TOKYO, Sept 17 (Reuters) - The dollar stayed on the defensive on Thursday as investors added to long positions in growth-linked currencies and lifted the Australian dollar to a one-year peak, encouraged by growing evidence of a global recovery.
Asian stocks tracked Wall Street higher after U.S. industrial production rose more than expected in August [ID:nN16118540] boosting sentiment towards riskier assets.
The sustained shift away from the U.S. dollar left the dollar index =USD subdued at 76.292, near 1-year lows of 76.151 struck on Wednesday and with charts pointing to a gradual fall to 2008 levels of around 70.70.
"Firm stocks suggest the dollar is probably set to slide for another week," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank.
The Australian dollar AUD=D4 rose to a one-year peak of $0.8756, up 0.2 percent on the day, with its next targets seen at $0.8813 and then $0.8907.
The New Zealand dollar NZD=D4, which advanced nearly 1.4 percent on Wednesday, was holding firm at $0.7140 with little resistance seen until $0.7200.
The euro EUR= held above $1.47 having struck a one-year high of $1.4738 on trading platform EBS on Wednesday.
The euro has now gained over 2.5 percent this month, riding on improved investor confidence and expectations that U.S. rates are likely to stay rock bottom for some time to come.
But the recent rally in the euro could run out of steam.
"With eight of the nine last sessions ending in euro rallies, the upward trend is extremely stretched," said Matthew Strauss, senior currency strategist at RBC Capital.
"In fact, euro valuations against the U.S. dollar are the most extreme since May this year. The trend is your friend but beware the technical correction."
The yen was broadly lower with the euro gaining 0.3 percent to 134.22 yen EURJP=R and the Aussie climbing 0.6 percent to 79.75 yen AUDJPY=R.
The U.S. dollar also rose 0.2 percent to 91.10 yen JPY= as some traders covered their short positions after it fell as far as 90.12 yen on EBS the previous day, a 7-month low.
On Wednesday, the dollar's slide against the yen picked up pace after Japan's Finance Minister Hirohisa Fujii said a strong yen had advantages for the nation's economy.
Fujii also said he was opposed to currency intervention if movements were gradual, while adding that currency moves were not rapid.
The yen's rise against the dollar on Wednesday was small despite Fujii's clear opposition to intervention, prompting traders to think twice about buying the yen at the moment, some traders said.
"Fujii was so clear about not intervening and he went so far as to say a strong yen has merit. But the dollar's slide against the yen ended up so small," said a senior trader for a Japanese bank.
"That suggests to me there is a background that the yen is missing its own fundamental reasons to be bought."
The yen showed little reaction to the Reuters Tankan manufacturing survey which found manufacturers were growing less pessimistic in September. [nTKC003469]
Also in Japan, the central bank ends its two day policy meeting on Thursday and is expected to keep rates unchanged at 0.1 percent although it could sound a bit more upbeat on the economy.
Data releases pick up later in the day with retail sales for August due in the UK while in the U.S., weekly jobless claims, home starts and the Philadelphia Fed business activity index are scheduled. (Additional reporting by Anirban Nag; Editing by Joseph Radford)
Wednesday, September 16, 2009
Treasury: We won't intervene in forex market
"We promised to help exporters, and we will do so, but not by intervening in the foreign currency market."
A Finance Ministry official vehemently denied reports today that the ministry will provide exchange rate support for exporters. "The Ministry of Finance won't intervene in the foreign currency market," a ministry official told "Globes" today. "We promised to help exporters, and we will do so, but not by intervening in the foreign currency market. We'll help them through guarantees, an aid fund for exporters, and by increasing support for ASHRA - The Israel Export Insurance Corporation Ltd. We'll seek solutions in this spirit."
The Manufacturers Association of Israel has been intensely lobbying the government in recent weeks to solve the problem of the low shekel-dollar exchange rate, which is battering exporters. A senior economic official was quoted this morning as saying, "The government will propose an exchange rate support mechanism."
Ministry of Finance officials have not heard about this, and ridicule it. A ministry official said, "This is a trial balloon by someone with no responsibility for the matter." The official's comment implies that that someone is at the Prime Minister's Office.
The Ministry of Finance official added, "Our position was, and has not changed, that help should definitely be given, because exporters face real hardships, and exports are critical for the economy, but we won't intervene in the foreign currency market. The Bank of Israel is totally with us on this. It's easy to sit in a comfortable office and toss out all kinds of comments without having to take responsibility for them, but the people who actually have to take responsibility should act responsibly. We'll continue to examine options for solving the problem."
Manufacturers Association president Shraga Brosh told "Globes", "It's simply not possible to sit with arms folded and let exports fall, because then the economy will fold, and we won't be there when the world begins to emerge from the crisis." As chairman of the Economics Organizations Liaison Committee, Brosh initiated the convening of Round Table to deal with the problem of the dollar.
The shekel-dollar exchange rate fell another 0.3% in morning inter-bank trading today to NIS 3.749/$.
A Finance Ministry official vehemently denied reports today that the ministry will provide exchange rate support for exporters. "The Ministry of Finance won't intervene in the foreign currency market," a ministry official told "Globes" today. "We promised to help exporters, and we will do so, but not by intervening in the foreign currency market. We'll help them through guarantees, an aid fund for exporters, and by increasing support for ASHRA - The Israel Export Insurance Corporation Ltd. We'll seek solutions in this spirit."
The Manufacturers Association of Israel has been intensely lobbying the government in recent weeks to solve the problem of the low shekel-dollar exchange rate, which is battering exporters. A senior economic official was quoted this morning as saying, "The government will propose an exchange rate support mechanism."
Ministry of Finance officials have not heard about this, and ridicule it. A ministry official said, "This is a trial balloon by someone with no responsibility for the matter." The official's comment implies that that someone is at the Prime Minister's Office.
The Ministry of Finance official added, "Our position was, and has not changed, that help should definitely be given, because exporters face real hardships, and exports are critical for the economy, but we won't intervene in the foreign currency market. The Bank of Israel is totally with us on this. It's easy to sit in a comfortable office and toss out all kinds of comments without having to take responsibility for them, but the people who actually have to take responsibility should act responsibly. We'll continue to examine options for solving the problem."
Manufacturers Association president Shraga Brosh told "Globes", "It's simply not possible to sit with arms folded and let exports fall, because then the economy will fold, and we won't be there when the world begins to emerge from the crisis." As chairman of the Economics Organizations Liaison Committee, Brosh initiated the convening of Round Table to deal with the problem of the dollar.
The shekel-dollar exchange rate fell another 0.3% in morning inter-bank trading today to NIS 3.749/$.
FOREX-Dollar down on higher risk appetite
NEW YORK, Sept 16 (Reuters) - The dollar slumped to a one-year low against major currencies on Wednesday as a recovery in the global economy encouraged investors to look for higher-returning assets.
The euro rallied to a nine-month high, a move analysts said reflected the view investors shunned the dollar as a safe haven.
The yen rallied to a seven-month high against the beleaguered dollar after Japan's incoming finance minister said a strong yen had advantages for the nation's economy.
"Risk appetite is still up on expectations of a global recovery after big data like (U.S.) retail sales yesterday," said Win Thin, a currency strategist at Brown Brothers Harriman in New York.
A report on Tuesday showed U.S. retail sales rose at their fastest pace in 3-1/2 years in August.
Midway through the New York session, the euro EUR= traded at $1.4684, hovering 0.2 percent higher on the day.
The dollar index .DXY, which tracks its performance against a basket of six major currencies, fell as low as 76.187, its weakest level in a year. It last traded at 76.377, down 0.2 percent on the day.
"The general dollar-selling trend remains in place," said Lauren Rosborough, senior currency analyst at Westpac in London, noting that traders were focused on $1.4720, above which would be the euro's highest since September 2008.
Some investors were initially fazed by an increase in the net capital outflow from the United States as seen in the Treasury Department's Treasury International Capital (TICS) flows report. Outflows for July swelled to $97.5 billion from a revised outflow of $56.8 billion in June.
"The headline number certainly paints a bit of a dark picture with regard to overall demand for U.S. assets," said Omer Esiner, a senior market analyst at Travelex Global Business Payments in Washington. "But I think the silver lining of this number is that we still see healthy demand from foreign central banks for U.S. Treasuries. In fact, both Japanese and Chinese holdings of U.S. Treasuries increased."
YEN RALLIES
The dollar JPY= fell 0.1 percent on the day to 90.90 yen though it went as low as 90.10 yen, according to Reuters data.
The dollar earlier plumbed its weakest level against the yen since mid-February after incoming Finance Minister Hirohisa Fujii said he was opposed to currency intervention if movements were gradual, while adding that current moves were not rapid. [ID:nTKU105550].
"The comments suggest the new government is not as keen to interfere in the market as the old one was," said Johan Javeus, chief currency strategist at SEB in Stockholm. "It seems this has given a go ahead signal to the market that it's OK for the yen to strengthen."
Still, he added Fujii's comments that he opposed currency intervention if movements were not rapid suggested the new government, like the old one, remained concerned with the speed of yen appreciation
Analysts have said traders remain cautious about pushing the yen too high due to lingering concerns Japan may act to stem the yen's strength, as they did in a massive intervention campaign in 2003-2004.
Such concerns may limit yen gains around 87 yen, a level hit earlier this year for the first time since 1995.
Market participants said traders were pushing dollar/yen lower in an attempt to test 90.00 yen, which was believed to be lined with options-related barriers.
A separate U.S. government report showing a rise in U.S. consumer prices had limited impact on trading and was soon overshadowed by later reports.
The Labor Department said its closely watched Consumer Price Index rose 0.4 percent in August, after having been flat in July, a touch above expectations for a 0.3 percent gain. [ID:nN15416331]. (Additional reporting by Naomi Tajitsu in London) (Reporting by Nick Olivari; Editing by Kenneth Barry)
The euro rallied to a nine-month high, a move analysts said reflected the view investors shunned the dollar as a safe haven.
The yen rallied to a seven-month high against the beleaguered dollar after Japan's incoming finance minister said a strong yen had advantages for the nation's economy.
"Risk appetite is still up on expectations of a global recovery after big data like (U.S.) retail sales yesterday," said Win Thin, a currency strategist at Brown Brothers Harriman in New York.
A report on Tuesday showed U.S. retail sales rose at their fastest pace in 3-1/2 years in August.
Midway through the New York session, the euro EUR= traded at $1.4684, hovering 0.2 percent higher on the day.
The dollar index .DXY, which tracks its performance against a basket of six major currencies, fell as low as 76.187, its weakest level in a year. It last traded at 76.377, down 0.2 percent on the day.
"The general dollar-selling trend remains in place," said Lauren Rosborough, senior currency analyst at Westpac in London, noting that traders were focused on $1.4720, above which would be the euro's highest since September 2008.
Some investors were initially fazed by an increase in the net capital outflow from the United States as seen in the Treasury Department's Treasury International Capital (TICS) flows report. Outflows for July swelled to $97.5 billion from a revised outflow of $56.8 billion in June.
"The headline number certainly paints a bit of a dark picture with regard to overall demand for U.S. assets," said Omer Esiner, a senior market analyst at Travelex Global Business Payments in Washington. "But I think the silver lining of this number is that we still see healthy demand from foreign central banks for U.S. Treasuries. In fact, both Japanese and Chinese holdings of U.S. Treasuries increased."
YEN RALLIES
The dollar JPY= fell 0.1 percent on the day to 90.90 yen though it went as low as 90.10 yen, according to Reuters data.
The dollar earlier plumbed its weakest level against the yen since mid-February after incoming Finance Minister Hirohisa Fujii said he was opposed to currency intervention if movements were gradual, while adding that current moves were not rapid. [ID:nTKU105550].
"The comments suggest the new government is not as keen to interfere in the market as the old one was," said Johan Javeus, chief currency strategist at SEB in Stockholm. "It seems this has given a go ahead signal to the market that it's OK for the yen to strengthen."
Still, he added Fujii's comments that he opposed currency intervention if movements were not rapid suggested the new government, like the old one, remained concerned with the speed of yen appreciation
Analysts have said traders remain cautious about pushing the yen too high due to lingering concerns Japan may act to stem the yen's strength, as they did in a massive intervention campaign in 2003-2004.
Such concerns may limit yen gains around 87 yen, a level hit earlier this year for the first time since 1995.
Market participants said traders were pushing dollar/yen lower in an attempt to test 90.00 yen, which was believed to be lined with options-related barriers.
A separate U.S. government report showing a rise in U.S. consumer prices had limited impact on trading and was soon overshadowed by later reports.
The Labor Department said its closely watched Consumer Price Index rose 0.4 percent in August, after having been flat in July, a touch above expectations for a 0.3 percent gain. [ID:nN15416331]. (Additional reporting by Naomi Tajitsu in London) (Reporting by Nick Olivari; Editing by Kenneth Barry)
Forex Trading and Bollinger Bands
The Bollinger bands theory was propounded by John Bollinger who formulated this very useful trading tool that builds upon the propensity of bands to expand and contract representing the volatility of forex markets and price behavior. It is based on standard deviation, a statistical tool that traces the relative deviation of a simple average to a maximum and a minimum limit.
Similarly, this trading tool makes use of a simple moving average with its corresponding higher and lower bands that will either expand or contract according to price movements in relation to the average. Traders in most cases use a 20-day average as the middle line or average, and study price movement trends, upwards or downwards, in relation to the 20-day average.
The Bollinger Squeeze is a phenomenon that predicts a major change in the direction of a price movement. The upper and lower bands are the closest to the average middle band on account of meager price movement during the trading period (open and close). However, when price action breaches and subsequently breaks out of a band (upper or lower), it indicates a new price trend. For e.g. if the price breaks out of the upper band then it indicates an upward trend after the gloomy trading period.
On the other hand, if the price breaks out of the lower band, it indicates a downward trend. Fundamentally, another way to look at it is to correlate the gap between the two bands with the length of the bands in a time period. The rule of thumb is that the closer together the bands are, the shorter will be the time that they stay close together.
For a trader, this is a signal that a major price trend reversal in on the cards. When the upper and lower bands are farther apart, it indicates a more volatile market implying a greater propensity for the price action to fall towards the average. However, in many cases the price has also exhibited a jump away from the average when the upper and lower bands expand.
An interesting behavior of Bollinger bands is the “Bollinger Bounce”. According to this, the price movements will eventually always return to the middle band (average) which is because of the balancing act played by the support and resistance levels at each maxim (upper and lower band). These bands therefore indicate a price movement trend. Let us further elaborate on the same.
The greatest disadvantage of the Bollinger bands is its inability to indicate the most suitable phase in a price action trend movement to open or exit a trade or even to initiate buying or selling a currency pair. It only acts an indicator of the trading price volatility. It can only help predict a possible trend and even make a calculated guess on when to expect an anticipated change.
The Bollinger bands work on three bands- upper, lower and a moving average band. The price fluctuates above or below the moving average indicating volatility in the forex market suggesting price behavior behind a currency pair. The narrowing of the upper and lower bands indicates the likelihood for a major price trend change.
Similarly, this trading tool makes use of a simple moving average with its corresponding higher and lower bands that will either expand or contract according to price movements in relation to the average. Traders in most cases use a 20-day average as the middle line or average, and study price movement trends, upwards or downwards, in relation to the 20-day average.
The Bollinger Squeeze is a phenomenon that predicts a major change in the direction of a price movement. The upper and lower bands are the closest to the average middle band on account of meager price movement during the trading period (open and close). However, when price action breaches and subsequently breaks out of a band (upper or lower), it indicates a new price trend. For e.g. if the price breaks out of the upper band then it indicates an upward trend after the gloomy trading period.
On the other hand, if the price breaks out of the lower band, it indicates a downward trend. Fundamentally, another way to look at it is to correlate the gap between the two bands with the length of the bands in a time period. The rule of thumb is that the closer together the bands are, the shorter will be the time that they stay close together.
For a trader, this is a signal that a major price trend reversal in on the cards. When the upper and lower bands are farther apart, it indicates a more volatile market implying a greater propensity for the price action to fall towards the average. However, in many cases the price has also exhibited a jump away from the average when the upper and lower bands expand.
An interesting behavior of Bollinger bands is the “Bollinger Bounce”. According to this, the price movements will eventually always return to the middle band (average) which is because of the balancing act played by the support and resistance levels at each maxim (upper and lower band). These bands therefore indicate a price movement trend. Let us further elaborate on the same.
The greatest disadvantage of the Bollinger bands is its inability to indicate the most suitable phase in a price action trend movement to open or exit a trade or even to initiate buying or selling a currency pair. It only acts an indicator of the trading price volatility. It can only help predict a possible trend and even make a calculated guess on when to expect an anticipated change.
Summary
The Bollinger bands work on three bands- upper, lower and a moving average band. The price fluctuates above or below the moving average indicating volatility in the forex market suggesting price behavior behind a currency pair. The narrowing of the upper and lower bands indicates the likelihood for a major price trend change.
Importance of forex learning courses for traders
By Lance Owen
Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.
Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.
The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.
Trade sitting at the comfort of home. Start with a mere 50$
The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:
Forex trading basics
Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.
Main drawbacks of Forex traders
Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.
Technical and fundamental analysis.
These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor. The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.
Forex trading system development.
Having the right system is a must if you want to have consistent profitable results. Having a system that doesn’t fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)
Money management.
This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)
Trading psychology.
Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.
Other important aspects every training program should include are: Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.
Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the training program works.
A good course will have the following: 1)A live conference room, where you can apply everything learned under live market conditions. 2)One-on-one feedback, every trader has different needs and requires special attention. For instance a trader wanting to improve the system and requires individual feedback from the instructor about it.
Online trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don’t have to change your lifestyle. A forum, where members can talk just about everything related to the Forex market and the Forex training program.
Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader’s trading career.
Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.
Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.
The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.
Trade sitting at the comfort of home. Start with a mere 50$
The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:
Forex trading basics
Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.
Main drawbacks of Forex traders
Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.
Technical and fundamental analysis.
These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor. The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.
Forex trading system development.
Having the right system is a must if you want to have consistent profitable results. Having a system that doesn’t fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)
Money management.
This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)
Trading psychology.
Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.
Other important aspects every training program should include are: Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.
Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the training program works.
A good course will have the following: 1)A live conference room, where you can apply everything learned under live market conditions. 2)One-on-one feedback, every trader has different needs and requires special attention. For instance a trader wanting to improve the system and requires individual feedback from the instructor about it.
Online trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don’t have to change your lifestyle. A forum, where members can talk just about everything related to the Forex market and the Forex training program.
Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader’s trading career.
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