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$ For The Week Of 10/16-With Some Trade Tips

  • #21
  • Oct 15, 2006 2:16pm Oct 15, 2006 2:16pm
newstrader,

Is there a Bloomerg radio on the web?
ie, is the Online Bloomber Radio even exactly same with what you are getting on the radio?
  • #22
  • Oct 15, 2006 2:25pm Oct 15, 2006 2:25pm
Quoting abobtrader
Buffet was indeed shorting the USD at this time, but I think he really increased his short position later on. Anyway, from my fundies thread, here is the relevant bit:

Below is the some of key data for November 2003 along with the percentage EUR/USD move on the day. Note how the data is outright USD bullish, yet the USD continued to weaken right through the month.

The funny business started with outright USD bullish payrolls data:

7 Nov - non farm payrolls (consensus 65k, actual 125k, EUR/USD daily change +0.36%)
14 Nov - PPI (consensus 0.2%, actual 0.8%, EUR/USD daily change +0.54%)
17 Nov - NY Empire manufacturing survey (consensus 28, actual 41, EUR/USD daily change +0.16%)
19 Nov - Housing starts (consensus 1850k, actual 1960k, EUR/USD daily change +0.25%)
25 Nov - Prel GDP (consensus 7.8%, actual 8.2%, EUR/USD daily change +0.17%)
25 Nov - Consumer confidence (consensus 85, actual 91.7, EUR/USD daily change +0.17 %)
26 Nov - Durable goods (consensus 0.7%, actual 3.3%, EUR/USD daily change +1.09%)
26 Nov - Chicago PMI (consensus 56.8, actual 64.1, EUR/USD daily change +1.09%)

...yet the USD just kept on falling:

http://www.forexfactory.com/forexfor...id=12211&stc=1
awesome stuff abo!!! im gunna guess you got this from you "connections"

yes, i now remember this period. this is before buffet shorted dollars. this is the period that made him get dollar bearish in the first place! so now i totally see your point, this is the reverse situation we are in now. and my dollar bullishness grows....
Relax and be happy.
  • #23
  • Oct 15, 2006 2:28pm Oct 15, 2006 2:28pm
Quoting NewstraderFX
Let's read your NFP arguments, Merlin
i think i will save this one, because my retail sales argument was better than my NFP, and you have not yet submitted to my retail sales argument LOL

at least we agree on the market direction
Relax and be happy.
  • #24
  • Oct 15, 2006 3:16pm Oct 15, 2006 3:16pm
Quoting NewstraderFX
Merlin: my overall point here is that US data has been bad, yet the dollar is gaining strength despite this. whereas what i am hearing from you is that the data has indeed been good, and the dollar is acting accordingly.

The retail sales were very strong-they were 3x stonger in Sept then in Aug- they'll prob increase again if energy stays where it is. The jobs number in Aug was revised to over 188,000. That is a very strong number. Ignore the 50k Sept number-the BLS has stated it's prob all wrong anyway.

Let's read your NFP arguments, Merlin
I simply love it when the government tells us "just ignore the numbers due to our flawed methodology." Right. Trust me, unemployment is an issue. Can you say "outsourcing"?

Originally posted October 11th:

Fundamentally, USD will remain "strong" absent inflation, relatively stable/low crude oil/gold, nuclear proliferation by N Korea and the November elections. As unemployment grows, recession becomes a reality and lower interest rates in Q1 2007 (which is the government's 2nd quarter, FY 2007). When the fed lowers rates early next year, the dollar will decline again.


Conclusion: expect initial price spikes on major economic announcements involving USD followed by retracements indicating dollar strength. Further, USD remains strong for 2-3 months, at least through January 2007, at a minimum.

Just information; not a recommendation, not even a prediction.
  • #25
  • Oct 15, 2006 3:24pm Oct 15, 2006 3:24pm
Originally Posted by merlin
newstrader, i just saw in the other thread where you said bloomberg expected +0.4% ex gas to be dollar positive. i didnt know this, and this may be a winning argument that the retail sales was indeed better than expected. im not totally convinced, but this is the best argument i have seen.

Seems like you've already agreed with me Merlin!

Hey, have we forgotten something here? How are we gonna trade this and make some of those $'s?!! I'll tell you one thing; I'm gonna listen closely to the Fed statements tom and when I trade the PPI on Tues...you can bet the Bloomberg is gonna be on!!
  • #26
  • Oct 15, 2006 3:43pm Oct 15, 2006 3:43pm
I have posted previously that money finds it way to higher returns, thus, I give you the US Equities market. The equitiy markets will create a demand for USD and, for the life of me I do not understand why most analyists and traders continue to think that the USD should remain weak and, the majors should only go in one drection. The economies of these countries suffer when their dollar gets to strong and the eb and flow of the markets keep things in balance.

I could list 1000 pros and 1000 cons for bullish or bearish, but in the end I believe that that the price right now is what the market can bare and you know the rest, the price will move up if there are more buyers and down if there are more sellers. We are along for the ride. I remain a dollar bull.
  • #27
  • Oct 15, 2006 4:03pm Oct 15, 2006 4:03pm
Quoting NewstraderFX
Hey, have we forgotten something here? How are we gonna trade this and make some of those $'s?!!
i like dollar vs CAD and EUR. loonie because oil prices are falling.
Relax and be happy.
  • #28
  • Oct 15, 2006 4:05pm Oct 15, 2006 4:05pm
Quoting XLInvestor
I have posted previously that money finds it way to higher returns, thus, I give you the US Equities market. The equitiy markets will create a demand for USD...
you could be spot on here, this dow rally could be what is driving the dollar right now. everybody needs dollars to buy stocks! what else could it be? nobody really thinks rates are going up.
Relax and be happy.
  • #29
  • Oct 15, 2006 4:09pm Oct 15, 2006 4:09pm
btw im looking at this EURUSD chart on the daily, this 1.25 level looks pretty important. if we break below it could slide hard...
Relax and be happy.
  • #30
  • Oct 15, 2006 5:25pm Oct 15, 2006 5:25pm
XLinvestor , I also concur on the equity mkt and the $, but only as a temporary driver. The correlation between equities and currencies is generally very weak* but perhaps it may only need to persist until EUR/USD pops below 1.25, before the baton is passed on to another driver, and then the drama could unfold as MoneyMa$ter suggests. At the same time I think higher rate 'expectations' are playing a major role here as well...hold on, higher rates expecs and a higher equity mkt at the same time? It can happen, as growth expectations have also been raised a notch, and we are that little bit further from the fat tail risk of a pronounced recession.

Merlin, I also love the USD/CAD higher trade (also bearish oil). I have written a meaty piece on this on the fundies journal thread with loads of charts.


* if you want to blow your mind plot EUR/GBP against a Euro equity index divided by the UK FTSE (you do this to get a relative equity performance measure between the two countries). The correlation is very strong but in the opposite direction to what you might expect.
"Always bet on black"
  • #31
  • Oct 15, 2006 5:27pm Oct 15, 2006 5:27pm
I would like to put my input on this matter.

And let us spell it fundamentally, the US$ remains supported for many reasons.

First off, lower energy prices and commodity prices helped in the dollar rally. I think that at current time we have 'global tensions' which shape in the NKorea program, and Iranian. Thus, traders seek risk in the US$ currency, a safe-haven currency.

The US$ also benefited from repeated speeches from Fed that inflation remains a risk. Those are the three base reasons I can consider.

But why analysts predict a weaker dollar in the medium term? Let us make this little pictur clear.

The US$ won't be pushed any lower unless expectations of easing are reinforced, higher energy prices, or resolved tensions in the globe.

I think that Fed is going to ease rather than hike, rates are already high. but the question is when? So do not be in a hurry to sell the dollar until then, and until the gap between interest rates in the US and european countries becomes smaller.

The market seems to fully price in ECB hike, and UK hike, and more. So it's time for a dollar rally from all sides, I mean it won't really suffer from retail sales report or NFP report, or Bernanke speech. As long as there is no clear signal which includes "going to easing rates too early into 2007"..

I agree that coming 2-3months, USD will remain firm, and I see that the breakout is likely to made to the topside with a scope for 1.2400 breach soon on Weekly chart. As we go ahead of 2007, I would be a US$ bear. that's all in all.

Bye
Forex is not easy!
  • #32
  • Oct 15, 2006 5:34pm Oct 15, 2006 5:34pm
It is interesting to me that you brought equities into the discussion. I have noticed that there are long periods of time that the dollar moves with the dow and s&p in general and times when it moves opposite. It would be interesting to determine what causes this relationship and how it might be useful.
Profit is where readiness meets Opportunity
  • #33
  • Oct 15, 2006 5:40pm Oct 15, 2006 5:40pm
Quoting FXopportunist
It is interesting to me that you brought equities into the discussion. I have noticed that there are long periods of time that the dollar moves with the dow and s&p in general and times when it moves opposite. It would be interesting to determine what causes this relationship and how it might be useful.
Hi FXO, As a tip, when looking at equities data, it may make sense to look at US equities relative to another market (eg: Eurotop), as it is surely relative equity market performance that is important to the exchange rate (a relative price). As you note, the correlation flips around all over the place..this is why I don't find the relationship as interesting as interest rate spreads, but the logic for looking at equity mkts is there since most international bond flows are currency hedged while most equity flows are left unhedged.
"Always bet on black"
  • #34
  • Edited 6:31pm Oct 15, 2006 6:16pm | Edited 6:31pm
Quoting FXopportunist
It is interesting to me that you brought equities into the discussion. I have noticed that there are long periods of time that the dollar moves with the dow and s&p in general and times when it moves opposite. It would be interesting to determine what causes this relationship and how it might be useful.
The relationship can be understood like this-

An inverse relationship exists between the $ and equities when the markets see rate hikes...however, in a time such as this when growth is the name of the game, you will see the $ and equities move together...not that the equity markets don't see hikes down the line, but in the immediate term, the decline in energy prices will fuel demand for everything which equals growth and more earnings. Lowered energy prices are the perfect storm for companies. Their costs to produce goods and services goes down as the demand for them goes up, with a big increase in their bottom line as a result.

Did anyone stop to think about why traders would remain bullish on the $ in the face of declining energy prices? Afterall, declining prices suggest no rate hikes which suggests a $- sentiment. It's becasue lower energy costs lead to increased spending in everything else. Increased spending=increased demand=higher prices(inflation)=the Fed having to ultimately raise interest rates. However, the Fed might not have to do this for a long time as prices are likely to drop somewhat first, before the effect of increased demand has the inevitable effect of driving up prices.

It used to be that as increased demand drove up prices, the markets natural ebb and flow would cap demand and thereby cap prices. As the housing market showed us the last 10 years, this isn't always the case. That's what a "bubble economy" is-increasing demand leading to increasing prices, which in turn increases demand as the percieved value increases. Same thing with the first internet "bubble"-as the price of internet stocks rose (for no other reason then people wanted to buy them; they had no earnings for the most part), they became more in demand (their percieved value grew), which caused their prices to increase even more.

Of course, George Bush could be controlling the price of energy in order to win some elections for the republicans in Nov. But for now, lowered energy prices is what we have, with the subsequent market reactions that follow...
  • #35
  • Oct 15, 2006 6:39pm Oct 15, 2006 6:39pm
Quoting NewstraderFX
What it meant to me was this...I would not even look at going long in the GBP/USD...to risky...so I waited for a good short move and entered. It worked out good for me. I must say that without the Bloomberg analysis though...I would have looked at this trade opportunity completely different and probably lost.

DC

Doc-I posted this several times-with both the NFP and Retail Sales. There was enough time to listen to Bloomberg radio or TV, hear the numbers and get their analysis and make a good trade. This may not work all the time, but anyone who isn't using this valuable free resource is losing out on some good opurtunities. BTW Doc-I've seen some of your posts before. What broker are you currently with and how are the fills, etc, working out? Trading 1 or even 2 minutes after an announcement can be tricky...

Oh and a big BTW to anyone who might know-if you have some info regarding how Buffet is investing vis a vis the $, would you please let me know? Thanks...
NewstraderFX,

I have decided to quit repeating myself about the broker I use. I use 2 btw. They both handle things differently, and I trade differently with them.

One of them gives me excellent fills 1 to 2 minutes in with NO slippage and perfect execution. I have named this broker many times already. No disrespect to you. I really appreciate your views to be honest.

Now on my 2nd broker I would not dream of a market order in the first 2 minutes.

This really is in complete agreement with you. Although I would add that ANY TRADING during news releases can be tricky, no matter how you trade them. This is why I have been stressing, research, planning, and discipline on EACH TRADE.

I am in 100% agreement with your position on Bloomberg. Just there free resources alone are my #1 view before any trade. I can't speak for anyone else, but it has increased my trade plan success rate considerably.

DC
"There is MORE Happiness in giving than receiving"
  • #36
  • Edited 10:16pm Oct 15, 2006 6:49pm | Edited 10:16pm
So lets get back to actual trading and makin some $'s for ourselves here. What do you think might happen if the PPI and CPI numbers show prices to be under control. It's very possible that the reports will show this, since the cost of energy has decreased. On the face of it, lowered prices or at least slowing inflation should cause the Fed to think about further pausing or even a lowering of rates. That may not be how the $ bulls see it.

It may be possible that the bulls will interpet reduced prices as being ultimately a driver of very strong economic expansion and demand for $'s. In the face of lowered energy costs, people will be borrowing more ($ demand), companies will be borrowing more ($ demand) foreigners will be buying more US equities ($ demand) and so on.

If you're bullish on something, you think the value of that something is going to be worth more in the future then it is right now, but what is it that makes something more valuable? It's when the DEMAND increases.

So with the lowered energy costs, the $ bulls may percieve the demand for $'s increasing, ultimately making it more valuable. You might want to buy something right now if it's going to be worth more in the future, don't you?
  • #37
  • Oct 15, 2006 7:14pm Oct 15, 2006 7:14pm
Quoting NewstraderFX
Did anyone stop to think about why traders would remain bullish on the $ in the face of declining energy prices? Afterall, declining prices suggest no rate hikes which suggests a $- sentiment. It's becasue lower energy costs lead to increased spending in everything else. ...
NewstraderFX,

Perception may suggest a decline but are energy prices actually "declining"? Or did they just return to the pre-spike level (retracement or "fade" as merlin would say). Current prices approximate those of October 2005 (remember those good old days, during the feds string of rate increases?).

So in reality, whereas we once thought $2.00 gas was obnoxious, it has become the norm. I guess it sounds better than $3.00 gas and gives us a psychological comfort level that prices are "declining".

Fundamentally, the US economy and USD project a safe haven for capital. Remember, capital is fearful - it always seeks the safest haven. That be US.....at the moment.
  • #38
  • Oct 15, 2006 7:36pm Oct 15, 2006 7:36pm
I think you're on the money with that one MM-it's all about the perception and no doubt, $2 gas looks better from a $3 perspective then from a $1 perspective...

MM-Remember, capital is fearful - it always seeks the safest haven. That be US.....at the moment.

Allow me to parphrase MM- Capitol is greedy-it always seeks a "haven" where it's lust for greed can best be satisfied-That may very well be the US at the moment...
  • #39
  • Oct 15, 2006 7:49pm Oct 15, 2006 7:49pm
Quoting NewstraderFX
MM-Remember, capital is fearful - it always seeks the safest haven. That be US.....at the moment.

Allow me to parphrase MM- Capitol is greedy-it always seeks a "haven" where it's lust for greed can best be satisfied-That may very well be the US at the moment...
Now was the pun intended, capitol vs capital? Because I read your statement as politicos running the capitol are forever seeking to satisfy their insatiable appetite for more!

But as far as making $$$ for our more benign endeavours, the dollar remains strong for the next several months, minimally through the elections and maximum until January/February 2007.
  • #40
  • Oct 15, 2006 7:55pm Oct 15, 2006 7:55pm
Actually no pun was intended, but it did work out funny that way-and if it does turn out that the $ remains bullish, the cornerstone of this $ bull market will be the last NFP. That was probably as low as we're going to see the $ for a very long time...
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