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February 29, 2012

New Spread Comparison Resource

Filed under: Forex General — Tags: , , — admin @ 5:32 pm

>As forex brokers one of our chief aims is to minimise costs. One way we do this is by looking for forex brokers that offer cheaper spreads and lower costs on our trades.

MyFXBook have provided an excellent spread analysis resource allowing forex traders to monitor forex brokers’ spreads and give an accurate, unbiased view of the average (as well as the highest and lowest) spreads provided to LIVE accounts! It certainly is a great resource for us to have in keeping with our pursuit of increasing our profits whilst minimising expenses.

A few thoughts and guide on how to use the resource have been made in this video here:

Please note that the MyFXBook Forex Spread site is in BETA – could be buggy. However, it’s looking much better than other similar sites such as FXIntel which look a little cluttered.

ECB + LTRO = Mr. Creosote?

Filed under: Forex Strategies — Tags: , — admin @ 4:43 pm

It’s time for the European equivalent of the US Non Farm Payrolls Lottery. Roll up and guess a number. Yes it’s LTRO time, or the baby Eltiaro as we prefer to call it. Now rather than join in with the guessing of how big it will be, we would rather jump directly to the market impact and nearly everything we have read suggests that, whatever the number, it will be taken as good news. Which to us is a red flag signalling that the market is more likely to come off after the event than scream higher, so we are happy to sit with our call from last week that this will mark a bit of a turning point. But we have to say the US data continues to stun on the upside, even if we are wondering why the US consumer isn’t worrying about gas prices. Were they THAT strong?

But back to the LTRO. With the ECB consuming all sorts of toxic waste in such huge quantities in exchange for liquidity, we are somewhat reminded of that rather unpleasant scene from Monty Python’s “The Meaning of Life”, only here The ECB has become Mr Creosote.

MARKET : Oh, shit! It’s Mr. ECB !!

MAITRE D: Ah, good afternoon, sir, and how are we today?

MR. ECB : Better.

MAITRE D: Better?

MR. ECB : Better get a balance sheet I’m going to spew liquidity.

MAITRE D: Uh, Gaston! A balance sheet for monsieur. There you are, monsieur.. [goosh] Merci, Gaston.

MR. ECB: I haven’t finished.

MAITRE D: Oh! Pardon. Gaston! A thousand pardons, monsieur.

MR. ECB: Uhh.
[goosh]

MAITRE D: Now, zis afternoon, we have monsieur’s favourite: Ze Greek bonds. Ze Greek yield is very high, and ze coupon is very rich with olives, anchovies, Ouzo, Feta , and promises to repay. Thank you, Gaston.

MR. ECB: There’s still more.

MAITRE D: Oh! Allow me. A new balance sheet for monsieur,…[goosh] …and ze liquidity mopping up woman,… and maintenant.
Would monsieur care for an aperitif, or would he prefer to order straight away?
[goosh]

MR. ECB: Oh.

MAITRE D: Uh, today we have, uh, for appetizers: Excuse me. Mmm. Uh, Ze Bouni Poliennali Del Tesoro pasta, Bonos y Obligaciones del Estado paella, Obligations Assimilables du Trésor (Zat iz Oats and frogs’ legs with more Oats), or Portuguese Obrigações very delicate. Very subtle.

MR. ECB: I’ll have the lot.

MAITRE D: A wise choice, monsieur. And now, how would you like it served? All, uh, mixed up togezer in a special Long Term Refinancing Operation?

MR. ECB: Yeah,… with the Greek short end on top.

MAITRE D: But of course, avec les toxic-waste.

MR. ECB: Yeah, and don’t skimp on the 5 year.

MAITRE D: Oh, monsieur, I assure you, just because it is mixed up wis all ze other things, we would not dream of giving you less than ze full amount. In fact, I will personally make sure you have a double helping. Maintenant quelque chose a boire. Something to drink, monsieur?

MR. ECB: Yeah, I’ll have 80 yards of the Spanish auction.

MAITRE D: Eighty..

MR. ECB: …and a double Jeroboam of the Italian 2022.

MAITRE D: Bon, and the usual French car company?

MR. ECB: Yeah. No, wait a minute. I think I can only manage sixty billion today.

MAITRE D: [tut tut tut tut] I hope monsieur was not overdoing it last month..

MR. ECB: Shut up!

MAITRE D: D’accord. Ah! Ze new balance sheet and ze liquidity mopping up woman. [goosh goosh goosh goosh] Monsieur, is there something wrong with the repayment?

HOLLAND: No, the repayment was excellent.

MAITRE D: Perhaps you’re not… happy with the service?

HOLLAND: No, no. No complaints.

GERMANY: It’s just that we have to go. I’m having rather a heavy PR problem.

AUSTRIA : Hmm.

LUXEMBOURG:Mmmm.

HOLLAND:– And… we… have… a… domestic issue to cope with.

MAITRE D: Ah.

GERMANY: Oh, Yes. Yes, of course. We have a domestic issue to cope with and I don’t want to start bleeding in the polls. Ha.

MAITRE D: Oh! Very well, monsieur and madam . Thank you so much. So nice to see you, and I hope very much we will see you again very soon. Au revoir, monsieur. [clunk] Oh, dear. I have trodden in monsieur’s balace sheet.

MAITRE D: And finally, monsieur, a wafer thin piece of 10yr Greece?

MR. ECB: Nah.

MAITRE D: Oh, sir, it’s only a tiny, little, thin one.

MR. ECB: No. Fuck off. I’m full.

MAITRE D: Oh, sir. Hmm?

MR. ECB: [groan]

MAITRE D: It’s only wafer thin.

MR. ECB: Look. I couldn’t buy another thing. I’m absolutely stuffed.

MAITRE D: Oh, sir, just– just one.

MR. ECB: [groaning] All right. Just one.

MAITRE D: Just the one, monsieur. Voila.

MR. ECB: [groaning]

MAITRE D: Bon appetit.

MR. ECB: [groaning]

[Creeek …… Kaaa…………Booooommm]

MAITRE D: Thank you, sir, and now, here’s ze check.

The USD/CAD’s Intraday and End-of-Day Conflict

Filed under: Currency Charts — Tags: , , , — admin @ 3:40 am

This is a look at the USD/CAD as it rocketed higher in the midst of what has to be considered still a bearish environment. I discuss the set ups – both short and long-term – that I am watching and the reason for my hesitancy to get too bullish.

One of the keys is the parity level which has not been able to maintain bullishness or even bullish momentum too far from this major psychological level. Add to that the 200DMA overhead and there USD/CAD remains under pressure. Stronger crude can only help the loonie at this point and allow it to gain on the greenback.

The way in which this pair shot higher puts into question in issue of more follow-through and yet it’s also troublesome to be a top picker since the momentum was so clearly up. The trick is to balance the short and longer-term set ups which is what I explain in this video.

If you like this video, you can get one each night from me at tradeforexfutures.com

Follow me at Twitter and Facebook!

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Housing and Monetary Policy

Filed under: Forex News — Tags: , , — admin @ 3:10 am
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Housing and Monetary Policy

The Federal Reserve, Housing and Monetary Policy

Housing is an important component of the national economy. Many investors notice the stock market moves every time housing data is released… but why?

Since the end of World War II, residential fixed investment (new home construction and remodelling spending) has accounted for nearly 5% of the United States’ GDP. But total housing expenditures – which include residential fixed investment, as well as rents, furnishings and other housing-related expenditures – have accounted for about one-fifth of total GDP.

What it Means to the Recovery

Historically, the housing sector has been a necessity to past economic recoveries as a whole. During the past nine recessions, the housing sector accounted for about 16.5% of economic growth in the first year of recovery.

The housing market will see a modest rebound in 2012. But given the depths to which the market fell in 2011, the recovery won’t feel very good to those in the real estate business, economists said earlier this month at the International Builders Show.

David Crowe, Chief Economist for the National Association of Home Builders, said housing starts are likely to jump to 700,000 units from 600,000 in 2011, with single-family starts reaching just about 500,000. Existing-home sales for the year should climb to 4.4 million from 3.8 million in 2011, he predicted.

“But we are going from the worst year for starts ever, or at least as far back as we can go to 1942, and the worst year for new-home sales since we started collecting that data,” he said. “This is not going to be a great year.”

The Importance of Housing

The housing market’s importance far exceeds some percentages of GDP. As the aforementioned numbers show, without housing participating in economic recovery, a meaningful economic recovery would not be possible.

Housing is relatively labor intensive. Nearly 12.5% of jobs were estimated to be related to housing during our last boom – which also includes employment tied to housing finance, such as mortgages. And take this into consideration; construction workers earn 25% to 30% more than the average pay in the economy.

And as housing goes, so does the rest of the U.S. economy. As the value of housing increases, the wealth effect kicks in. It’s estimated that consumers eventually spend as much as 5% of the increase in the value of their homes. For example – and I know this may be hard to reflect upon – during the previous decade’s housing boom, households used home-equity loans to boost their spending. A 5% increase in housing net worth, or about $1 trillion, coming from housing could boost consumer spending by $50 billion. This is a pretty good jumpstart to a fledgling economy.

The Fed and Monetary Policy

Housing is an important channel through which monetary policy affects the economy. A study at the Federal Reserve points out that the effect through housing accounts for about a quarter of the total responses of the economy to changes in monetary policy. Through the two rounds in Quantitative Easing, the Fed has poured in around $1.5 trillion of liquidity into the economy. In addition, the “Operation Twist” has lowered long-term interest rates including mortgage rates.

So, like it or not, this is what the Fed is trying to do with its policy. If we can somehow get house prices to stabilize, then banks would gain the confidence to lend money. Falling house prices and ever-increasing defaults have created banks with short arms and deep pockets. The tightening lending conditions have restricted consumer spending and slowed economic recovery.

Once houses begin to sell better as a result of rising prices and easier bank lending conditions, people will spend more money on furniture, landscaping, painting, remodeling, etc. A U.S. government study shows that a new homebuyer spends an additional $5,000 in the first year with the existing buyer spending about $3,700 more.

The Federal Reserve believes with no real fiscal policies coming from Capitol Hill to help the housing market, their monetary policy is the only game in town. Look for future policy moves and suggestions by Mr. Bernanke because they may have a significant effect on foreclosures and multi-family home building.

Good Investing,

Jason Jenkins

Article by Investment U

Hip-hip hooray for crude oil’s breakout.

Filed under: Currency — Tags: , , , , — admin @ 2:26 am

It has been quite the move in the last two weeks. Especially after crude oil lulled everyone to sleep for about three months, even though the tension in the Middle East (particularly Iran) grew slowly and steadily.  

Well, that tension is still building as Israel leans towards aggression, Iran stands its ground, and the outside powers voice their disapproval of potential military action; the US and Europe are watching their sanctions dig deep and the Eastern powers of Russia and China don’t want anyone meddling in their Mid-East relationships.  

At the same time, there are some supply concerns from Iran, South Sudan, Yemen and Syria. In Iran’s case, part of the disruption came directly from European and US sanctions; the other part was voluntary as Iran preempted the shipment of crude to the UK and France by cutting off its exports immediately. The geopolitical turmoil in the other nations has created supply risks as well.  

Based on the above plus technical reasons, I had been expecting a break higher for crude oil. Members of myCommodities Essential letter have been rewarded for their patience before crude oil’s sideways movement resolved itself.  

Even though I believe there are very many risks that the price of oil could collapse as we move further into 2012, as I discussed in an issue of Commodities Essential back in mid-January and again more recently, I still think crude oil has some room to run a bit higher still on the current drivers and market sentiment.  

Crude oil futures, daily – breakout:      

Ultimately I think demand destruction will overtake supply concerns at some point later in the year, perhaps as early as May or June, though not just yet. Currently the geopolitical sentiment is helping the supply threats to mask the soft global demand. But it won’t last.

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Euro Reversal is Likely in the Next Few Days

Filed under: Business — Tags: , , , , — admin @ 12:27 am

Yesterday’s drop has nearly been retraced and there is no change to the call for “an extension of the rally towards Fibonacci objectives of 13584 (100% extension of 12623-13234 rally) and 13627 (61.8% retracement of decline from the 10/27/11 high). The former level intersects short and long term channels on Thursday. A rally to the mentioned level(s) will probably complete a corrective advance from the January low. In other words, I expect to flip to short in early March. Support today is 13420.

February 28, 2012

Weekly Profit Vapourised In 3 Minutes

Filed under: Forex General — Tags: , , , — admin @ 5:33 pm

>I would love to have reported that this week saw another good performance from the system ending with a return of 30% on risk capital (dividing it by 4 would give us the actual return on capital being 7.5%). HOWEVER, some yet undiscovered bug saw to eat through all the hard-earned paper profits made on the demo account and end the week slightly behind.

Details and analysis of the trades during the week are shown in the current video below:

The file with all the transactions can still be located here.

Not Quite There Yet

Filed under: Forex General — Tags: , — admin @ 5:33 pm

The system didn’t perform as well this week ending the month of January with a loss. Unfortunately there was one currency that absorbed the profits and this was the EURGBP. Analysing the trades after the fact means further “tweaking” of the system is needed.

A video of all the trades and the imported system into MyFXBook is shown here:

(Amazingly though, money was made on the USDCAD! Woohoo!!)

Sunday Night Forex Run-Down

Filed under: Currency Charts — Tags: , , , — admin @ 3:40 am

I just recorded this video and it’s a look ahead at the Sunday open as well as early Monday set ups that I’ll be watching. Some of these will be contingent on how the Dow and U.S. Dollar react from the Friday close – most especially the U.S. Dollar that pierced the 78.43 support level before rallying back above it to close out the week.

You can follow me on Facebook and Twitter!

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Oil on a Slippery Slope

Filed under: Forex News — Tags: , — admin @ 3:10 am

Source: ForexYard

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After consolidating gains over the last five days, crude oil has hit a bump in the road. As of this afternoon, crude oil is down 1.5% and is trading right around $109.09. With the euro-zone economy still struggling and demand for crude oil from the U.S. dwindling, the commodity is finding itself at a lower value than what many expected last week. In addition to this, China is also going through a drop in demand as of late. Perhaps in response to the contraction that it’s manufacturing sector has been dealing with as of late. As the afternoon unwinds, be mindful of these factors when watching the value of oil.

Read more forex news on our forex blog.

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Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

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