EUR/USD paid off nicely as we sold off from around 1.4100 to 1.3900 in the post FOMC lows. I'd say as long as Wednesday's highs hold, any other decent rally attempts should be shorted on EUR/USD and any position trades short should be fine. The FOMC Statement today wasn't groundbreaking, but the fact that they did not expand their quantitative easing in any way was USD strengthening, and in my opinion, their statement was a bit more pessimistic than the market was looking for. Based on this, we managed to nab 40+ pips on a scalp, but I don't think there was a big enough surprise on the statement to warrant any modifications to our long term view. Stocks may float up a bit above Wednesday's highs, but as long as they don't surge through 917, the short side should be rewarding. No change on our long term gold outlook... look for lower prices over time. We're looking for stronger USD for sure, but in recent markets, it's been better to short pairs like EU and GU on big bounces for medium to long term trades, and chasing quick momentum is really only ok for scalps. Also, if EUR/CHF works back down to the 1.5000-1.5100 range again, it could be worth a nice buy as more intervention or the anticipation of intervention steps in to send it upwards. For news Thursday:
0830 US GDP 1Q Final Annualized (-5.7% expected) - Usually the final revision to GDP is the least important and deemed less significant by the markets; however, it is still a GDP release, and it should have an impact if there's a big surprise. Since this is a final revision, we'll need a decent 0.5% deviation to make it reliably worth trading. The likelihood of hitting that trigger is somewhat small historically, but it's possible given all the unusual complexity to the data from the first quarter.
If it comes out at -5.2% or higher, EUR/JPY should rally 50 pips.
If it comes out at -6.2% or lower, EUR/JPY shoudl sell off 50 pips.
1845 NZ GDP q/q (-0.7% expected) - This should be an ok trade as long as it hits a 0.3% deviation. If we get a smaller 0.2% away from expectations, it might be ok if the y/y (expected at -2.3%) difference is decent also, but it's not quite as reliable.
If it comes out at -0.4% or higher, NZD/USD should rally 30-40 pips.
If it comes out at -1.0% or lower, NZD/USD shold sell off 30-40 pips.
Thursday 25 June 2009
Thursday 18 June 2009
Forex Trading Signal 06/18/09
0430 UK Retail Sales y/y (-0.4% expected) - We haven't seen a clear signal on this indicator in awhile, and with some strange price action lately on this news, be careful that the monthly number has a significant surprise in the same direction in order to stick with a trade here. If a trend develops, I recommend holding no longer than 45 minutes.
If it comes out at +0.2%, GBP/USD should rally 40+ pips.
If it comes out at -0.8%, gbp/USD should sell off 40+ pips.
If it comes out at +0.2%, GBP/USD should rally 40+ pips.
If it comes out at -0.8%, gbp/USD should sell off 40+ pips.
Wednesday 10 June 2009
Forex Signals for 10-06-2009 forward
seen a pretty sharp and momentuous retracement of last weeks selloff obviously threatening the validity of the call for a resumption of downside over the medium term on GBP/USD and EUR/USD. As of right now, it may end up simply being a very sharp retracement that will resume it's ultimate move lower fairly soon; however, there's so much buying pressure that it's probably best to stay neutral until we get a bit more confirmation. Unfortunately, we can't rule out either case until we start making some decent lower lows or break some of last week's key highs, so watch the video for a bit more on that and also stocks and gold and we'll take another look at them tomorrow. We are finally getting a bit of news this week though:
0430 UK Industrial Production (-0.1% expected) - This should be good for some pips short term, with follow-through more dependent on the medium term technicals
If it comes out at +0.2% or higher, GBP/USD should rally 30-45 pips.
If it comes out at -0.4% or lower, GBP/USD should sell off by 30-45 pips.
1700 NZ Interest Rate statement (expectations range from no change to 0.50% cut, with consensus somewhere in between no change and 0.25% cut) - Watch out for the text from the statement here on this one since sometimes the language conflicts with the decision itself.
If they leave the rate unchanged, NZD/USD should quickly rally 40 pips or more.
If they cut 0.50%, NZD/USD should sell off by 50+ pips.
AU Employment Change (-30K expected) and Unemployment Rate (5.7% expected) - Watch out for both numbers as either one is about as important as the other.
If Employment comes out at 0 or higher, and/or Unemployment Rate comes in at 5.5% or lower, AUD/USD should rally by 40+ pips.
If Employment comes out at -50K or lower, and/or Unemployment Rate comes in at 5.9% or higher, AUD/USD should sell off by 40+ pips.
0430 UK Industrial Production (-0.1% expected) - This should be good for some pips short term, with follow-through more dependent on the medium term technicals
If it comes out at +0.2% or higher, GBP/USD should rally 30-45 pips.
If it comes out at -0.4% or lower, GBP/USD should sell off by 30-45 pips.
1700 NZ Interest Rate statement (expectations range from no change to 0.50% cut, with consensus somewhere in between no change and 0.25% cut) - Watch out for the text from the statement here on this one since sometimes the language conflicts with the decision itself.
If they leave the rate unchanged, NZD/USD should quickly rally 40 pips or more.
If they cut 0.50%, NZD/USD should sell off by 50+ pips.
AU Employment Change (-30K expected) and Unemployment Rate (5.7% expected) - Watch out for both numbers as either one is about as important as the other.
If Employment comes out at 0 or higher, and/or Unemployment Rate comes in at 5.5% or lower, AUD/USD should rally by 40+ pips.
If Employment comes out at -50K or lower, and/or Unemployment Rate comes in at 5.9% or higher, AUD/USD should sell off by 40+ pips.
Sunday 7 June 2009
The world's most expensive stock index will plunge 50%
The world's most expensive stock index will plunge 50%
June 1 (Bloomberg) -- The steepest rally in the Topix index in 56 years has turned Japanese stocks into the world’s most expensive equities. Not for long, say hedge-fund managers betting the recession will prevent earnings from rebounding.
Bridgewater Associates Inc., Highbridge Capital Management LLC and Farallon Capital Management LLC, which together oversee almost $80 billion, increased bets against Japanese companies in the past three months, filings to the Tokyo Stock Exchange show. The Topix climbed 30 percent in the same period, the most since 1953, and shares in the index trade at an average 41.2 times estimated earnings, the highest level among the 40 largest markets, data compiled by Bloomberg show.
Bullish investors say Japanese stocks, which have recovered 44 percent of the losses that followed the collapse of New York- based Lehman Brothers Holdings Inc. in September, will rise further because analysts predict earnings will rebound the most since 2000. Bears point to forecasts by economists that show Japan will contract twice as much as the U.S. this year.
“Investors are anticipating a strong earnings recovery in 2010, but it’s really doubtful,” said Kazuyuki Terao, a Tokyo- based manager at the Japanese unit of Allianz SE, which oversees $1.6 trillion. “The markets have gotten ahead of themselves.”
The Topix rose 1.6 percent to 912.52 today, while the Nikkei 225 Stock Average advanced 1.6 percent to 9,677.75. Last week, the Topix gained 2.5 percent, while the Nikkei 225 climbed 3.2 percent, rounding out a third consecutive month of gains.
Higher Valuations
Japanese valuations dwarf those of companies in the Standard & Poor’s 500 Index, which traded at an average 16.1 times earnings, based on 2009 estimates as of last week. Stocks in the Topix were also more than twice as expensive as shares in China, Hong Kong, Australia and South Korea, and traded at about three times the valuations for Germany’s DAX Index, the U.K.’s FTSE 100 and France’s CAC 40, data compiled by Bloomberg show.
A decline to the average valuation during the past five years of 21 times earnings would drive down the Topix by about half its value, according to data compiled by Bloomberg.
The 1,703 companies in the Tokyo Stock Exchange’s first section, where the biggest Japanese corporations list, are forecast to earn an adjusted 22.1 yen (23 U.S. cents) per share this year, based on share-weighted analysts’ estimates compiled by Bloomberg. In 2008, they lost 12.99 yen a share.
Lost Decade
Japan’s economy shrank at a 15.2 percent annual rate in the first quarter, the most since data began in 1955. Gross domestic product will drop 6.7 percent in 2009, according to the median forecast of 11 economists compiled by Bloomberg. That’s more than twice the 2.8 percent contraction projected for the U.S. in another survey of 61 economists.
June 1 (Bloomberg) -- The steepest rally in the Topix index in 56 years has turned Japanese stocks into the world’s most expensive equities. Not for long, say hedge-fund managers betting the recession will prevent earnings from rebounding.
Bridgewater Associates Inc., Highbridge Capital Management LLC and Farallon Capital Management LLC, which together oversee almost $80 billion, increased bets against Japanese companies in the past three months, filings to the Tokyo Stock Exchange show. The Topix climbed 30 percent in the same period, the most since 1953, and shares in the index trade at an average 41.2 times estimated earnings, the highest level among the 40 largest markets, data compiled by Bloomberg show.
Bullish investors say Japanese stocks, which have recovered 44 percent of the losses that followed the collapse of New York- based Lehman Brothers Holdings Inc. in September, will rise further because analysts predict earnings will rebound the most since 2000. Bears point to forecasts by economists that show Japan will contract twice as much as the U.S. this year.
“Investors are anticipating a strong earnings recovery in 2010, but it’s really doubtful,” said Kazuyuki Terao, a Tokyo- based manager at the Japanese unit of Allianz SE, which oversees $1.6 trillion. “The markets have gotten ahead of themselves.”
The Topix rose 1.6 percent to 912.52 today, while the Nikkei 225 Stock Average advanced 1.6 percent to 9,677.75. Last week, the Topix gained 2.5 percent, while the Nikkei 225 climbed 3.2 percent, rounding out a third consecutive month of gains.
Higher Valuations
Japanese valuations dwarf those of companies in the Standard & Poor’s 500 Index, which traded at an average 16.1 times earnings, based on 2009 estimates as of last week. Stocks in the Topix were also more than twice as expensive as shares in China, Hong Kong, Australia and South Korea, and traded at about three times the valuations for Germany’s DAX Index, the U.K.’s FTSE 100 and France’s CAC 40, data compiled by Bloomberg show.
A decline to the average valuation during the past five years of 21 times earnings would drive down the Topix by about half its value, according to data compiled by Bloomberg.
The 1,703 companies in the Tokyo Stock Exchange’s first section, where the biggest Japanese corporations list, are forecast to earn an adjusted 22.1 yen (23 U.S. cents) per share this year, based on share-weighted analysts’ estimates compiled by Bloomberg. In 2008, they lost 12.99 yen a share.
Lost Decade
Japan’s economy shrank at a 15.2 percent annual rate in the first quarter, the most since data began in 1955. Gross domestic product will drop 6.7 percent in 2009, according to the median forecast of 11 economists compiled by Bloomberg. That’s more than twice the 2.8 percent contraction projected for the U.S. in another survey of 61 economists.
Friday 5 June 2009
Forex Trading signals 05-06-09 forward to next week
The EUR/USD broke through 1.4100 to confirm the head and shoulders sell on the hourly, only to frustratingly rally back up as GBP continues to be the preferential sell.
At the moment, as long as the 1.4241 highs hold on EUR/USD, the bias should be short from here.
If those highs go I'd shift to neutral. If we do resume downside price action as we've seen on the GBP, the 1.3800 level is a likely medium term target. One big reason the GBP has been weak are rumors of Prime Minister Brown potentially resigning.
These rumors have been refuted by his office, but the markets definitely still smell blood. Pretty much all of the scheduled news on Thursday came out pretty vanilla without any big surprises with the exception of very strong UK Halifax house prices which made a very nice short term GBP strengthening move of 80 pips in 40 minutes.
0700 CAD Employment (-36.5 expected) - Last month's huge positive deviation created a surprisingly small selloff in the USD/CAD. On the one hand it seems as though CAD levels after news events have been frequently manipulated; however, CAD Employment is usually a very reliable indicator and one bad month shouldn't completely force us to sit on our hands here. A comprimise of trading a wider trigger than usual seems appropriate.
If it comes out at 0.0K or higher, USD/CAD should sell off 50 pips
If it comes out at -62K or lower, USD/CAD should rally 40+ pips
0830 US Nonfarm Payrolls (-520K expected) - We have not seen very large deviations on this report since December 2008. Because of that, we've gotten a lot of strange price action on the smaller deviations primarily due to large order flows that tend to follow this release. I recommend trading a wide 100K trigger and if it comes out closer to expected than that, or if there's a conflict with Unemployment Rate,
avoid taking long directional trades and simply look to scalp sell rallies and scalp buy sell offs into support.
Because we've seen some clear decoupling of EUR/USD, USD/JPY and EUR/JPY, it's hard to say which pair will have the best reaction on the news. My best guess is USD/JPY will be best for a quick news spike pop, but EUR/JPY will have the deepest, most sustainable move.
If it comes out at -420K or higher, EUR/JPY should rally 50+ pips
If it comes out at -620K or lower, EUR/JPY should sell off 50+ pips
At the moment, as long as the 1.4241 highs hold on EUR/USD, the bias should be short from here.
If those highs go I'd shift to neutral. If we do resume downside price action as we've seen on the GBP, the 1.3800 level is a likely medium term target. One big reason the GBP has been weak are rumors of Prime Minister Brown potentially resigning.
These rumors have been refuted by his office, but the markets definitely still smell blood. Pretty much all of the scheduled news on Thursday came out pretty vanilla without any big surprises with the exception of very strong UK Halifax house prices which made a very nice short term GBP strengthening move of 80 pips in 40 minutes.
0700 CAD Employment (-36.5 expected) - Last month's huge positive deviation created a surprisingly small selloff in the USD/CAD. On the one hand it seems as though CAD levels after news events have been frequently manipulated; however, CAD Employment is usually a very reliable indicator and one bad month shouldn't completely force us to sit on our hands here. A comprimise of trading a wider trigger than usual seems appropriate.
If it comes out at 0.0K or higher, USD/CAD should sell off 50 pips
If it comes out at -62K or lower, USD/CAD should rally 40+ pips
0830 US Nonfarm Payrolls (-520K expected) - We have not seen very large deviations on this report since December 2008. Because of that, we've gotten a lot of strange price action on the smaller deviations primarily due to large order flows that tend to follow this release. I recommend trading a wide 100K trigger and if it comes out closer to expected than that, or if there's a conflict with Unemployment Rate,
avoid taking long directional trades and simply look to scalp sell rallies and scalp buy sell offs into support.
Because we've seen some clear decoupling of EUR/USD, USD/JPY and EUR/JPY, it's hard to say which pair will have the best reaction on the news. My best guess is USD/JPY will be best for a quick news spike pop, but EUR/JPY will have the deepest, most sustainable move.
If it comes out at -420K or higher, EUR/JPY should rally 50+ pips
If it comes out at -620K or lower, EUR/JPY should sell off 50+ pips
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