Fundamentally-The Euro Rally is Dead: | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Fundamentally speaking 17 replies

Fundamentally Speaking... 14 replies

The EUR/USD Rally-Still Dead? 23 replies

The Euro Rally Is Still Dead-coreCPI/TIC Update 3 replies

My MT4 demo is dead!! Help!! 8 replies

Fundamentally-The Euro Rally is Dead:

  • #41
  • Dec 11, 2006 9:03pm Dec 11, 2006 9:03pm
Quoting Trader1580
last housing report was good news for the dollar.

just to make it clear, because of the fact that the USD is going lower, it will make the same items that are imported cost higher and thus the US would rather manufacture it themselves or not import it. Thus, this will help the trade balance to be a little better than expected thus good news for the dollar?
but that cycle takes years.

when we talk abt forex, 100 or 1000 pips is nothing really to the real currency outside.

but i must agree 1000 pips for us traders is like wow.

forex is all about jduging the sentiment and speculation. the actual fundamental takes awhile before really reflected in the currency.

so, i guess to be rich one shud be friends with the rich? because together they can alter the 100++ pips up or down.

just like the banks.
  • #42
  • Dec 11, 2006 9:12pm Dec 11, 2006 9:12pm
Whatever being said, the latest COT data shows that commercial traders are extermely long on USD, which means that it may start to go down in days, weeks or months to come. If you look at COT data for EUR, it shows the opposite. Anyone agrees with this?

Selveen
  • #43
  • Dec 11, 2006 10:23pm Dec 11, 2006 10:23pm
Quoting selveen
Whatever being said, the latest COT data shows that commercial traders are extermely long on USD, which means that it may start to go down in days, weeks or months to come. If you look at COT data for EUR, it shows the opposite. Anyone agrees with this?

Selveen
Commercial positions are used for hedging. Hedging in this case means that if one expects the Dollar to fall to a reasonable level one hedges to be prepared in case the Dollar should not fall.

From the day that the Euro was being tradet publically it ever rose, why should that end now. The US Economy is definitly shrinking compared to Asian and not to forget the EU + Russia. Iran started first to denominate Oil prices in Euro, Russia diversified into the Euro and the Yen.

The Dollar will no longer be the Currency of the World as it stopped being the leading economy of the World ( Germany alone is a bigger exporter than the US ).

We will see 1.40 levels if the fundamentals hold.

The US are going into a recession, the Fed is at the end of the rate cyle ( whereas the EU, Japan and Switzerland are in the middle and the start respectivly ).

Central Banks diversify into other currencies after Japan and China have overdone. As soon as China will let it's currency increase and Japan starts to raise rate there will be a massive sell out in Dollars not to mention that we wont see too many Bond buys anymore as soon as the US start to lower interest rates.

Strong competition from Asia and Europe will let the US exports tumble further but a decline in the Dollar will most probably boost domestic markets that will offset those negative effects.

Overall we will see a stronger Euro, a weaker Pound, a much stronger CHF and an extremely strong Yen over the next year.

Just my 2 Eurocent
  • #44
  • Dec 12, 2006 7:51am Dec 12, 2006 7:51am
BTW-the Euro rally is still over-it hasn't gone anywhere that I've seen...true the $ hasn't gotten stronger as of yet...it's holding...the rate statement is gona be a real strong key...
  • #45
  • Dec 12, 2006 8:11am Dec 12, 2006 8:11am
Fundamentals came in very weak for the Greenback, Euro Rally is still intact, Fed statement will have an temporary effect at the most.

just my 2 Eurocents
  • #46
  • Dec 13, 2006 11:48am Dec 13, 2006 11:48am
Euro rally still looks dead to me-until further notice. I called it dead @ 3190 and while it's fluctuated a bit, all that has done is brought several shorting opportunities as price worked back to the "dead" level.

Retail sales were much stronger then expected, which actually was no big surprise as there are plenty of jobs. So what if the value of my house has gone down a bit-I'm not taking a home equity loan to buy xmas presents anyway...

Speaking of housing, where might it go? IMO, sales and prices could go down a bit more, but this is to be expected given the population. Fisrt of all, an estimated 70% of Americans already own their own house. Many also own some type of vacation or retirement home/condo. We know that the baby boom generation is aging out of the housing market and there are less people to buy houses. What could happen as the baby boom starts retiring?

First of all, most of these boomers have children. Many only have 1 and the average is less then 2. Let's say a boomer retires and moves into their vacation house/condo full time. What happens to their house? They either sell it to a stranger or give/"sell" it to a wage earning child. I put sell in quotes because many of these sales are likely to be private transactions between family members that won't be recorded. Why? Taxes. If a home is sold, the capitol gain has to be reported IF a new domicle isn't bought in 1 year. A lot of boomers already have a retirement home, so they're not gonna buy another one-the sale transaction won't get reported in order to avoid the tax liability.

OK now the boomer's wage earning adult child is living in the house. Guess what? They either have no mortgage or a reduced one. Wow that leaves them a lot more discresionary income to spend on other things besides a mortgage. Consumer spending which is 70% of the economy looks to stay pretty strong in a scenario like that.

If most people didn't already own homes and sales were down, that would signal a problem. Everyone one wants a house and in a case where most don't own and they aren't buying-obviously something is wrong. In the case where most people already own a house and less people are coming into the market to buy-of course sales will be down. The difference is that this doesn't signal a problem with the economy-it just means there are less people available to buy houses.

It's like with the ISM numbers. The US has been shifting away from a manufacturing to a service economy for years, but the jobs lost in manufacturing are more then being made up in services. Now if you're a Detriot auto worker-yeah u have a problem, but if you're in services, which more people are, you're doing fine. Just to look inside the numbers a bit, construction is part of services. Residential construction may be down, but many will find jobs in commercial construction, which is doing well. BTW, those commerical construction jobs pay pretty good too...
  • #47
  • Dec 13, 2006 5:25pm Dec 13, 2006 5:25pm
Quoting NewstraderFX
Euro rally still looks dead to me-until further notice. I called it dead @ 3190 and while it's fluctuated a bit, all that has done is brought several shorting opportunities as price worked back to the "dead" level.

Retail sales were much stronger then expected, which actually was no big surprise as there are plenty of jobs. So what if the value of my house has gone down a bit-I'm not taking a home equity loan to buy xmas presents anyway...

Speaking of housing, where might it go? IMO, sales and prices could go down a bit more, but this is to be expected given the population. Fisrt of all, an estimated 70% of Americans already own their own house. Many also own some type of vacation or retirement home/condo. We know that the baby boom generation is aging out of the housing market and there are less people to buy houses. What could happen as the baby boom starts retiring?

First of all, most of these boomers have children. Many only have 1 and the average is less then 2. Let's say a boomer retires and moves into their vacation house/condo full time. What happens to their house? They either sell it to a stranger or give/"sell" it to a wage earning child. I put sell in quotes because many of these sales are likely to be private transactions between family members that won't be recorded. Why? Taxes. If a home is sold, the capitol gain has to be reported IF a new domicle isn't bought in 1 year. A lot of boomers already have a retirement home, so they're not gonna buy another one-the sale transaction won't get reported in order to avoid the tax liability.

OK now the boomer's wage earning adult child is living in the house. Guess what? They either have no mortgage or a reduced one. Wow that leaves them a lot more discresionary income to spend on other things besides a mortgage. Consumer spending which is 70% of the economy looks to stay pretty strong in a scenario like that.

If most people didn't already own homes and sales were down, that would signal a problem. Everyone one wants a house and in a case where most don't own and they aren't buying-obviously something is wrong. In the case where most people already own a house and less people are coming into the market to buy-of course sales will be down. The difference is that this doesn't signal a problem with the economy-it just means there are less people available to buy houses.

It's like with the ISM numbers. The US has been shifting away from a manufacturing to a service economy for years, but the jobs lost in manufacturing are more then being made up in services. Now if you're a Detriot auto worker-yeah u have a problem, but if you're in services, which more people are, you're doing fine. Just to look inside the numbers a bit, construction is part of services. Residential construction may be down, but many will find jobs in commercial construction, which is doing well. BTW, those commerical construction jobs pay pretty good too...

Well, after today's release of FOMC rate decision, I have seen both arguments for the likehood of next year's decision. Many would argue that in order to boost U.S. economy, a rate cut in March is imminent- especially so when the minutes said "susbstantial cooling" of the housing market and the mix data may suggest that the fed is not ready to raise rates.

However, one factor that we have to remember is that the U.S. is much of a service economy- 80% much, with only 15% in manufacturing. (Let's not forget ISM non service was well above 50) Although what it seem to be a stream of bad news for the lower in the last couple of weeks, the core inflation rate (excluding food and energy) is at 2.9%, well above the comfort zone of the Fed. Many see the U.S. as a slow growing economy and would see the Fed raise rates. With energy prices, we are at 1.3%.

So, in the up coming weeks and into 2007, what do you think the EUR, USD will do?
  • #48
  • Dec 13, 2006 6:28pm Dec 13, 2006 6:28pm
Good question. Bottom line? I think the Euro is gonna finish the year around 2800, but that doesn't mean you have to short it now.

I have to see it break below the 3130-40 level. If it does, I believe it'll go down further. I also think it's gonna test that level a couple of times before it drops thru. It could happen in the London session, but maybe not.

When I said the Euro rally was over-I didn't mean to short it immediately. There isn't a need to do that until it passes thru some resistance. The more times it tests there before it breaks, the better I'll feel.
  • #49
  • Dec 13, 2006 7:36pm Dec 13, 2006 7:36pm
the dollar is definitely overdue for a rally here, and it seems more and more fundamental data are coming in strong for the dollar. Interesting thing is that at the 2800 level is the Fib 61.8 retracement level as well.
  • #50
  • Dec 13, 2006 9:54pm Dec 13, 2006 9:54pm
Quoting NewstraderFX
Euro rally still looks dead to me-until further notice. I called it dead @ 3190 and while it's fluctuated a bit, all that has done is brought several shorting opportunities as price worked back to the "dead" level.


First of all, most of these boomers have children. Many only have 1 and the average is less then 2. Let's say a boomer retires and moves into their vacation house/condo full time. What happens to their house? They either sell it to a stranger or give/"sell" it to a wage earning child. I put sell in quotes because many of these sales are likely to be private transactions between family members that won't be recorded. Why? Taxes. If a home is sold, the capitol gain has to be reported IF a new domicle isn't bought in 1 year. A lot of boomers already have a retirement home, so they're not gonna buy another one-the sale transaction won't get reported in order to avoid the tax liability.
I agree with most of your analysis; however, I would like to correct you on the capital gains issue. As long as you have lived in a house 2 out of the last 5 years a married couple can profit 500K on the sale of the home without having to pay taxes on the gain (it is 250K if you are single). I know some people with multiple investment properties who are in early retirement that will go to one home, live in it for 2 years and sell it as their primary residence and make tax free profit...then they'll go to the next one and live there 2 years, sell it as their primary residence and make tax free profit again...For those that bought beach or resort type property 20 years ago it is a great way to legally avoid paying taxes on the gain.

Q
  • #51
  • Dec 14, 2006 7:48am Dec 14, 2006 7:48am
Quoting juao

The Dollar will no longer be the Currency of the World as it stopped being the leading economy of the World ( Germany alone is a bigger exporter than the US ).

The US are going into a recession, the Fed is at the end of the rate cyle ( whereas the EU, Japan and Switzerland are in the middle and the start respectivly ).

Central Banks diversify into other currencies after Japan and China have overdone. As soon as China will let it's currency increase and Japan starts to raise rate there will be a massive sell out in Dollars not to mention that we wont see too many Bond buys anymore as soon as the US start to lower interest rates.

Strong competition from Asia and Europe will let the US exports tumble further but a decline in the Dollar will most probably boost domestic markets that will offset those negative effects.

Overall we will see a stronger Euro, a weaker Pound, a much stronger CHF and an extremely strong Yen over the next year.
This is a long term scenario I agree 100%.
And let's not forget that none of those countries are in stuck in a war that has no end nor gives anything positive for the US economy. One would think that the new Iraqi government might sell oil to US for $? If that's the goal (Saddam wanted euros) - so where is that new Iraqi government that has control over the country?
  • #52
  • Dec 14, 2006 8:20am Dec 14, 2006 8:20am
unemployment claims are down, and the euro bounced right back almost at the exact daily fibonacci level of 3167...maybe buyers are here for the short term...
  • #53
  • Edited 9:15am Dec 14, 2006 8:30am | Edited 9:15am
Quoting juao
Fundamentals came in very weak for the Greenback, Euro Rally is still intact, Fed statement will have an temporary effect at the most.

just my 2 Eurocents
Keep posting Juao-you have some excellent ideas, but which weak fundamentals are you referring to? The jobs numbers are very strong and though housing is down-it's debatable as to exactly how low it might go. There's a good chance that with prices down, rates still low and with plentiful jobs available-it might not go down too much further.

BTW-as with all economic coins-there's 2 sides to the China story. While a weak Yuan causes a trade imbalance, let's say u want to invest in China-a strong $ makes that investment easier, no?
  • #54
  • Dec 14, 2006 9:36am Dec 14, 2006 9:36am
Quoting NewstraderFX
Good question. Bottom line? I think the Euro is gonna finish the year around 2800, but that doesn't mean you have to short it now.

I have to see it break below the 3130-40 level. If it does, I believe it'll go down further. I also think it's gonna test that level a couple of times before it drops thru. It could happen in the London session, but maybe not.

When I said the Euro rally was over-I didn't mean to short it immediately. There isn't a need to do that until it passes thru some resistance. The more times it tests there before it breaks, the better I'll feel.
It looks like you hit the EURO once again the low as of this moment is 1.3140 do we have to wait for the break out b4 we go short?
  • #55
  • Edited 10:55am Dec 14, 2006 9:42am | Edited 10:55am
Quoting Trader Valsky
It looks like you hit the EURO once again the low as of this moment is 1.3140 do we have to wait for the break out b4 we go short?
I've been short Eur since about 3240 and I would definately think about closing at 3125-that's an important number. If it breaks below that, u can short some more-just watch it carefully. I think it will test and re-test around that number several times before going either way.

The reason I think 25 is an important level is because it was the peak of $ strength after the NFP...
  • #56
  • Dec 14, 2006 9:46am Dec 14, 2006 9:46am
Tnx a lot ur inputs wil be highly appreciated keep posting more such!:-)
  • #57
  • Edited Feb 6, 2007 2:09pm Dec 14, 2006 10:06am | Edited Feb 6, 2007 2:09pm
oil is trying for third time breaking 63 (brent february), as this time still unable to break it, ....but eventually it will,...seems fundamentals SO strong...is the same with euro?
its just money
  • #58
  • Edited 10:51am Dec 14, 2006 10:15am | Edited 10:51am
Agreed-and if u look at a 4 hour chart from 12/9-there's a beautiful head and shoulders pattern developing...can any of u chart guys post it?

I'll stay short in the Euro until it pops over 3175-that's a key number-I wouldn't necessarily get long there because the trend since 12/2 is down for the euro-but as long as it stays below 75 i'm short. If it does go up from 75 and I miss it-then so be it.

Then, 3125 is very important-that was the peak of $ strength after the NFP. It could go back and forth around that level but a break below is another good signal to short-and 3125 will complete the head and shoulder pattern on the 4 hr chart that started on 12/9...so we could be good to go there...

So i'm hoping it stays below 3175 and I'm hoping the head and shoulder pattern completes. No garuntee it will, but that's my set-up...
  • #59
  • Dec 14, 2006 11:08am Dec 14, 2006 11:08am
A few important BB stories indicating Euro/USD weakness and an indication from China about the Yuan:
http://www.bloomberg.com/apps/news?p...&refer=economy

http://www.bloomberg.com/apps/news?p...&refer=economy

http://www.bloomberg.com/apps/news?p...&refer=economy

Chinese Vice Premier Wu Yi suggested those pushing for a quick breakthrough are misguided. I love that..misguided...lol

And BTW-guys like Paulson and all his buddies on Wall St absolutley love things exactly as they are...the cheap Yuan allows them to invest in China much more easily...Wall St could care less about trade imbalances as long as they're making $$$$$$ off the situation...as soon as they stop making money from it...then you'll hear a different tune, but that's not in the cards for quite some time...
  • #60
  • Dec 14, 2006 11:52am Dec 14, 2006 11:52am
It's almost comical to see this Chinese guy callin Paulson-a true master of the universe if ever there was one-"misguided". He can feel confident though, knowing that the threat of trade sanctions is just that-a threat. With that Dem senator falling ill-that leaves the senate in control of the republicans since Cheney has the final vote. In that scenario, there's virtually no chance that trade sanctions will ever get passed, not that Bush wouldn't likely veto them anyway...

Probably the best the US can hope for is a tacit agreement from China to keep buying US debt and MAYBE a slight, gradual widening of the trade band...
0 traders viewing now