Saturday, January 8, 2011

Forex Market Updates & Commentary

Forex Market Updates & Commentary

Link to Forex News and Commentary by FXDD

The Weekend Forex Commentary is available for viewing

Posted: 07 Jan 2011 02:03 PM PST

Live Education with Greg and Shawn Tuesday Jan 11th

Posted: 07 Jan 2011 01:01 PM PST

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FXDD Live Education with Greg and Shawn Tuesday Jan 11th 2011 at 4pm New York time >> Register now

EURUSD selling off into the NY close.

Posted: 07 Jan 2011 12:59 PM PST

The EURUSD looks like it will close the week at or near the lows. The pair is comfortably below the 200 day MA and th 50% retracement at the 1.3078 level and also the 1.2920 support level

Irelands Corrigans on newswires

Posted: 07 Jan 2011 10:24 AM PST

The chief executive of the National Treasury Management Agency (NTMA), says “Ireland could tap bond market in 2011″

That would be litnus test for the nation. Currently, the ECB is buying their bonds in order to keep the markets orderly and earlier this week, the SNB said that they were not accepting Irish collateral for repos.

The Midday Forex Commentary looks at the major currency pairs

Posted: 07 Jan 2011 09:35 AM PST

The FXDD End of Year Forex Report

Posted: 07 Jan 2011 09:00 AM PST

The "FXDD End of Year Forex Report" (CLICK HERE TO ACCESS THE PDF REPORT) gives a view of some key points that should./may shape the Forex market in 2011. 

  •  In the United States, jobs will be the focus.  It may be time for corporations to provide the stimulus and stop relying on the 2 year theme of government support. Increasing efficiency is over.  HIRE.
  • The Fed will be paying attention to loan data from the banks. 2010 saw an improvement in lending but it still remains down.  A shift from buying bonds to making loans is needed.  Ironically higher rates coupled with job growth are the ticket to more loans and more confidence in lending.
  • In the EU, the sovereign debt will be the major theme. Will the EU stick together? Debt auctions in the 1st quarter will be telling. 
  • In the UK, inflation will be the challenge as an increase in VAT is absorbed with inflation already above target. 
  • In Japan, the interest rate differential might lead to JPY selling again (USDJPY buying).  
  •  The CHF might finally fall on less flight to quality buying ,and 
  • Australia has a disastrous flood and slower China that muddies the water as the year gets started  

I take a look at the commodities and what they may be saying about inflation.  Although stronger growth leads to higher prices, some of the gains may be hot, free money chasing a moving market.

 

From a technical perspective, I outline the key levels from the daily chart as the New Year begins.  Without a technical reason to trade, you don't do the trade.  Technical movements define your risk.  Finally, at the end of the report is a graphical review of the key economic release for each of the major currency pairs.  

 

Let me thank you for your support in 2010. In 2011 I look forward to taking you to new levels.  I hope that through our firm's educational commitment you became a better trader. 

 

Good fortune with your trading and all the best for a happy, peaceful and joyous New Year,

 

Greg Michalowski 

Vice President and Chief Currency Analyst at FXDD

 PS. If you are not on my email distribution list, to opt in send me an email at greg@fxdd.com

Are higher rates better sometimes?

Posted: 07 Jan 2011 08:22 AM PST

On CNBC just a few minutes ago, the commentaries talked about how since QE2, rates have gone up and that this is a problem at the Fed.  Are higher rates necessarily a bad - this time. 

One might argue. (well I might argue) that the higher rates are just what the doctor ordered.  At lower rates,banks do not have an incentive to lend. Employment is still high so banks are worried about credit quality. With rates low  (say 4.25% for mortgages), the banks may also feel that “hey this adds to my risk.”.   Banks don’t want to lend low borrow high.  They too know good and bad value. That is why they bought bonds instead of lent money. 

 With rates now higher (at 4.82% in the current week mortgage rate) this now gives the banks more incentive from a rate standpoint to lend.  They have some room. They are not lending at the low but at a more fair rate given the risks.

The missing piece is jobs.  If jobs are created - and today was a step forward - then banks will have less credit risk to the newly employed worker.  They will be encouraged to take the Feds FREE money and instead of buying bonds, they make loans instead.  Loans help ignite the economic engines because of the multiplier effect. Buying treasuries does not have that power.

In my end of year forex report, CLICK HERE FOR THE PDF REPORT this idea (and some other ideas) are presented.  2011 is all about jobs, and about the shift from buying treasuries to making loans.  If that can happen, rates will go up, but it is a good rise in rates - not necessarily a bad rise in rates.

(To subscibe to my email distribution list, send me an opt in email to greg@fxdd.com)

Report SNB is not accepting Portugal paper as collateral

Posted: 07 Jan 2011 07:37 AM PST

There is a report in the market that the Swiss National Bank is not accepting Portugal debt paper as collateral.  If you recall, a similar decision was made with regard to Irish paper earlier this week.  This is suggesting that the central bank is concerned about the credit worthiness of the countries debt.  They may be more conservative then most and the market reaction is somewhat muted. However, it may be an increasing theme in 2011.

Bernanke on Capital Hill. Some comments

Posted: 07 Jan 2011 07:33 AM PST

  • Fiscal issues long term
  • US needs credible fiscal plan
  • US should stabilize debt to GDP ratio in the near term
  • Credibility is fiscal challenge
  • US recovery is “fragile”
  • Tax code and spending should be more growth friendly
  • Tax code supports growth
  • Favors changes to long run tax structure.

The Fed Chairmans comments are really his opinions on what the congressional members should be doing. In theory, he has no control over what they do or how they do it.  His comments are consistent with what would have been expected so far.
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