FXCM/DailyFX Signals and Strategies

See a sneak peek of the new and improved DailyFX webpage:http://www.dailyfx.com/media/trailer.mov

The Nikkei and Hang Seng stock indices are important to watch if trading the Asian currencies, and you can also trade them directly through the CFD platform. Both have been testing support levels and the Nikkei took a large dip overnight. Here's an article put together by Jamie Saettele on what he's watching http://www.cfdtrading.com/2009/09/29...upport-lines/:


Nikkei

http://www.cfdtrading.com/wp-content.../09/nikkei.png


Hang Seng

http://www.cfdtrading.com/wp-content...9/hangseng.png

You can register for a CFD demo account through FXCM UK to trade the Nikkei and Hang Seng CFD contracts: http://www.fxcm.co.uk/demo-cfd-usd.jsp

DailyFX Analyst John Kicklighter will host a live trading room tomorrow starting at 8:15am ET for the Non-Farm Payroll report. Click the image below to join.

http://img96.imageshack.us/img96/8193/nfpcil.jpg

Below is an interesting call from Ilya Spivak of DailyFX. Ilya incorporates candlestick patterns into his trading strategy and the trades tend to be longer term. For longer term trades, it's best to dial down the leverage and make sure your account is well capitalized.

EUR/USD
Strategy: Remain Short at 1.4710, Targeting 1.3742

Last week, we sold EURUSD at 1.4710 after the pair showed a Three Inside Down bearish reversal candlestick pattern with added confirmation as the RSI oscillator reversed out of overbought territory showing negative divergence. Prices have indeed declined and are now testing rising trend line support established from the swing lows in March. We will remain, looking for a break below this support (now at 1.4502) to open the door for a move to 1.3742. A stop-loss activated on a daily close above 1.4847, the 9/23 wick high.

http://www.dailyfx.com/export/sites/...100209_EUR.png

Read the Full Report Here

John Kicklighter of DailyFX just posted on Twitter couple of minutes ago:

French officials say there will indeed be a statement released after tomorrow's G7 meeting. They have also said currencies may be discussed. http://forexstream.dailyfx.com/

The G7 wasn't expected to make statements on currencies but this new information creates risk. Important to keep in mind with any trades you leave open this weekend.

Here's another quote from the G7 meeting. The French economy minister took a shot at the Euro strength:

"It is out of the question that the euro pays the bill for an adjustment between the dollar and the (Chinese) yuan," French Economy Minister Christine Lagarde said on Thursday. Source: G7 Article from Reuters

Here are the highlights from next week's economic release schedule.

Have a great weekend everyone.

Written by Terri Belkas, DailyFX Currency Strategist

• US ISM Non-Manufacturing Index (SEP) – October 5, 10:00 ET
On Monday, the ISM non-manufacturing index is projected to rise for the sixth straight month in September to 50 from 48.4, which would be the highest reading since September 2008. With 50 being the point of neutrality, anything even slightly better than expected (50.1 or higher) would signal an expansion in business activity for the first time since August 2008. That said, a sharp improvement seems unlikely in light of the fact that the Conference Board’s measure of consumer confidence slipped to 53.1 in September from 54.5, while the latest US NFP report showed that the services sector lost 147,000 jobs during the same period. Overall, it would likely take an index reading above 50 to elicit a strong reaction from the US dollar, though a surprise decline would provide equally choppy price action for the currency.

• Reserve Bank of Australia Rate Decision – October 6, 23:30 ET
The Reserve Bank of Australia (RBA) is anticipated to leave their cash rate target unchanged on Tuesday for the sixth straight month at 3.00 percent, and the Australian dollar may only respond to a change in the bias of RBA Governor Glenn Stevens’ monetary policy statement. As it stands, Credit Suisse Overnight Index Swaps (OIS) are pricing in a 22 percent chance of a 25 basis point rate hike during this upcoming meeting, and 175 basis points worth of hikes over the next 12 months, which is generally in line with what we’ve seen since early August. It was actually in early July when the RBA’s bias shifted from dovish to neutral, as Stevens removed a line from his statement noting that “scope remains for some further easing of monetary policy.” As long as we see these RBA statements continue to provide progressively optimistic outlooks, the markets are likely to remain in favor of large rate increases over the next year. However, if the RBA starts to signal a more cautious tone, this sentiment could shift very quickly and lead the Australian dollar lower.

• Bank of England Rate Decision – October 8, 07:00 ET
The Bank of England (BOE) is anticipated to leave rates unchanged at 0.50 percent on Thursday at 7:00 ET, but this won’t even be the market-moving part of the announcement. Instead, traders will be looking toward the BOE’s policy statement. This has consistently been the prime “news event” of recent rate decisions. Last month, the BOE indicated a neutral stance as they stated they would continue their £175 billion quantitative easing program, and this ultimately led the British pound to rally against the US dollar and euro immediately. A repeat of this statement is likely to trigger a similar reaction from the British pound, but on the other hand, any indication that the program may need to be expanded down the line would weigh very heavily on the currency. That said, such a scenario is highly unlikely.

• European Central Bank Rate Decision – October 8, 07:45 ET
The European Central Bank is anticipated to leave rates unchanged at 1.00 percent at 7:45 ET. Where the currency ends the day, though, may have more to do with what ECB President Jean-Claude Trichet says during his post-meeting press conference at 08:30 ET. Traders will likely focus on any comments regarding the future of interest rates in the region, including whether 1 percent should be considered the “floor,” as well as statements on exit strategies for the central bank’s liquidity programs.

• Canadian Net Employment Change (SEP) – October 9, 07:00 ET
At 7:00 ET, the Canadian net employment change may show a decline of 7,500 during September following a surprise jump of 27,100 in August. Furthermore, the unemployment rate is anticipated to have risen to match the January 1998 high of 8.8 percent from 8.7 percent. Since the employment change tends to be a very volatile release, this should have the greater impact on the Canadian dollar, with a sharper than expected drop likely to weigh on the currency and an unexpected positive result likely to push it higher.

See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.

Here's another special report DailyFX has put together on the correlation between the EUR/USD and Dow Jones Industrial Average.

Written by John Rivera, Currency Analyst

The EUR/USD continues to see risk sentiment have the greatest influence on price action as movement in the DJIA is explaining 41% of overall direction. However, U.S. interest rate expectations are starting to increase in importance as they have become a weighing factor with a -0.24 correlation.



http://www.dailyfx.com/export/sites/...yst/930pdb.gif

Full Report Found Here

With last nights interest rate increase by the Reserve Bank of Australia, the AUD looks to be setup as one of the strongest currencies. SSI positioning on AUD/USD increased this morning to -2.91 as traders try to pick a top in AUD/USD despite the very positive AUD news. Rising interest rates also makes the AUD/USD a carry trade target. Here's the latest SSI.

http://img340.imageshack.us/img340/7157/ssi.jpg

The second currency pair I want to look at is the USD/JPY which is re-testing the double bottom support level made from Dec. '08 - Feb. '09. Traders are making a more calculated trade trying to pick the bottom in this one due to the Bank of Japan's recent threats to intervene against continued JPY strength. Here's an article DailyFX put together on trading the JPY in light of possible BOJ intervention. If support at the 87.00 level gives way, the next major support would be 82.00, last reached in 1995!

http://img209.imageshack.us/img209/2357/usdjpy.jpg

SSI is updated twice a day in DailyFX Plus. Register for a free login here.

If nothing else, you have to admit USD/JPY is exciting at this level, and retail traders are raising their bets that 88.00 will hold. AUD/USD shorts are getting a reprieve from their losing positions.

http://img40.imageshack.us/img40/6839/ssiusdjpy.jpg

Ilya Spivak of DailyFX says Australian data points to a housing bubble. http://www.dailyfx.com/story/special...894224462.html . Another possible concern for the RBA to raise rates.

If you've been reading Bloomberg and other financial sites, there's talk by technical analysts of gold targeting $1,500. My question is, why $1,500, so I pulled up a chart and started adding fibonaccis. If you start at the low of $250 from 1998 and draw a fibonacci matching the 38% level to the recent break above $1,000, then 0% target level matches up with $1,500. Interesting...

If you want to trade gold or view gold charts, you can register for a CFD demo through FXCM UK. http://www.fxcm.co.uk/gold.jsp (Note CFD trading is only available for non-US residents). Here's the gold chart from the FX Trading Station.

http://img266.imageshack.us/img266/2092/goldtarget.jpg

If you're looking for currencies against which to short the USD, take a look at USD/NOK. Dollar weakness has been accelerating as of late against the Norwegian currency. USD/NOK is available for trading through FXCM in EUR denominated accounts.

Here's a daily chart of USD/NOK since the beginning of 2009.

http://img65.imageshack.us/img65/4195/usdnok.jpg

DailyFX doesn't publish any research on this pair through the website, but their is a daily email report you can sign up for. I attached today's copy to this post, and you can sign up for the daily email by emailing [email protected] .

Written by Terri Belkas, Currency Strategist


The US dollar will encounter the most event risk compared to the rest of the majors next week, as US advance retail sales, the FOMC meeting minutes from September, and the University of Michigan’s consumer confidence index will all be released. Meanwhile, CPI from the UK and Canadian are both anticipated to reflect easing price pressures, which could ultimately weigh on the already-weak British pound and Canadian dollar.


• UK Consumer Price Index (SEP) – October 13, 4:30 ET
The UK’s consumer price index (CPI) reading for the month of September is expected to rise 0.3 percent, but the more important part of this report is that the annual rate of growth, which is more closely watched by the Bank of England, is forecasted to fall to 1.3 percent, the lowest since October 2004 from 1.6 percent, keeping inflation within the central bank’s acceptable range of 1 percent - 3 percent, but below their 2 percent target. If CPI falls more than projected, the British pound could pull back sharply as the markets will anticipate that the BOE will expand their quantitative easing efforts even further before year-end. On the other hand, if CPI holds strong, the currency could rally in response.

• US Advance Retail Sales (SEP) – October 14, 8:30 ET
The Commerce Department is forecasted to report that US retail sales slumped 2.1 percent in September, after jumping by the most since January 2006 in August at a rate of 2.7 percent. The decline is likely to be due primarily to a drop in auto sales relative to recent months. For example, spending on motor vehicles and parts rocketed 10.6 percent higher in August as the “cash for clunkers” program came to an end, and demand is likely to have fallen without the government-sponsored incentive. Furthermore, this index is not adjusted for inflation, so volatile gas prices can often play a big role on how the overall results fare, and based on the drop in average retail gasoline prices during September from $2.60/gallon down to about $2.47/gallon, there are additional downside risks. That said, better-than-expected results are likely to lead to at least a brief bout of US dollar strength, but as we saw with the last time this report came out on September 15, risk trends still tend to win out. Thus, after initially choppy price action, the US dollar could ultimately gain upon disappointing US retail sales data (risk aversion) or drop on positive numbers (risk appetite).

• Federal Open Market Committee (FOMC) Meeting Minutes – October 14, 14:00 ET
The main event risk for the US dollar on Wednesday will be the release of the minutes from the Federal Reserve’s last meeting on September 22-23. Following that meeting, the policy statement initially led the US dollar to sell-off against the most popular currencies as the central bank maintained a neutral tone and repeated that they would keep rates "exceptionally low" for an "extended period." However, the currency subsequently bounced back as the overall sentiment of the statement was optimistic, with the FOMC saying that "economic activity had picked up" while conditions in the financial markets have "improved further." As far as quantitative easing went, the central bank maintained that they would purchase a total of $1.25 trillion of agency mortgage-backed securities (MBS) and up to $200 billion of agency debt, which should be completed by the end of Q1 2010, while their purchases of $300 billion in Treasury securities will be completed by the end of October 2009. A reiteration of these statements has the potential to lift the greenback once again, but on the other hand, indications that FOMC members are feeling uneasy about the outlook for growth or the need to expand quantitative easing down the road could do quite the opposite.

• Canadian Consumer Price Index (SEP) – October 16, 7:00 ET
The annual rate of Canadian headline CPI growth for September is projected to slip down to -0.9 percent from -0.8 percent, while the Bank of Canada’s core measure is projected to ease back to 1.3 percent, the lowest since July 2005, from 1.6 percent. Such results would suggest that both commodity costs along with downward pressures stemming from lackluster demand are starting to come into play for prices throughout the broader economy. The Bank of Canada said in their most recent policy statement that “overall risks to its inflation projection are tilted slightly to the downside,” and if we start to see even core measures of inflation fall toward zero, the Canadian dollar could pull tumble.

• University of Michigan Consumer Confidence (OCT P) – October 16, 9:55 ET
The preliminary reading of the University of Michigan’s consumer confidence index is forecasted to go unchanged in October and hold at 73.5, which is the highest since January 2008. That said, it’ll be interesting to see if the index can hold at such robust levels after the latest US non-farm payrolls results showed that the pace of job losses unexpectedly accelerated in September. The major issue we want to point out with this report is that the official time of release is 10:00 ET, but it typically hits the wires at 9:55 ET, which can exacerbate any surprise factor from the actual results.

See the DailyFX Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators.


http://www.dailyfx.com/story/bio1/US...110153365.html

John Kicklighter of DailyFX wrote a special report on the 12 month outlook for interest rates. Below is a screenshot from Bloomberg showing expectations for the next 12 months. (Note: 100 basis points = 1.00%)

"...The interest rate outlook is generally positive in that the next move expected to come from most of the world’s largest central banks will likely be a hike. Therefore, the real consideration is when the banks will start moving and what pace will they maintain. We’ll look at those central banks that support the most liquid currencies and use this as a gauge to establish whether their markets are overbought or right in line with fundamentals."

http://www.cfdtrading.com/wp-content...10/JK1009a.bmp

The article on CFDTrading.com gives an overview of each central banks outlook. Read the full report here.

Jamie Saettele sees 0.9914 as the next support level for USD/CAD. We're quickly moving towards parity. Here's the link to Jamie's article http://www.dailyfx.com/story/bio2/Ca...358370868.html

http://www.dailyfx.com/export/sites/...st/1012jsg.gif

The AUD/USD positioning has become less extreme over the past couple of days. This indicates the trend may be slowing. The trend overall is still up, but the levelling out of positioning could indicate an upcoming consolidation.

The USD/CAD on the other hand is signalling more losses for USD/CAD. If oil can break through the current resistance of $73-$75 it could give USD/CAD momentum towards parity. Otherwise the next major economic event scheduled for Canada is the CPI announcement on Friday.


http://img26.imageshack.us/img26/5595/audusdssi.jpg

DailyFX is hosting a live trading room discussion during Wednesday's Retail Sales announcement. John Kicklighter will be providing live commentary before, during and after the announcement.

http://img101.imageshack.us/img101/3...ilsalescil.jpg

The focus of USD weakness is often viewed against major currencies such as the Euro, British Pound, Yen, etc., but the dollar weakness has also been very pronounced against emerging market currencies such as the South African Rand (ZAR). In fact a couple of weaks ago we had some countries such as Thailand, South Korea, and Taiwan intervening in the market due to the strength of their currency against the dollar. All of this caught my attention after reading an article on Bloomberg this morning about the Rand hitting a 14 month high against the dollar. Below is a chart of the USD/ZAR I created using the Marketscope chart in the FX Trading Station II.

http://img263.imageshack.us/img263/6524/usdzar.jpg

The Rand has strengthened by nearly 30% since the start of the year. In addition to dollar weakness, the Rand also has the support of rising gold prices. Gold is a major South African export.

If you want to trade USD/ZAR or have it on your watchlist of currencies, you can trade USD/ZAR in the FXCM Trading Station II. It is available on nearly all live accounts including micro.

To add the currency pair to your dealing rates window, goto the top of the platform and click on the Symbols button. In the symbols window, scroll down to USD/ZAR and add a check in the box to have it displayed. The USD/ZAR needs to be in your dealing rates window for it to appear in the Marketscope chart instrument list.

Second, gold has continued it's push towards higher levels. If you want to compare gold prices against the USD/ZAR or the USD in general, gold trading is available on the FX Trading Station II through FXCM UK (for non-US residents). You can find out more about gold trading with FXCM on our webpage here.

I thought the title of John Rivera's article on CFDTrading.com was fitting "Dow 10,000-Now What?" Here's what he had to say:

The Dow finally closed above 10,000 for the first time in over a year. A break above the psychological level will expose significant potential to the longer-term target of 10,495. However, the monumental level could spark a retracement with support at 9,430-10/2 low.

http://www.cfdtrading.com/wp-content...FTC10.15-2.gif

Article Found Here

USD/CHF is targeting parity.

DailyFX released their weekly SSI report today. The numbers are fairly mild compared to earlier this week. The one extreme case is with USD/CHF at 3.15.

Why is the Swiss National Bank not talking about intervening? Most likely because EUR/CHF has held steady around 1.51. The last time the SNB intervened, EUR/CHF was threatening to break below 1.50. Here's the USD/CHF weekly SSI figures overlayed with USD/CHF exchange rate (the green and red historgram bars display weekly SSI and the black line represents the USD/CHF rate):

http://www.dailyfx.com/export/sites/...st/DR1015e.gif

USDCHF – The ratio of long to short positions in the USDCHF stands at 3.13 as nearly 76% of traders are long. Yesterday, the ratio was at 3.44 as 77% of open positions were long. In detail, long positions are 5.0% lower than yesterday and 9.1% stronger since last week. Short positions are 4.3% higher than yesterday and 7.0% weaker since last week. Open interest is 2.9% weaker than yesterday and 1.2% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

Full Report Found Here

Parity is a popular topic this week. Today's parity spotlight is on the Australian Dollar. It's all over the financial news sites with Barclays expecting AUD/USD to reach parity possibly by year end, and the newspaper The Australian running a front page article about AUD/USD parity http://www.theaustralian.news.com.au...017771,00.html

One of the more lively rumors floating around the trading floors this morning had the RBA governor Glenn Stevens mentioning AUD/USD could reach 1.10. But it was just a rumor, and a statement he made was taken out of context.

SSI for AUD/USD as of this morning was only at -1.50. Nothing to get excited about. But I will keep an eye on it and post an SSI update if AUD/USD goes to extreme levels. AUD has moved up over 600 pips in the last 9 days so a breather may be in order before the weekend.

DailyFX also has a currency room devoted to the Australian Dollar here http://www.dailyfx.com/currency-room...an-dollar.html.

Speaking of DailyFX, the launch of the new and improved site is scheduled for today at 6pm ET .