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

btw, does anyone know for sure if the full text for bernanke's speech will be released at noon?

His last speech indicated his view on housing and how that effected GDP. The USD then took a hit.

I will be very interested in interpretation of the speech.

Merlin, will the fed site release the speech as soon as the text is available?


DC

mentioned yesterday that consumer spending has been the backbone for the dollar support and today’s positive reports in both Retail Sales and Consumer Confidence caused huge gains for the dollar, particularly against the Euro and Yen. The actual retail sales report came in a -0.4%. On the surface that looks like a bad figure, but you have to dig a little deeper to get the real story. Gas prices have been dropping like a rock lately and because of this, gasoline sales have been dropping. This is factored into the entire retail sales report. When gas prices drop, US consumers tend to spend more on other things. So if you take away the gas sales, retail sales actually went up 0.6%. Now the true story is revealed and we can see that consumers are spending more money on other things now since they don’t have to fill up their SUV’s with $70 worth of gas every week!

The other big story was the Michigan Consumer Confidence report. Yesterday I mentioned that this would be an important report to watch because if this number came out positive along with a good retail sales report, we would see a big move for the dollar. Well my friends, the consumer confidence report came out very positive. In fact, it came out higher than forecasted. The forecast was at 86.3 and the actual number was 92.3. Basically this means that consumers are confident in our economy (lower gas prices tend to be their measuring stick) which means higher consumer spending which translates into higher retail sales and a stronger economy.

With the holidays coming up, I expect to see consumer spending continue its growth. It will continue to be the catalyst for the dollar bulls until the end of the year. Regardless of whether or not gas prices go up, I still think consumer spending will rise. Wage growth has been growing faster than retail sales for the past 5 months so even if gas prices do rise, I think the higher salaries will compensate and we’ll see the stores filled with crazy parents rushing to get the last “Tickle Me Elmo” doll for their precious babies. You gotta love the holidays!

EUR/USD

Despite the positive US news, the dollar will have a tough time breaking 2500. You can see that it’s been a strong support level and it also happens to be where the 200 SMA is on the daily chart. I think we’ll see another test of the 2500 level and then a retracement to around 2550-60. I say 2550-60 because that is where the 50 SMA on the 4hr. chart is headed, making it a short term resistance level.

I'm not sure that Bernanke is speaking @ 12.00 EDT-Bloomberg isn't talking about it yet and another calender has it scheduled for 13.30 EDT

I'm really enjoying this thread - it's sad when an interesting/serious thread becomes the exception on the net.

I've been thinking about how to view both the NFP and RS numbers with regards to the dollar strength we saw afterwards. Personally I don't really think explaining it away matters all that much, since sentiment and market mechanics are where I get an edge out of all of this.

Looking at the NFP we get this huge revision number and the big money thinks, "Whoa! Last month was way better that we were told. But hang on this months number is pretty crap." Enter market mechanics. "Well seems everyone is getting short dollars on this (admittedly very weak) number, nevermind all the losers who've been holding since 2800. So lets go out and screw them over, we've got the revision on our side. Besides this month will probably get revised higher anyway".

With regards to retail sales they were expecting a lower number ex. gas and as a result we got dollar strength, but as merlin points out, "Where did all the other money go?" I"ll use some economic theory to explain this one away.

When taxes are lowered by say $100m that saving should logically go back into the economy but because of the MPC, less than that $100m will be spent. This is the same situation we saw in gas sales this month, more was saved but not all of that saving was spent on "other shit". To assume that all of it would be spent is a bit unreasonable.

At the end of the day the market didn't move all that much anyway after the RS. But my point is that the RS was actually pretty mixed. The main reason it went down is because the small money was caught on the wr/long side... again, and got punished (probably holding long from Friday). Sentiment is that the USD can't go much higher since "the eurusd fundamentals dictate 1.3000" I've heard that so many times in the past few weeks that I want to puke.

Guys do yourselves a favour and check out the SSI and Oanda's new historical positioning. You'll see that average retail money is always taking the other side of the trend and holding. What ever happened to cutting your loses and let the winners run?

Bloomberg is mum about Bernanke at NOON...but even the dailyfx calendar has him up at 12 est.

Hmmmm??

The Euro is not out of trouble yet, but he reaction to the US New York index suggests the Euro is finding increased support and there is likely to be good buying interest on renewed dips to below the 1.25 level against the dollar.

Faure-At the end of the day the market didn't move all that much anyway after the RS.

Nothing personal, but this is what I mean by traders being married to their opinions. The GBP was around 8612 prior to the report and dropped down to 8535 by 10.00 EDT. That was a big move.

you guys may be right, the speech may have been moved to 1:30pm...lemme check some places...

either we goofed or the speech got moved. econoday is reporting that bernanke speech is at 1:30pm EST.

No prob Merlin-better to be too early then too late...

yes better to be early. but best to be right i will check into this see why we goofed, i think it the conference schedule was shuffled on us, but i will see...

What I meant was that the release may have moved the market around it didn't really breakout of the previous 2 days' range.

I don't know what you mean by me being married to my opinion. I'm actually long dollars if you think I'm talking up my opinion.

BTW, just to help you out, there is button in the right-hand corner called "quote" which you click to reply to and quote that post.

Your opinion that the market didn't move much off the RS. The GBP dropped 80 pips...it didn't hold there too long, because traders took some profits out...but in the 1.5 hr after the report u could have made 80 pips...if that's not a lot-what is?

Now I am hearing some things about Bernanke on Bloomberg

Hoping for some statement about a hold on the interest rates. He has said that he will NOT be lowering the rates anytime soon.

full text was released at 1:30...

http://www.federalreserve.gov/boardd...16/default.htm

I guess he says like this.
Saying opposite woud harm the $.

If you remember few months ago FED avoided to say as long as it was possible and as long people could believe that, that FED was not sure if to pause or not interests hike

<TABLE cellSpacing=1 cellPadding=3 width="100%" border=0><TBODY><TR bgColor=#6393da><TD colSpan=4>Projected Economic Releases for Tuesday</TD></TR><TR bgColor=#ffcc00><TD colSpan=4>(Consensus Forecasts vs. Previous Report)</TD></TR><TR><TD>Core PPI</TD><TD align=right>8:30</TD><TD align=right>Sep</TD><TD align=right>0.2% vs -0.4%</TD></TR><TR bgColor=#eeeeee><TD>PPI</TD><TD align=right>8:30</TD><TD align=right>Sep</TD><TD align=right>-0.6% vs 0.1%</TD></TR><TR><TD>Core PPI</TD><TD align=right>8:30</TD><TD align=right>Sep</TD><TD align=right>0.2% vs -0.4%</TD></TR><TR bgColor=#eeeeee><TD>Net Foreign Purchases</TD><TD align=right>9:00</TD><TD align=right>Aug</TD><TD align=right>$50.0B vs $32.9B</TD></TR><TR><TD>Capacity Utilization</TD><TD align=right>9:15</TD><TD align=right>Sep</TD><TD align=right>82.3% vs 82.4%</TD></TR><TR bgColor=#eeeeee><TD>Industrial Production</TD><TD align=right>9:15</TD><TD align=right>Sep</TD><TD align=right>0.0% vs -0.1%</TD></TR><TR><TD>Capacity Utilization</TD><TD align=right>9:15</TD><TD align=right>Sep</TD><TD align=right>82.3% vs 82.4%</TD></TR></TBODY></TABLE>

Fed's Poole Sees Equal Chance Interest Rates Will Rise or Fall

http://bloomberg.com/apps/news?pid=2...&refer=economy

``If it looks like the numbers this week and other information suggest to us that the inflation rate is in danger of hanging here or moving higher, rather than moving lower, then I am certainly very much in the camp that would favor, at some point, additional policy restraint,'' Poole said in response to an audience question after the speech.

Poole is a full voting member thru out 2007.

Now the question is this: If the PPI and CPI come out on consensus, does that mean the inflation rate is "hanging"? Remember, we had decreases of -.3 and -.4 the last 2 months. An increase of .2, as expected, might not be a number that the Fed is gonna be comfortable with, since it indicates a big increase over the prior 2 months. I don't believe that .2 is priced into the $ yet (20.30 EDT EUR 2540, GBP 8630), so I think it's possible an on-consensus report will move the $ stronger by at least 60-80 pips. Higher then concensus could break all resistance.

If you want to trade this number when it comes out, you better have a clear cut indication of what the number will mean to the Fed. These reports are gonna be more crucial then ever because Poole has stated that policy is going to depend on them (as if we didn't know that already!)

If the numbers do come out in negative territory again, I think we might see the $ lose over 100 pips. Should be fun...