Attached Image (click to enlarge)
-
Weekly Currency Wrap Up
Long-Term Video Commentary by Jay Norris [url]http://brewer.acrobat.com/p47559904/[/url] Currencies Mixed at the End of Another Wild Week By James Hyerczyk The EUR USD closed unchanged for the week in a two-sided trade. Early in the week the Euro gained ground on the Dollar as the Fed allowed unlimited amounts of Dollars into the global financial system to shore up ailing banks. This flood of money weakened the Dollar, but it recovered most of the loss later in the week when news hit the market of a potential global recession. Stabilization in the stock market throughout the week also encouraged investors to move funds into the U.S. A few important signs that the credit markets were loosening up also helped the Dollar this week. The TED Spread was reduced; LIBOR rates dropped and commercial paper lending was being transacted in record fashion. Although U.S. economic reports were all weak, most were in line with expectations except Retail Sales which was twice as bad as expected. Earlier in the week the Dollar lost ground because of reports of a prolonged recession, however, by the end of the week most traders agreed that the selloff was overdone and that the recession was probably going to be worse in the Euro Zone. Technically, the Euro will change its trend to up on a trade through 1.3785. Until this occurs, continue to press the downside. The GBP USD closed higher for the week. The steps taken by the Bank of England to bail out weak U.K. banks and the Fed’s permission to use unlimited Dollars to create liquidity helped support the British Pound. The trend remains down but will turn up on a move through 1.7629. Aggressive counter trend traders can begin to look at the upside with stops under 1.6788. More conservative traders should wait for the trend to turn up before getting long. The USD JPY closed higher for the week as the U.S. stock markets posted gains. The higher close is a positive which may translate into more buying confidence next week. The charts indicate the formation of a bottom with a change in trend to up on a trade through 103.05. The stock market will dictate the direction of this pair. As the stock market stabilizes, demand for risk will increase and the USD JPY will benefit. A weaker stock market will be bullish for the Yen. The USD CHF is in a position to break out over a swing top at 1.1127. The key to a rally through this top will be a higher stock market. Traders will sell the Swiss Franc and flock to the U.S. Dollar if confidence can be restored to the stock market. News that the Swiss economy may be contracting has been bullish for the Dollar. Look for the direction of the stock market to have a serious influence on the movement of the Swiss Franc. A strong market will lead to a strong USD CHF. The USD CAD may have reached a short-term top as commodity markets seem to have bottomed. Early in the week, the Canadian Dollar was under pressure because of massive liquidation selling in the commodity markets. Crude oil and soybeans reached 50% of their all-time highs which attracted some buying interest. The first sign of a possible top in the USD CAD was when the market could not follow through to the upside as crude oil posted new lows for the year. Look for profit-taking to put in a short-term top. Another severe decline in crude oil is likely to trigger a resumption of the uptrend and lead to a breakout over 1.2150. The AUD USD is in the process of testing the low for the year. This pair started the week in a strong position as traders increased their appetite for risk when the stock market recovered from its recent low. Talk of a possible global recession had the Aussie under pressure most of the week following a top at .7237. A trade through this price will turn the main trend to up. News that the Reserve Bank of Australia will lower interest rates before the end of the year is also putting pressure on the AUD USD. Continue to look for more downside and do not think about the long side until .7237 is crossed. The NZD USD is trading near its low for the year, but may be building a support base. A trade through .6345 will confirm a base has been built. Until this occurs, look for lower markets as talk of a global recession, sharply lower commodity prices and the lack of demand for higher risk, higher yielding assets has diminished expectations of a robust economy. With the pressure from the credit and baking crisis seemingly alleviated, traders will be monitoring economic reports carefully. Any signs of recession could trigger a rate cut by the Reserve Bank of New Zealand. Please do not hesitate to contact us at 1-800-971-2154, with any questions. [url]www.brewerfx.com/jnorrisedu/[/url] DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
- Comments
- Subscribe
- Comment #1
- Edited 11:20am Oct 18, 2008 11:14am | Edited 11:20am
- xrayer
- | Joined Jun 2008 | Status: Leverage Kills | 0 Comments
- Comment #2
- Oct 19, 2008 2:16am Oct 19, 2008 2:16am
- sonicdeejay
- | Commercial Member | Joined Mar 2008 | 155 Comments
- Comment #3
- Oct 19, 2008 7:29am Oct 19, 2008 7:29am
- Santora
- | Joined May 2008 | Status: Junior Member | 0 Comments