timing [of] any Reserve Bank of Australia interest rate hike.” On this front, investors are ratcheting down their expectations of a rate hike anytime soon, as “The RBA has signaled that there’s a danger of raising rates too soon.” Futures prices reflect the expectation that rates will rise by only 37 basis points from current levels before 2010, and by 161 basis points 12 months from now.
With such economic uncertainty, investors have turned their attention elsewhere. “Nomura Chief economist Stephen Roberts said in the absence of any clues about the fundamental drivers of the currency, nearly all the cues in foreign exchange markets are being taken from equities.” Some analysts have posited a close relationship with the US stock market: “The correlation between the Aussie dollar and U.S. equity market in particular has been very strong over the past few weeks, with our analysis showing a correlation as high as 95 percent.”
For other analysts, the relationship is with the Chinese stock market. This correlation makes more sense logically, since the Australian economic recovery is largely contingent on continued growth in China and the concomitant purchases of Australian commodities. “Currency markets will be watching the Shanghai share market, which has been a pretty big influence on the Aussie recently,” summarized one analyst. A reporter for the WSJ tried to spell it out even more clearly in an article entitled, “Australian Dollar Up Late, Closely Tied To Chinese Stocks.”
Unfortunately, the correlation with (Chinese) stocks runs both ways. When the Chinese stock market tanks – often for inexplicable reasons – as it has for the last three weeks, the Australian Dollar follows suit. Another analyst is more blunt: “The story for the Australian dollar and other risk- and growth-oriented currencies is similar to the share markets. They’ve had a great run and are probably due a bit of a pullback.”

UK Debt Management Office indirectly encouraged

The government meanwhile has demonstrated a certain ambivalence when it comes to the program. The head of the UK Debt Management Office indirectly encouraged the BOE to continues its purchases of bonds, for fear that stopping doing so could cause yields to skyrocket and make it difficult for the government to fund its activities. “A rapid sell-off could create a downward spiral of gilt prices which would make life harder for both it and the DMO.” On the other hand, one of the leaders of Britain’s conservative party – which is projected to take office after next year’s elections – has criticized the program on the grounds that it will lead to inflation.
From the BOE’s standpoint, it’s a no-win situation. Continue the policy, and you risk inflation and further invoking the ire of politicians. Wind it down, and you could tip the economy back into recession. For better or worse, it seems the BOE will err on the side of the former: “If we stopped supporting the economy now it would crash. Every country in the world and just about every informed commentator is saying the same thing. The job is not finished.” Given that inflation is projected to hover around 0% for the next two years, the BOE still has some breathing room.
As for the charge that the surfeit of cash flowing into markets is weakening the Pound, ‘So be it,’ seems to be the attitude of Mervn King who suggested that, “The weaker pound was ‘helpful’ to efforts to rebalance the British economy toward exports.” While he backtracked afterward, it still stands that the BOE hasn’t made any efforts to stem the decline of the Pound, and is at best indifferent towards it.
Regardless of where the BOE stands, the Pound is not being helped by the weak financial and housing sectors, which during the bubble years, comprised the biggest contribution to UK growth. Exports are weak, and domestic manufacturing activity has yet to stabilize. As a result, “The British economy will contract 4.4 percent this year before expanding 0.9 percent in 2010, the International Monetary Fund predicts.”
Objectively speaking, then, it makes sense to call the Pound sick. Still, many other currencies are just as sick. I guess the perennial lesson is that in forex, everything is relative.

One of the great advantages of trading currencies

One of the great advantages of trading currencies is that the forex market is open 24 hours a day (from 5pm EST on Sunday until 4pm EST Friday). Economic data tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world. With at least eight major currencies available for trading at most currency brokers and more than 17 derivatives of them, there is always some piece of economic data slated for release that traders can use to inform the positions they take. Generally, no less than seven pieces of data are released daily from the eight major currencies or countries that are most closely followed. So for those who choose to trade news, there are plenty of opportunities. Here we look at which economic news releases are released when, which are most relevant to forex (FX) traders, and how traders can act on this market-moving data.
Which Currencies Should Be Your Focus?
The following are the eight major currencies:
1. U.S. dollar (USD)
2. Euro (EUR)
3. British pound (GBP)
4. Japanese yen (JPY)
5. Swiss franc (CHF)
6. Canadian dollar (CAD)
7. Australian dollar (AUD)
8. New Zealand dollar (NZD)
This is just a sample of some of the more liquid derivatives based on the currencies above:
1. EUR/USD
2. USD/JPY
3. AUD/USD
4. GBP/JPY
5. EUR/CHF
6. CHF/JPY
As you can see from these lists, the currencies that we can easily trade span the entire globe. This means that you can handpick the currencies and economic releases to which you pay particular attention. But, as a general rule, since the U.S. dollar is on the "other side" of 90% of all currency trades, U.S. economic releases tend to have the most pronounced impact on the market.
Trading news is harder than it may sound. Not only is the reported consensus figure important, but so are the whisper number and the revisions. Also, some releases are more important than others; this can be measured in terms of both the significance of the country releasing the data and the importance of the release in relation to the other pieces of data being released at the same time.
When Are News Releases Issued?
Figure 1 lists the approximate times (EST) at which the most important economic releases for each of the following countries are published. These are also the times at which you should be paying extra attention to the markets, if you plan on trading news releases.

The Pound fell over 150 pips

The Euro surged back above 1.4750 as it found support on the back of higher European stocks markets which were up by over 1.0% across the board. Risk appetite is being fueled by expectations that lean companies will benefit from the upswing in the inventory cycle and produce solid profits. Meanwhile, the only fundamental data on the day was German wholesale prices which unexpectedly fell by 0.2% in September versus estimates of a 0.3% rise. Cost for retailers have decline by 8.1% from a year ago as the sharp fall in oil continues to suppress energy costs. The continued disinflation in Europe’s largest economy will allow the ECB to maintain interest rates at their current record low 1.00%
The Pound fell over 150 pips in early trading before finding its footing on the increased risk appetite. Traders are becoming fearful that the BoE will keep interest rates low for a longer period than their G-7 counterparts as tight credit conditions have dictated their dovish outlook. This could be a weighing factor for the sterling if it doesn’t find support from the increasing broader optimism. Prime Minister Gordon Brown stated today that stopping quantitative easing would imperil the recovery and that doing more to cut the deficit would put the economy at risk. However, he remains confident that the deficit reduction plan will be met and that investors remain willing to buy U.K. government debt which will allow them to finance the stimulus efforts.
The dollar has come back under pressure after finding support during Asian trading as European traders weren’t as cautious ahead of earnings season. We could be seeing weakness over concerns that central banks are shunning the greenback as a storage of wealth, a Bloomberg article claims that 63% of new reserves last quarter were converted into Euros and Yen. There has been a prevailing concern that countries will continue and try to diversify away from the dollar following the crisis which may limit upside potential. Those fear were stoked by comments from the Kuwait finance minister, who stated that they remain on track to developing a single Gulf currency by 2010. There is an empty economic calendar today but with earnings from Goldman Sachs, Google and several Dow components expected to be robust in the week ahead, traders may look to get a head start which has futures pointing toward a higher open. Increasing optimism and risk appetite should be a weighing factor for the greenback if results match expectations.

One method of trading that a lot of our forex traders'

One method of trading that a lot of our forex traders' use, is holding their position for only a very short amount of time and a very small number of pips. Essentially what they are trying to achieve is a high accuracy edge.
A trading systems' edge is what is going to make it profitable in the long run. A great example of an edge is a blackjack game at a casino. Based on the rules of the game, the house has a very slight edge over the player. After a lot of repetition, a great sample size of hands is played and the casino exploits the edge and makes a lot of money. This should be the same with any system. It is critical to understand that losses will happen and the only way to win is have an edge over the long run.
With this in mind different systems have different types of edges. In this article I will show you a great risk management trick called the Martingale that will help you maximize the returns of a high accuracy system. Before I go on, let me briefly describe what the Martingale Strategy is. Then I’ll show how it can be used. Here’s how it works in theory:
In the Martingale Strategy you increase your position size when you have multiple losing trades in a high accuracy system. When the system’s performance reverts back to the mean and begins to win again, the losses are quickly recouped because of the increased size of the winning trades.

Every news trader uses an economic calendar

There are a few different strategies that a currency trader can develop: scalping, day trading, swing trading, carry trading and news trading. Many forex traders focus on one particular trading strategy known as News Trading. The basic idea behind trading the news is to profit off the volatility created by economic news announcements. One of the advantages of trading currencies is that the forex market is open 24 hours a day from 5pm EST on Sunday until 4pm EST Friday. Interest rates are the general driver for the markets direction however; Economic data tends to be one of the most important catalysts for short-term movements in any market. This is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world.
Every news trader uses an economic calendar to pinpoint the time and dates of different news releases. Usually, there are no less than seven pieces of data are released daily from the eight major currencies or countries that are most closely followed. So for those who choose to trade news, there are plenty of opportunities. But, as a general rule, since the U.S. dollar is involved in 90% of all currency trades, U.S. economic releases tend to have the most pronounced impact on the market.
Trading news is harder than it may sound. Not only is the previous number important but the projected or forecast number plays a bigger role. Also, some releases are more important than others; this can be measured in terms of both the significance of the country releasing the data and the importance of the release in relation to the other pieces of data.

Forex trading method

Here is a Forex trading method which is very popular with professional traders but very few new traders use it however, if you do use it you will have a timeless way, to make a triple digit income in just 30 minutes a day.
Most traders in Forex think the best way to make money is to buy "low and sell high" but if you believe this myth, you are going to lose money and the reason why is - if you try and buy lows and sell highs your predicting and that really is another word for hoping and guessing and if you try it, you will end up in the vast majority of losers. So how should you trade to amek regualr profits?
The answer is you don't want to predict you want to trade the reality of price change, when the odds are at their best and you can do this by buying or selling breakouts, to new chart highs and lows.
A careful look at any currency chart will show you that all the biggest and most profitable trends, start and continue there trends from breakouts so, if you buy good breakouts, you can make a lot of money from the really big trends - so how do you do it?
You need to find levels of resistance which are deemed important by traders and these will be strong levels which have been tested numerous times before the break. I like to look for levels that have been tested at least 4 times but its the more times the level has been tested, the better when using this method of trading.
Once the level breaks, you simply enter the trade and if its a good breakout it will quickly move away from your entry point and this will give you great risk to reward, because when you open the trade, the stop goes right under the level that's just broken - but as soon as it moves strongly, get your stop to break even and you have a risk free trade.
You will find a few good breakouts occur every month and create trends which can last for weeks or months which you can run with leverage on your side for huge gains.
All you need to do is study support and resistance and add a couple of momentum indicators into time your trades ( if you want to) although working with just trend lines works just fine and you have a robust and simple, Forex trading methodology which can make you a triple digit income in around 30 minutes a day.

Forex News Trader was developed

Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.
Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.
Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade – as the odds will now be tipped in your favor.
Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market (FOREX). Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.

The best forex trading would be dependent on the trader

As a trader you shouldn't settle for anything but the best forex trading you can do. With so many strategies available sometimes it can be a little difficult to chose where to start. Be sure when looking for strategies to add to your skill set that you test them out one by one until you find one that works for you. Depending on the strategy it can take anywhere from a few days to a few weeks to test it out completely.
What determines the best forex trading strategy? This would depend on many things such as: What is the amount of time you put into your methods and testing? Is it difficult to repeat this process? What ever strategy you end up using, it has to be repeatable. If the strategy is not repeatable, the chances are that it isn't going to bring you to success. Can it make you consistent trades of profit? You need to make more trades winners than losses in order to make profits.
The best forex trading would be dependent on the trader and their preference of trading. There are many different styles of trading available such as: scalping, trade timing, interest rates and volatility, the bond market and currency pairs, etc. With so many options on what method of trading to do, one can find them self in a position trying to figure out which one suits them. One of the most difficult aspects of forex is finding out the method that works for you. Once you find out your niche method, the profits become easier.
One may be asking them self what the best forex trading strategy to start out on may be. The Scalping method is one of the most popular trading ways today. With more people joining in on forex scalping, it is an exploding market. Scalping is short quick trades that last for seconds to a minute with minimal account risk. Scalping may take time to get down, but it is a very rewarding method of trading.

Forex trading business and are busy making good profits

In a very short space of time, the foreign exchange market has certainly become the world's largest financial market. Until only recently it was only the large trading houses that could employ the full potential of the FOREX market. But thanks to the far-flung use of the internet and other communicating devices this has succeeded in opening up the Forex arena not just to small and medium traders, but also to individual investors.
Because of this more easier access large number of individual traders have leaped into the Forex trading business and are busy making good profits online while trading from their personal computers. In fact, you can also start trading in Forex through one of the many easy to follow & profitable Forex trading platforms that are available on line.
A number of Forex brokers and traders are offering individuals trading platforms through their online trading portals that combine Forex trading services along with other trading options. You can easily become a member of one of these easy to follow & profitable Forex trading platforms and starts making good profits through Forex trading.
But before you start trading it is highly recommended that you gain some knowledge and information about trading and signal interpretation before putting your hard earned money into Forex trading, for while the profits in this business can be very large, the losses can also be very disastrous if you are ill prepared for what lies ahead.
So as a beginner, you should first find a Forex trading platform that you understand well and start trading with only very small amounts, gradually increasing your risks as you come to understand the Forex market better.

The DividendTrader newsletter is changing

The DividendTrader newsletter is changing. There is still the most important information in our spreadsheet of upcoming dividends, but we are adding more commentary as well as other information in the form of an extract from our trading diary - see below for this week's edition.
As mentioned in previous emails, we will be moving to a user pays model for our newsletter in order to cover the costs of publishing our reports. Premium subscribers will get our trades sent via email soon after they happen. Free subscribers will get a summary later - possibly too late to follow the trades.
Other business commitments have delayed this move a bit longer than expected. In the meantime we will continue with the free newsletter.
Our Trading Diary.
We are now well into the second half of this dividend seasonand the pickings are thinning out quickly. We are down to 52 div stocks on the list and of those only about 8 are worthy contenders.
Of those that have gone ex div, CAB did not come back down to our buy level, so we will move on from that one now.
ASX has moved up nicely from our buy level of $33.40 to close at $35.50 on Friday. We grabbed a larger than usual position with ASX and have now taken the profit on half of that position. That gave us a gain of 6.2% on ASX and loss of 3.4% on the partial hedge for a gross profit of around 3.5% in 3 days. If the price differential closes as expected, we will look to take the rest of the profits, but if it opens further again we will look to re-enter the other half of that position again. Regular readers will probably have a fair idea of our targets.
We also re-entered WOR on Friday at $29.23. It is a long while after the ex div date but there looks to be a good chance of a 5% or so gain there as WOR rebounds yet again.
COF goes ex div on 12/10 so we are looking to re-enter there on a spike downwards some time this week. The price differential compared to xjo is also favourable now

foreign exchange market has certainly

In a very short space of time, the foreign exchange market has certainly become the world's largest financial market. Until only recently it was only the large trading houses that could employ the full potential of the FOREX market. But thanks to the far-flung use of the internet and other communicating devices this has succeeded in opening up the Forex arena not just to small and medium traders, but also to individual investors.
Because of this more easier access large number of individual traders have leaped into the Forex trading business and are busy making good profits online while trading from their personal computers. In fact, you can also start trading in Forex through one of the many easy to follow & profitable Forex trading platforms that are available on line.
A number of Forex brokers and traders are offering individuals trading platforms through their online trading portals that combine Forex trading services along with other trading options. You can easily become a member of one of these easy to follow & profitable Forex trading platforms and starts making good profits through Forex trading.
But before you start trading it is highly recommended that you gain some knowledge and information about trading and signal interpretation before putting your hard earned money into Forex trading, for while the profits in this business can be very large, the losses can also be very disastrous if you are ill prepared for what lies ahead.
So as a beginner, you should first find a Forex trading platform that you understand well and start trading with only very small amounts, gradually increasing your risks as you come to understand the Forex market better

forex trader are scattered everywhere

In any field of business applying forms of strategies is very important to know if which among the applied strategies bring more profit and convenience to business owners. Some might use the best tool such as suitable software and many other tools. When talking about business, I always think about being a forex trader. I know getting involved on this type of business needs further research, enough knowledge or shall we say the forex trading strategies. I have mentioned earlier how strategies role over any particular business. We know that everybody's aim of having a business is simply to earn profit. I don't think there's a business that exist or built just for nothing because it's only wasting the time.
In our place nearby offices of the forex trader are scattered everywhere. I think that is the reason why I want to get into someday. It seems they are using the good strategy because until now they are still operating. In fact their number is increasing. How about you, is getting into forex is one of your passion? Even if you don't ask me I would say yes for an answer to this question. For an innocent individual to forex like me I made some queries to some of the forex trader here nearby. Every time I asked them questions about the business they always ask me if I am a broker. I just smiled at them because I don't know the role of a broker.
Anyway, if you are in forex trading field, there's a trading software which is now out and you can download it online. This Forex Executor Pro is not compatible to all broker's platforms so you have to find out first if you have the Metatrader 4 platform in order for this F. E. P. to work. It offers lots of benefits in your business, so if you have the feeling strategy in forex don't waste your time to get it now.

The greenback began its rise overnight

NEW YORK (Dow Jones)--The dollar was ahead of most rivals Friday but gave up some of its overnight gains as U.S. equities ticked higher.
The greenback began its rise overnight on the back of comments by Federal Reserve Chairman Ben Bernanke regarding the eventual tightening of U.S. monetary policy.
A better-than-expected report on the U.S. trade balance in August also boosted the dollar, sending the greenback in New York morning trading to its intraday peak against the euro. The common currency has since taken back some lost ground.
Currencies likely will remain in a tight range for the remainder of the session as investors consolidate their positions ahead of next week's slew of corporate earnings reports, said Jessica Hoversen, fixed income and foreign exchange analyst at MF Global in Chicago.
If companies continue to report positive results, the euro should resume its advance on the dollar, Hoversen said.
Late morning, the euro was at $1.4747 from $1.4790 on Thursday, according to EBS via CQG. The dollar was at Y89.53 from Y88.42. The euro was at Y132.03 from Y130.75. The U.K. pound was at $1.5922 from $1.6080, while the dollar was at CHF1.0293 from CHF1.0264.
Earlier Friday, the Commerce Department said the U.S. trade deficit unexpectedly narrowed for the first time in four months, with exports rising to their highest level of the year and imports easing despite higher oil prices. The weak dollar aided the narrowing in the trade balance.
After falling to its lowest level in 14 months on Thursday, the U.S. Dollar Index recovered to its recent trading range by early morning in New York. The index measures the dollar against a trade-weighted basket of currencies. It had fallen to 75.76 on Thursday; it stood at 76.19 late morning Friday in New York.
The dollar was also higher against the yen Friday as general dollar strength lifted the greenback against the Japanese currency, analysts said.
Bernanke said in a Thursday evening speech that the central bank would be ready to tighten monetary policy and shrink its bloated balance sheet once the economy improves.
Loose monetary policy and ultra-low interest rates encourage investors to use the low-yielding dollar to fund bets in riskier assets, such as commodity-backed currencies like the Australian dollar.
While the Fed continues to believe that loose monetary policy will be needed for an extended time, it must be ready to tighten policy as the recovery takes hold, Bernanke said.
However, the dollar's rebound on the back of Bernanke's comments isn't likely to last, analysts said.
"In reality, the Fed cannot afford to raise rates any time soon, and it seems that such comments are mostly aimed at quashing any budding inflation expectations that might lead to higher long-term rates before the economy can handle them. As such the effect should be short-lived and we expect [the euro] to continue its march higher," said BNP Paribas analysts in a research note.
The dollar lost ground Thursday after a perfect storm of events, including better-than-expected U.S. corporate earnings, central bank meetings without surprises and rising equities teamed to heighten risk appetite.
European Central Bank President Jean-Claude Trichet on Thursday expressed support for a strong-dollar policy. He didn't send any signals to tamp down euro strength against the dollar, as some analysts had expected.
Other central banks did express concern about the dollar's weakness, with several Asian monetary authorities - including Hong Kong's - intervening in the market Thursday.
Separately, New Zealand Finance Minister Bill English said that his country's dollar was overvalued and that the government would employ fiscal discipline to keep interest rates low to reduce the pressure on the currency. The New Zealand dollar was at $0.7350 early Friday, down from Thursday's peaks, which were the highest against the U.S. dollar since the end of July 2008.
The Canadian dollar was substantially higher Friday morning, reaching a new 12-month top after Canadian jobs data for September sharply outpaced expectations. The U.S. dollar traded at C$1.0430, from C$1.0510 late Thursday. It earlier hit a session low of C$1.0425, its lowest level since late-September 2008

Foreign exchange trading has grown rapidly in popularity

Foreign exchange trading has grown rapidly in popularity among individual investors in this last decade, and that opportunity has not been lost on venture capitalists who have put their money behind the trend.
Two companies have recently sprung up to address this space: Currensee Inc., which operates a social network for forex traders, and Tradonomi LLC, which operates a Web site that uses a game-like interface to simplify forex concepts.
These sites address the growing number of people who have quit their day jobs, or looked to supplement income, by exploiting fluctuations between currency pairs, usually with significant amounts of leverage tied to those bets.
There are a number of reasons that forex trading has gained popularity among individual traders: use of leverage, ability to be on either side of market swings, and the ability to access the market 24 hours a day, “which may not be good for sleeping, but it helps people get really into it,” said Dave Lemont, the chief executive of Currensee.
About a year ago, North Bridge led a $4 million Series A round in Currensee. Its platform, which is currently in beta, provides a way for users to view market data and collaborate with other traders, though not actually execute trades. Since Currensee links to brokerages, traders, with permission, can see what others are doing, and how successful their strategies are, rather than just sharing strategies in a chat room.
“There are somewhere between one million and three million professional foreign exchange traders. If we get tens of thousands of those active on our platform, we’ll build a big business, but we expect to get hundreds of thousands,” said Jim Moran, a general partner with North Bridge Venture Partners.
The company plans on generating revenue by collecting commission from brokers to whom it brings new business. In order to set up an account with Currensee, traders must link to the broker that they are using so it can draw information from their accounts.
“My first reaction [to Currensee], having been an equities trader, was, ‘Who’s going to want to show their hand?’” Moran said. “What’s different about forex, is it’s really not done that way. No gang of traders is going to move the market in any direction.”
Gain Capital Holdings Inc., a venture-backed company that operates trading site Forex.com, estimates that retail trading in forex didn’t occur in any significant volume until around 1996, but interest has skyrocketed since then. Last year, Gain Capital registered more than 1.1 million new practice accounts for people that want to learn about forex, up from just over 100,000 in 2004, its first full year of running Forex.com, according to its recent IPO filing with the Securities and Exchange Commission.
Though they don’t need those levels of growth to continue in order to have a successful business, said Currensee’s Lemont, the company anticipates continued growth and a steady stream of new participants, especially from emerging economies like China.
One company that’s counting on continued interest is Tradonomi, operator of eToro.com, which enables newcomers to learn about forex through simulations, trade with practice currency using real information, and view the most popular trades made by others on the platform. As they become more savvy in forex trading, users can advance through six different trading arenas, with varying amounts of simplicity and in-depth data.
The Limassol, Cyprus-based company raised $6.3 million in its second round of financing from Israeli investors BRM Group and Cubit Investments last spring.

you can try and trade price reversals

If you're familiar with forex trading you will know that there are lots of different ways you can trade the markets. For example you can trade in the direction of the overall trend or you can try and trade price reversals, for instance. However in this article I want to discuss another form of trading which involves trading range-bound markets.
These markets basically occur when the price doesn't appear to be trending upwards or downwards, and is seemingly stuck in a narrow trading range. You may think that this indecision may be difficult to profit from, but that's not necessarily the case.
For a start you can trade the high and low points of this trading range in the hope that the sideways trading pattern will continue. In other words you go short when the price is at or near the top of the trading range and open a long position when the price is close to the bottom of the trading range. To protect yourself from any breakout you simply place your stop loss just outside of this range.

Another much more profitable way to trade

Another much more profitable way to trade these sideways markets is to actually trade any breakouts that occur. This can be very profitable because you know that the price won't be confined to this narrow range forever. Eventually the currency pair is going to break out of this range, either upwards or downwards.
So all you do is place an order to go long a few points above this trading range and place a sell order a few points below so you're automatically into a position whichever direction the price moves.
If you want to boost your chances of success even further you can employ a system that filters out some of the false breakouts. This involves waiting for an initial breakout, followed by a slight pull-back, followed by a confirmation breakout. This is generally a lot more profitable because these secondary breakouts are usually the ones that are most likely to succeed.
So the point is that you can successfully trade these range-bound markets. You can either trade conservatively by trading the high and low points, which is often a very good long-term strategy, or you can wait for the price to break out of this range, which it will invariably do at some point. Both of these methods can produce some excellent profits.

Economists are forecasting that prices

The Canadian Dollar soared throughout the past week and broke from its recent range that has held since the beginning of August. A slew of positive fundamental data and increasing optimism over the global economy provided loonie support. An unexpected rate hike from the RBA raised the outlook for broader growth which spurred demand for risky assets which fueled bullish sentiment for the com-dollars. The Ivey-PMI gauge rising to its highest level since July, 2008 confirmed the improving outlook for the Canadian economy. A surge in the employment component along with slight advances in inventory, prices and supplier delivery led to the increase in business activity. Meanwhile, the Canadian employment report confirmed the strength in the labor market as the economy generated 30,600 new jobs in September leading to a drop in the unemployment rate to 8.4% from 8.7% the month prior. Goods producing employers led the way with 46,200 hires sending total fulltime jobs skyrocketing to 91,600. The strong commitment to long-term employees underlines the improving outlook for growth by managers. This was evident in the Bank of Canada’s survey of business leaders which showed that 69% of them believe that their sales will increase over the next year.
Focus will now turn toward next week’s consumer price report and its implications for future interest rate policy. Economists are forecasting that prices remained flat during September which will allow the central bank to maintain its accommodative monetary policy. The BoC has recently reaffirmed that they will not look to raise rates until mid-2010 unless they see upside risks to inflation emerge. Traders should watch the core reading as it traditionally garners the committee’s focus and greater than expected rise could generate Canadian dollar support. However, policy makers continue to express concern that the loonie’s strength will deter demand from the U.S. its main trading partner. Therefore, they will look to keep rates low for as long as possible and could contemplate intervention if its currency continues to appreciate.
The USD/CAD had been trading in a wide range between 1.0600 and 1.1100 which it broke this week to test 1.0400 before finding support. The psychological level is the only barrier before a test of 1.0299-9/28/08 low which would erase the entire post-Lehman dollar rally. It appears that we ultimately the level will be tested as the fear that the event generated is being priced out of the marketplace. Increasing interest rate expectations from the Fed and a turn in risk appetite could delay lead to a retrace for the pair before ultimately reaching the critical level. Resistance may come at 1.0651-10/7 high with the 20-Day SMA at 1.0724 as the next barrier.- JR

The US dollar’s benchmark market rate

Looking out over different time frames, we can see different fundamental concerns weighing on the dollar’s health. Through the short-term, currency traders are almost completely concerned with risk appetite. The US dollar’s benchmark market rate (the three-month Libor) has leveled off; but it is still at a discount to its Japanese and Swiss counterparts. With policy officials vowing to keep the overnight rate at its low levels until the middle of next year, rising carry interest is pegging the greenback as a funding currency. However, the Fed’s loose monetary policy will likely be reigned in soon; and when they do move it will likely be at a relatively quick pace. Through the medium term, the dollar’s troubles lie with the economy’s ability to recovery combined with the government’s ability to remove stimulus. This will be a delicate balance all on its own; but to support dollar strength, the country will have to perform this tight wire act more quickly than its global peers. Finally, we have the long-term implications for the US currency. The financial crisis has exposed the flaw in having a single reserve currency and disconnected policy has amplified the world’s desire to revert to a more stable alternative. The dollar has dominated the FX landscape since the pound lost favor in the early 1900’s. Is there a viable alternative to the buck?