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

  • #121
  • Oct 17, 2006 10:04pm Oct 17, 2006 10:04pm
news,

Just want to clarify your expectations for cpi tomorrow. Basically what do you mean by better in the last post? When you say "hopin for that .1 or better on the core CPI" do you mean that if core CPI comes in less than consensus (<.2) then traders will remember the possibility of a ratecut and -$?

That seems to me a likely rationalization. Otherwise, if core CPI stays on consensus maybe even up to 0.3 then only very little reaction either way...
  • #122
  • Oct 18, 2006 8:02am Oct 18, 2006 8:02am
The CPI was a no-trade for me. The core came out on consensus and we have see some $ buying against the GBP. So to my thinking, there's no clear-cut indication here and I wouldn't take any serious positions based on the CPI number. The one thing to remember is the housing starts, which were up, surprisingly, along with yesterday's NAHB number. That may influence the market as well.

I prefer to trade on more clear-cut indications. Maybe I don't see them here and maybe you do.

If you're looking for a small trade, you might want to think about buying some GBP on the dips, but I wouldn't put any big bets on that...I might put a couple of bucks on that in a mini account, but that's just my opinion.
  • #123
  • Edited 10:12am Oct 18, 2006 8:21am | Edited 10:12am
Slower economic growth and declining fuel prices will allow Fed policy makers to keep interest rates unchanged in coming months, economists said. Still, the report showed the biggest year-over-year increase in core prices in a decade, suggesting the slowdown in inflation will be gradual.

``It may take time, but there should be less pass-through of energy prices on core inflation,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. Declining fuel costs are ``going to put the kibosh on inflation expectations.''

A separate report from the Commerce Department showed the housing market may be starting to stabilize. Housing starts rose 5.9 percent last month from a three-year low, as falling mortgage rates began to draw buyers back into the market.

This is the kind of mixed opinion that personally I don't trade on. I do think the increase in housing starts indicates a very resilent consumer, bouyed by plentiful jobs, improving wages and lowered energy prices.

Still, I would like to see a more detailed breakdown in housing. What kind a orders are coming thru? We had a story today in the NY Post that the avg salary on Wall St. is almost 300,000/yr and bonuses are higher then ever. Maybe it's these luxury buyers that are ordering all the new housing. Maybe the guys who started You Tube buyin a bunch of houses...

11.15 EDT We have currencies basically flat, off the initial $+ move...I think there is real uncertainty and debate among traders as to how the Fed might interpet the info-but I think what might be important is that we havn't seen a drop in the core CPI even with the lowered energy prices...no pass-thru seems to be occuring as of yet. Core CPI prices are showing the biggest y/y increases in a decade as noted above. Still the rate was almost this high when the Fed paused. The uncertainty and debate tells me one thing as a fundamental trader: This is not a good market to be in at this time. No clear trend exists so why trade if you trade off the fundamentals. Boring? Yes-but sometimes not losing money can be as exciting as making it. I'm takin the rest of the day off...
  • #124
  • Oct 18, 2006 10:38am Oct 18, 2006 10:38am
The only remaining US news worth trading is the Philly Fed. Previous was a big -0.4, perhaps due to the high fuel prices.. This time, it is expected at 7.0.

I wonder if the market will start buying USD right now till the release time. An improvement from -0.4 to 7.0 is something to be more than Dollar Positive.
  • #125
  • Edited 5:05pm Oct 18, 2006 11:33am | Edited 5:05pm
Could be...the Philly Fed does sometimes get some good movement. Another report worth looking at is the GBP retail sales, although I think we're getting a little trade hungry here...

The pros right now are undecided as to how things are going...and there might not really be anything good for the rest of the week as far as the US goes. Absent some strong fundamentals I don't see where to trade...patience might be the best trading virtue right now...

15.15 EDT-Msnbc.com
So far this year, consumer prices are rising at an annual rate of 3.4 percent, matching the increase for all of 2005. Excluding food and energy, core inflation has been rising at an annual rate of 3 percent, still above the Fed’s comfort zone of 1 percent to 2 percent.
However, economists believe with price pressures now moderating, the Fed will be content to keep rates unchanged probably for the rest of this year.

Everyone likes to throw their 2 cents in regarding Fed moves so here's mine. The core CPI, while not being the Fed's preferred measure of inflation, is pretty far above where they would like to see it. Going into the Nov. elections, I don't see the Fed throwing any cold water on the economy at their next meeting on 10/24&25. Until then the Fed will have no choice but to continue to talk tough and hope that does the trick. They have kind of painted themselves into a corner; while i'm sure they would prefer to do nothing the numbers may force them to act, especially if the housing continues to pick up. Eventually they will have to back up their words with actions or risk losing credibility. The core PCE and housing are the things to watch.

So my opinion is this: no move at the next meeting, but plenty of tough talk without much market reaction except if Bernanke makes some pretty specific statements.
  • #126
  • Edited 5:09pm Oct 18, 2006 5:05pm | Edited 5:09pm
Quoting NewstraderFX
Could be...the Philly Fed does sometimes get some good movement. Another report worth looking at is the GBP retail sales, although I think we're getting a little trade hungry here...

The pros right now are undecided as to how things are going...and there might not really be anything good for the rest of the week as far as the US goes. Absent some strong fundamentals I don't see where to trade...patience might be the best trading virtue right now...

15.15 EDT-Msnbc.com
So far this year, consumer prices are rising at an annual rate of 3.4 percent, matching the increase for all of 2005. Excluding food and energy, core inflation has been rising at an annual rate of 3 percent, still above the Fed’s comfort zone of 1 percent to 2 percent.
However, economists believe with price pressures now moderating, the Fed will be content to keep rates unchanged probably for the rest of this year.

Everyone likes to throw their 2 cents in regarding Fed moves so here's mine. The core CPI, while not being the Fed's preferred measure of inflation, is pretty far above where they would like to see it. Going into the Nov. elections, I don't see the Fed throwing any cold water on the economy at their next meeting on 10/24&25. Until then the Fed will have no choice but to continue to talk tough and hope that does the trick. They have kind of painted themselves into a corner; while i'm sure they would prefer to do nothing the numbers may force them to act, especially if the housing continues to pick up. Eventually they will have to back up their words with actions or risk losing credibility. The core PCE and housing are the things to watch.

So my opinion is this: no move at the next meeting, but plenty of tough talk.


What about the Advance GDP for the Pound??? Nobody going to trade it?

Also, anyone going to trade the CAD CPI? It comes out Friday as well.
  • #127
  • Oct 18, 2006 6:10pm Oct 18, 2006 6:10pm
I'm gonna be looking at the Philly Fed tomorrow. Hearing some rumors that the number is gonna be a lot higher then the consensus, but i'll do some further checking in the morning. Another thing to watch for off these releases: If you see a currency gaining or losing strength in the preceding hours before a release, it's usually an indication that traders may be buying the rumor..so we'll see what happens.

The Philly Fed is an informal survey that is conducted by contacting various bussineses. It wouldn't surprise me at all if the big players had their own sources for this information and could estimate it pretty well themselves.
  • #128
  • Oct 19, 2006 1:32am Oct 19, 2006 1:32am
After the US CPI yesterday, USD gained strength against the other 3 currencies but weakened after the NY session:

EURUSD dropped 45 pips and has regained 33.
GBPUSD dropped 60 pips and has regained 20.
USDJPY climbed 60 pips and has dropped 33.

Seems like EUR is the most resilient of the above YET there is no positive EUR news/data coming out of EZ.

UK's rate hike is almost a sure bet this november.

JPY is rumored to have Russians buying JPY to the disbelieve of the Japanese..

US will be having Philly Fed later whihc is rumored to be highly USD positive.

With all the above moves, I wonder why USD is still slipping.

We already have a wide aray of very USD Positive News the past few days; SHOULD Philly Fed does not move the USD aggressively later, "no one is buying the USD anymore?", then it all points to a simple "short the USD" from now on.
  • #129
  • Oct 19, 2006 4:38am Oct 19, 2006 4:38am
GBP got a big Retail Sales scare coming out -0.4!!!!! GBPUSD dropped 40 pips .

YET Look at GBPUSD now!!! Its coming back up!

If the Phil Fed fails to move USD, then it is official, USD Sentiment is DEAD!
  • #130
  • Oct 19, 2006 4:52am Oct 19, 2006 4:52am
Hi BK, I don't think the GBP move reflects USD sentiment. I think what we have is a situation where the next BoE rate hike in November is close to being set in stone, and a little soft data won't change this.

Continued softness in the economic data is a different kettle of fish.

Re Philly Fed, note that while last month's action was significant, the evidence since then tells us it was a freak regional number. Because of this, I don't think the market will hold much store in it this time around. If there is a spike of any kind, I wouldn't be surprised if the USD moved back to the pre Philly number within the next 15 minutes or so.

Just my views.
"Always bet on black"
  • #131
  • Oct 19, 2006 6:09am Oct 19, 2006 6:09am
Quoting abobtrader
Hi BK, I don't think the GBP move reflects USD sentiment. I think what we have is a situation where the next BoE rate hike in November is close to being set in stone, and a little soft data won't change this.

Continued softness in the economic data is a different kettle of fish.

Re Philly Fed, note that while last month's action was significant, the evidence since then tells us it was a freak regional number. Because of this, I don't think the market will hold much store in it this time around. If there is a spike of any kind, I wouldn't be surprised if the USD moved back to the pre Philly number within the next 15 minutes or so.

Just my views.
I have been reviewing Philly feds responses, and no I am not referring to the 1st few minute responses but on a longer time frame. I have noticed that upon release of Philly fed, it will dictate the trend for the rest of the day - albeit slowly but definitely safe to trade.

It was only last month that the sudden huge drop caused a 1st minute surge in the price.

OK if it is not USD Sentiment (or the lack of it) thats causing the USD weakness , then perhaps, its more like GBP, EUR, and JPY sentiments are far more stronger than USD's.

At any rate, can you make any insightfull comment on what/why EUR is strengthening all about? There is nothing positive about EUR for the week other than CHF having a field day... Oh yeah I forgot, its correlation????
  • #132
  • Oct 19, 2006 6:13am Oct 19, 2006 6:13am
Something from IFR:

Quote
[IFR Forex Watch] [SQUAWK BOX]
[11:05 USD INDEX: Falling Tops And Long-Term Resistance Highlighted] London, October 19. The Dollar index has struggles to make any lasting headway above the 87.00 level despite briefly breaking above the 200-day moving average line back on the 13th October. A series of falling tops on the daily chart within a congestion band have weakened the underlying bull run, which set in on September 22 from levels around 84.90. While the range bound pattern could fall into the continuation category the bias appears to be building for a downside break rather than a further run higher. The base of the pattern came in at 86.67 and the market has just eclipsed this low as USD/JPY hangs heavy and both EUR/USD and GBP/USD look to work higher through early Thursday trade. In terms of resistance and a pivotal level to watch into the weekend the 200-day average comes in at 87.10 at the last read. [email protected]

So its the Dollar Index that preventing the USD sentiment...
  • #133
  • Oct 19, 2006 7:37am Oct 19, 2006 7:37am
US Unemployment claims fell below 300K; lowest in 12 weeks.

Of course this is a minor news that does not have any effect on USD in the forex market - but is something the politicians would love to show off in their campaign paths.
  • #134
  • Oct 19, 2006 7:49am Oct 19, 2006 7:49am
Quote
I have been reviewing Philly feds responses, and no I am not referring to the 1st few minute responses but on a longer time frame. I have noticed that upon release of Philly fed, it will dictate the trend for the rest of the day - albeit slowly but definitely safe to trade.

Ah, I see. Nice one BK, I haven't looked at the Philly Fed responses in a long time. Anyway, all the best trading. I will probably stear clear of the mkt today.

From the IFR squawk:
Quote
A series of falling tops on the daily chart within a congestion band have weakened the underlying bull run
...have they weakened the underlying bull run, or are the the outcome of a weakening bull run? ...you can see I am not a big fan of TA !!!
"Always bet on black"
  • #135
  • Oct 19, 2006 7:56am Oct 19, 2006 7:56am
Re initial claims:

WASHINGTON, Oct 19 (Reuters) - The number of U.S. workers lining up for jobless benefits unexpectedly fell by 10,000 last week, the government said on Thursday in a report underscoring a relatively stable job market.

The Labor Department said a seasonally adjusted 299,000 workers filed new claims for state unemployment insurance benefits in the week ended Oct. 14, down from 309,000 claims a week earlier.

Economists polled by Reuters were expecting a slight increase in jobless claims to 312,000 from an original reading of 308,000 in the week ended Oct. 7.

The four-week moving average of new claims -- viewed as a more accurate indicator of longer-term labor conditions - fell to its lowest in nearly four months.

Lends a bit of support to the notion that the NFP was an outlier. If the labour market retains its composure, that would make me a lot more comfortable with the long USD view.
"Always bet on black"
  • #136
  • Oct 19, 2006 8:42am Oct 19, 2006 8:42am
The Fed Funds Futures picture a bleak USD for the future - the rates were going down; reason is the lack of any Fed rate hikes foreseen in the near future.

Perhaps one of the contributing reason for the lack of USD sentiments in the market...

+ NKorea announced it is ready for war with US! CHF gained strength, USD fell and along with it JPY, GBP, EUR went up.

OK it is defintely time for me to short USD!!!!

ADDENDUM:
USD Index is lower again. Connect the dots...
OPEC decided to lower production. USD hardest HIT!
  • #137
  • Edited 10:11am Oct 19, 2006 9:52am | Edited 10:11am
Nice call on that $ short BK-BTW what's source do u use for the FED Fund Index....

Looking at the Philly Fed number-with all the sell off seen in the $ today-it makes me suspicious that the info on the number has either been leaked or that the professioanl money sees it as very weak. I've seen this happen many times before. If this is what's happened and the # does come out weak, you may see the $ weaken by another 15-20 pips and then see the $ go the other way as some profits get booked.

I would look for a weak number and watch for profit taking if you want to trade it. If the $ shortens further watch for it to peak, then head below the pre-release number. You might want to trade at that point.
  • #138
  • Oct 19, 2006 9:58am Oct 19, 2006 9:58am
News

You still super bullish on the $??
Trade what you see - Not what you think
  • #139
  • Oct 19, 2006 10:15am Oct 19, 2006 10:15am
My specific opinion way back was to watch for a sustained break below 2500 and to continue that way ONLY if the fundamentals further indicated $ strength-I'm tryin to read what the market is doing...fundamental trading turns on a dime...again to paraphrase an old baseball saying "momentum is only as good as the last fundamental release".
  • #140
  • Edited 10:40am Oct 19, 2006 10:20am | Edited 10:40am
An economist interviewed at CNBC came out saying that there is a strong correlation between US "New" car sales and Recession.

He pointed out the different dates when New Car Sales dropped below -2.x% and a recession following a few months after.

ie, He is predicting a US recession either it be as early as Jan 2007 or Jun 2007.
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