World Currency Watch: FOREX Market, FOREX Trading BLOG

GBP/JPY could drop upon the U.S. stock market opening!

With U.K. housing slumping further overnight and U.S. stock futures predicting a lower opening for U.S. stocks....GBP/JPY could head lower from its triangular breakout.

Both Asian and European stock markets were also down overnight which would only further encourage more yen buying and the selling of high yielding currencies (like the GBP).

Also there's more "worries" being reported in the market already this morning:

U.S. stock-index futures dropped after an Australian owner of 700 U.S. shopping malls said it's struggling to pay debt and Swiss weekly Sonntag reported UBS AG expects further writedowns on subprime investments.
(Click to enlarge the chart below.)

Sean Hyman
Currency Director, www.sovereignsociety.com
Editor/Trader, www.money-trader.com

Here is the EUR/AUD trade that I spoke of.

Click on the results to enlarge them.

Euro battles it out in a tug of war with the Aussie dollar!

Once again, the euro is in a struggle to try to win supremacy over the Aussie dollar. The last time, the Aussie dollar won the tug of war as it broke out of its previous descending triangle pattern. This time it's setting up a descending triangle pattern again. Which one will win? We'll know in the upcoming days to weeks as the pair breaks to once side or the other of the triangle pattern. If it breaks upward, it could minimally head towards the long term (upper horizontal resistance line). If it breaks lower, it has even further that it could fall before reaching long term support (lower horizontal thin line).

Keep an eye to out to see which one runs out of steam and which one drags the other across the line. (Click on the chart to enlarge chart.)

EUR/AUD is known for very volatile moves. In fact, in my Money Trader service (www.money-trader.com) we took a position in it this month and captured 304 pips.

If you want exact trading recommendations with entries, stops and exit points...check out the service.

Have a great weekend and happy trading!

Sean Hyman
Editor/Trader www.money-trader.com

Today's Retail Sales and PPI numbers catch traders by surprise!

Today's Retail Sales and PPI numbers really caught traders by surprise as they came in at double to triple expectations.

This shows that the consumer is alive and so is inflation (at least at the producer level). So this boosted the dollar upward against the euro and British pound.

So now traders need to see if this hot PPI number bleeds through to CPI (the Consumer Price Index). For that's the more important question to answer since the Fed watches it so highly.

Also watch out for any Fed comments about what they saw happen today. Their comments, along with the latest CPI readings, will help to paint a picture as to where the dollar will go next.

As of this writing, the dollar is already positioning itself for a hotter CPI report tomorrow at 8:30am EST.

 

Also, it looks like today's snow in New York City is cooling off stocks too. This is bringing some life back into the yen. EUR/JPY is falling right along with stocks.

Get your popcorn out! It should be interesting.

Sean Hyman
www.money-trader.com

New Zealand's Retail Sales disappoint; NZD falls against the USD and AUD.

New Zealand Retail Sales came in at -.7% month over month vs. 0% expected. The core retail sales came in at -1.1%  vs. 0% expected.

AUD/NZD double bottomed on the hourly chart upon this news and NZD/USD started to fall also. (Click to enlarge the AUD/NZD chart below.)

NZD/JPY erases all of yesterday's losses after the FOMC meeting!

NZD/JPY and many other yen pairs fell hard after the FOMC meeting. Many of the yen pairs lost 150-300 pips within hours (on yen strength). Traders didn't feel that the Fed did enough to stimulate the economy so they sold stocks with a fury. The Dow dropped a whopping 300 points.

The NZD/JPY pair dropped 200 pips within 3 hours following the rate announcement out of the U.S. Money was running to the yen as fast as possible.

However, overnight as markets recovered, NZD/JPY regained all of its losses that it incurred after the rate announcement. That resilience is quite impressive.

The EUR/USD held up better than most in the aftermath. This morning's U.S. Trade Balance numbers will be out within minutes. Let's see how it affects the EUR/USD.

Sean Hyman
Editor/Trader, www.money-trader.com

AUD/JPY and GBP/JPY crumble 300 pips on Yen strength after the Fed rate cut in the U.S.

Quick note: AUD/JPY and GBP/JPY both crumble 300 pips on Yen strength after the Fed rate cut in the U.S.

So far EUR/USD is holding up. Euro is also holding up a lot better than the Aussie dollar. That's boosting the EUR/AUD up towards the top end of its descending triangle pattern on its hourly chart.

CHF/JPY broke higher out of its triangle pattern, then stalled and fell towards the bottom of the triangle pattern. Watch to see if that holds.

Comments from the Fed rocket the yen up 150 pips against the Euro and New Zealand dollars!

Here are some of the headlines concerning the Fed announcement:

 

Fed says some inflation risks remain

Fed says three rate cuts should promote growth

 

Fed sees softness in business, consumer spending

 

Fed says growth is slowing, housing worse

 

FOMC statement less upbeat on economy

Fed suspends balance of risk statement

 

Boston Fed president dissents in favor of bigger rate cut

Fed maintains spread between fed fund and discount rates

 

Fed cuts discount rate by quarter point to 4.75%

FOMC cuts fed funds rate by quarter point to 4.25%

Markets go into a coma before a Fed announcement.

Watching markets before a Fed announcement is just about as exciting as watching paint dry. The reason for this is that the "big money" that really moves the markets, don't want to place any new "bets" until they have that unknown behind them. Then once they know what the Fed does today at 2:15pm EST on interest rates and more importantly what they say afterwards, then they'll jump back into the markets.

So don't look for much to happen in stocks or currencies until after the meeting.

It's anticipated that the Fed will cut by 25 basis points.

The Euro took a bit of a dive last night on a ZEW report that went down to a 14 year low (ouch!). Other than that, there wasn't much activity due to the Fed meeting before us.

The Euro is recovering a bit right now on the thought that the U.S. Fed will lower rates and increase the interest rate differential between the Euro and the USD in the Euro's favor.

However, look for EUR/USD to have some trouble climbing above 1.50. For the high Euro exchange rate is about to take its toll on their economy and the EUR/USD will fall on its own weight in time even despite a faltering U.S. economy.

The AUD/USD may actually have further upside against the USD than the Euro does. For instance, look at an hourly chart of EUR/AUD and you'll see a descending triangular pattern. You'll see that the Euro has been dragged down lower by a stronger Aussie dollar.

Also, AUD/USD just broke out of a descending triangle pattern to the up side yesterday. So this is bullish for it. If the USD falls after the rate decision, expect the AUD/USD to rocket higher.

EUR/JPY may not do too much before the Fed announcement due to it tracking stocks so much lately and stocks will be in a coma until the Fed announcement.

Sean Hyman
Editor/Trader www.money-trader.com

All of the markets are poised for a dollar drop on tomorrow's rate desicion. Will they get it?

Gold is rising today on speculation that the U.S. Fed will deliver a rate cut tomorrow that will cause the dollar to plummet and break this nice bounce that it has had.

Oil is rising due to that same reason plus a Houston shipping channel shut down at the moment.

The Euro just broke a week long downtrend against both the U.S. dollar and the Japanese yen on the hourly charts. It's quite unusual for a trend line to break the day before a Fed announcement. Normally the market is in a coma until after the announcement (and it probably will get that way fast now until after the announcement).

The Euro wants to hit 1.48-1.50 against the U.S. dollar. It may get its chance soon.

So the question is....will all of these markets be right or will the obvious turn against them. Get your popcorn out and let's see how the market responds to Fed Chairman Bernanke tomorrow around 2:15pm EST.

Sean Hyman
Currency Director, The Sovereign Society
Editor/Trader, www.money-trader.com

P.S. - Check out the Money Trader site when you get a chance. Last month we were up 292 pips. This month we're up over 400 pips so far. We can help you maneuver through the rough currency waters.