Currency Market Updates

Currency Market News: US Dollar Holds Gains

16, August 2010

Friday was a busy day on the economic data front. First up, we saw figures released showing that the Eurozone economy expanded in the second quarter at the fastest pace in nearly four-years. The Euro-Zone’s seasonally adjusted preliminary second quarter GDP showed an expansion of 1.0%, compared with the previous 0.2% and the expected 0.7%.

The biggest jump in the figures came from Germany’s GDP, with a preliminary reading of Q2 GDP showing extremely robust 2.2% q/q growth, well above expectations of 1.3%. This was the fastest pace of growth in nearly 20 years since German reunification. Global demand and a weaker Euro helped boost exports during the period, sustaining growth in the area.

Whilst the UK can take comfort from the fact that they can control their own currency, there are still issues. House prices in the UK have taken a bit of a knock for the month of July according to figures posted by Rightmove, the property website. The figures reflect that people wanting to sell their homes are having to cut prices faster than at any time this year following a flood of properties hitting the market.

On a national basis house prices have come in by 1.7% from July to August. Following the Bank of England cutting its growth forecast on Wednesday and raising its estimate of inflation this housing data has not helped the continued fear around the risk of a double dip recession.

Friday’s US data was broadly in line with expectations. July retail sales rose by 0.4% (versus market consensus +0.5%) and the June reading was revised up to -0.3% from -0.5%. Crucially, core CPI inflation for July was steady at +0.9% as expected, suggesting there has been no increase in deflationary pressures in the past month. This may help calm fears that the Fed will be forced to launch another round of QE later this year.

The University of Michigan consumer sentiment index rose to 69.6, fractionally ahead of consensus of 69.0. The weakening risk environment allowed the US Dollar to hold onto much of last week’s gains. On the week, the euro shed 4.13% against the dollar with sterling only loosing 1.9%.

In other news, China is officially the second largest economy in the world, after the US. The Japanese GDP data out overnight reflected that China has moved into the lead and a number of economists are forecasting that China will take over as Number One by 2027.

This week’s economic calendar starts with today’s Eurozone’s CPI inflation data for July with a market expectation for 1.7% year on year. This is a heavy week for UK data starting with July’s CPI, due on Tuesday, expected to moderate again to +3.1% year on year versus previous month’s +3.2%. On Wednesday, the minutes from the August 5th MPC meeting are due, with weekend press speculation suggesting the possibility of a three-way-split in how the votes were cast.

We expect MPC Member Sentance to remain a lone voice in calling for a rate hike. After the recent weakness in house price and consumer confidence, retail sales due on Thursday will be a useful barometer of whether consumer spending has been affected by headlines warning of imminent and severe fiscal consolidation.

Out from the US this week, starts with tomorrow’s July’s housing starts and industrial production. This is then followed on Thursday by weekly initial jobless claims and two indices of manufacturing activity.

Report by Tim Lewis

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7 Ways To Become An Unsuccessful Trader

7 Ways to Become an Unsuccessful Trader
Q&A with an experienced Elliott wave trader reveals seven common trading mistakes.
August 12, 2010

By Elliott Wave International

To be a successful trader demands knowledge.

If you’d prefer to become an unsuccessful trader, you can start by making the following common trading mistakes, detailed by a professional who spent 25 years in portfolio management, trading and forecasting in the financial capital of the world, New York City.

In 2002, Wayne Gorman, long-time Elliott wave trader and current head of trader education at Elliott Wave International, left his 35th floor Manhattan apartment and moved to the quiet of North Georgia. He’s been sharing his knowledge and skills with aspiring traders ever since — in both online seminars and before live audiences around the world.

Wayne graciously agreed to a Q&A about trading mistakes. In his interview, Wayne reveals seven common mistakes traders make.

——–

EWI: Could you name two mistakes frequently made by stock traders?

Wayne Gorman: (mistake 1) The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an “event” comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.

(mistake 2) The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.

EWI: What are two common mistakes among options traders?

WG: (mistake 3) One common mistake is to buy puts or calls that are way “out of the money,” with no other transactions to compliment them. Unless your timing is absolutely perfect — and who has perfect timing? — your chance of success is low. It’s like buying a lottery ticket.

(mistake 4) Another common mistake is to buy options with too little time left to expiration. With less than one month to expiration, the time decay begins to accelerate and the chances of success diminish.

EWI: Please name a frequent mistake among traders who aim to catch the beginning of a particular Elliott wave.

WG: (mistake 5) In the middle of a corrective pattern, it’s common to run out of patience while waiting for confirmation of a trend change. You have to give corrective patterns time to unfold before you jump in. This requires discipline, and a solid understanding of the many ways corrective patterns can unfold.

EWI: What’s the biggest misconception among traders about using Elliott waves?

WG: (mistake 6) Too many traders think Elliott wave is a trading system that tells you exactly where to enter and exit a particular market. That’s the biggest misconception. The reality is that it’s an analytical and forecasting tool, which helps you develop and use your own trading system, based on your own personal risk tolerance.

EWI: What technical indicators do you believe traders over-rely on, and why?

WG: (mistake 7) Traders tend to over-rely on momentum indicators such as RSI, Stochastics and MACD to precisely spot turning points. But to paraphrase Mark Twain, markets can stay overbought or oversold a lot longer than either you or I can remain solvent.

EWI: How would you characterize today’s market action, and do you teach courses that address this environment?

WG: This is a difficult stock market in the near term. Prices haven’t strayed far from where they began in January. The action has yet to break out significantly to the downside or upside. This situation may not last much longer. I can suggest these online courses to deal with the current situation, and to prepare for the next big move:

• How to Spot Trading Opportunities, Parts 1 and 2
• How to Trade Choppy, Sideways Markets
• 5 Options Strategies Every Elliott Wave Trader Should Know
• Trading the Line – How to Use Trendlines to Spot Reversals and Ride Trends

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Market Analysis Video: Keep A Close Eye the NASDAQ

Has The NASDAQ Lost Momentum?

The NASDAQ appears to be acting the same as it was two years ago. The pattern is clearly shown on the charts in the video below. Should it continue and repeat itself there could be danger ahead for many investors.

Watch as Adam Hewison walks and talks you through the points and the formations.You will also see how the Trade Triangle indicators work and why it will be important to keep an eye on these signals over the coming days.

If you would like to make a comment about this video on the MarketClub Trading Blog Click Here

In recent days we have looked at two other huge markets. If you missed these market anasysis videos here are the links:

Video 1: S&P500 Looks Poor

Video2: Doom For The DOW?

Adam Hewison
President of INO.com
Co-founder of MarketClub

The contents of this report are for information purposes only.

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Currency Market Updates: $1.7trillion Lost Stock Value

13, August 2010

Global stock arkets look set to end the week well in the red. Across the globe indicies are about 4% down on the week wiping a whopping USD $1.7trillion off global stock values in the past 4 days.

An unexpected rise in US jobless claims yesterday ironically caused the dollar to make further gains as the world’s most liquid currency benefitted off the back of risk aversion. Disappointingly US new claims for jobless benefits rose to a six month high as the labour market in the States continues to struggle.

The labour department figures showed the initial jobless claims rose by 2,000 to 484,000 when a significant reduction was expected. Freddie Mac also reported further disappointing figures as home loans in the States hit new lows off the back of a soft US economy.

European Industrial Production figures out yesterday did little to boost confidence in the market. Output in the Euro area dropped 0.6% from May versus expectations of a 0.3% gain suggesting the Euro Zone economy is still far away from making a recovery. Coupled with extremely poor growth figures from Greece, EUR came under pressure reversing early gains.

The Greek economy shrank by 1.5% in the second quarter, this figure was significantly lower then economists had expected. The Greek economy is expected to contract by 4% this year according to the EU and IMF.

However, this morning’s data shows more positive signs for the Eurozone with Germany and France reporting better then expected GDP. Starting with Germany their GDP grew 2.2% (compared to the 1.3% expected) in the second quarter driven mainly from strong investment and exports.

Impressively this figure was the biggest gain in 23 years and economist are expecting at least a 3% growth this year. France’s GDP figures, although not nearly as superior as Germany’s, were still marginally better (by 0.1%) than the market had predicted coming out at 0.6%. French consumer prices fell less than expected in July at -0.3% month on month (up 1.9% on an annual basis).

In Asia, all eyes have been upon the Yen which reached a 15 year high on Wednesday of 84.73. Yen has since sold off slightly to current levels of 85.90. It is being very closely watched by, no doubt, anxious officials. in an unscheduled press conference yesterday, the Finance Minister, Yoshihiko Noda pledged that “appropriate action” would be taken against the strength of the yen. Exactly what the action will be however is unknown but one would expect this to signal possible intervention.

With very little data out elsewhere this Friday, focus today will be on the Eurozone GDP out at 10am followed by US data later this afternoon.

Report by Alistair Cotton

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Currency Market Updates

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Market Analysis Video: Doom For The DOW?

Currency Market Updates, keeping
an Eye the DOW:

Adam Hewison
President of INO.com
Co-founder of MarketClub.com

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