Whats really moving the market today?

WASHINGTON (AP) - China cuts holdings of US Treasurys for 5th month
The Treasury Department said Monday that China cut its holdings by $9.2 billion to $1.14 trillion. Japan, the second-largest foreign holder, boosted its holdings by $17.6 billion to $907.9 billion. There had been concerns that the March 11 earthquake and tsunami would lead Japan to scale back its purchases so it could use the money for reconstruction. Britain, the third-largest buyer, increased its holdings by 10 percent to $325.2 billion in March. Total foreign holdings increased by $4.9 billion to $4.48 trillion. (LINK)

BBC - Residents have been moved further away from the crippled Fukushima nuclear plant in northern Japan as the no-go zone is extended and there is a new setback at the plant. The government and Tepco have said it would take until next January to achieve a cold shut-down at the plant. Last week the government agreed a huge compensation package for those affected by the disaster. Analysts say the final bill for compensation could top $100bn (£61bn). (LINK)

bug here: More than 80,000 people have been relocated to shelters and this new evacuation adds 5,000 more people. These are people now effectively without a job, a home and without privacy (living in a shelter or a gym with hundreds of other refugees hardly gives you any time to be alone, this can be quite depressing). Tepco and the Japanese government said it would take until January 2012 (sic!) to cool the reactor, but that could be an understatement. Furthermore, a cold reactor doesn't mean it's safe to return home. These are hard times for those that have been evacuated, but the overall situation is also having a depressing effect on the Japanese economy as was apparent from today's consumer sentiment figures that came in way below expectations.

ForexLive European Wrap: Sluggish start to the week

ForexLive US wrap: nasty squeeze but euro ends well below highs

You can definitely count me in..has the potential to be a real class thread, although I've always been told to stay out of the Interactive Trading Section .

Reminds me a bit of a BBC show..Million Dollar Traders. In the mornings before NY Open the traders would sit down with their newspapers papers on a large desk, and everyone would report their findings to ensure that everyone acquires as much information as possible. It wasn't a bad show coming to think of it...

Regards,
xXTrizzleXx

AUD in my (amateur) view

Risk off so far this week, European worries, stocks down, commodities down and AUD... flat.

If this continues it gives me a long bias, what can't go down has to go up. COT not overextended anymore and where else can investors get relatively safe yields like this. Will need to see stocks and commodities go up before i take any longs though and would like to see the stops below 500 taken out before then.

Also i think the market has underestimated the chance of an interest rate increase in June, it will take more than one month of volatility in their employment figures to hold off an increase

Who pushes the buttons for RBA doesnt come from Glen Stevens but from China.
Two Tier economy has been bandied about and already certain sectors in the AUD economy are on the nose especially in the housing sector.
If China slows and with their latest monetary policy statement was early signs Australia is in a spot of bother.
Asian CB's have been buyers of AUD in supporting weakness of their currencies.
Now there is no imminent Asian currency strengthening I suspect they will be absent.
Overall I feel the AUD could come under some selling pressure and would use any strong rallies to sell into.
Of course any negative news from the US about debt then its a different ball game.

Maybe I have missed the point here but are you honestly expecting to factor all this into your trading decisions ? !!!

I'll stick to price action as the news/data is already largely priced in and global events are subject to the human reaction.

Trade better by keeping things simple. Don't overthink the markets. That's my motto after years of info overload.

Good Luck and Profitable Trading To You All

makingpips

No need for information overflow, just need to gauge the general sentiment of the market and the possible risks/support of that sentiment. You would be surprised what a difference it would make on your profit/loss if you use market sentiment as a filter for which price action trades to take (or more importantly not to take). The perfect pin bar can mean nothing if it's against the market sentiment.

What if you have a perfect price action setup and long AUD. Right after your entry commodities start moving down, stocks move down and a huge acquistion is announced that an aussie company is buying a US company? Do you just stay in the trade because the past price action was right?

Totally agree about the dangers of China and housing to AUD. Although i think some of this is already priced in (not that it will save the AUD if the bubble bursts). I never hold on to AUD trades for long due to it's sensitivity.

Everyone seems to be talking about the bubble in China and AUD, but what happens if there isn't a bubble? no one seems to be considering this. Also, What if there is a slowdown in Australia and China but still a bigger slowdown in the economies of EUR, US & Japan?

I'm pretty new to this type of stuff so these are more questions than statements, feel free to critique or point me in the right direction so i can educate myself.

Sure market sentiment has a role to play (I don't disagree) but it does translate into PA.
Sentiment can change following any announcement planned or otherwise on any market.
So it follows that if conditions change due to a shift in sentiment then it could upset the flow of the current move. And I would move to take action if necessary but I do not watch the market when in trade. Price action is largely predictive so a limit order usually takes care of the rest most of the time. And if things shift around due to a shift in sentiment I am usually in a position of having protected the first bit of profit before leaving the market to its move.
I trade Crude everyday and prefer currency pairs that do not attract scalpers. Have never traded AUD. I stick with the same markets day in day out and have done for years.
You cannot plan for unplanned news and you would avoid relevant/important planned news anyway if day trading. Sorry not sure what sort of trader you are......so you may need a longer term view of things ignoring the intraday noise as necessary. We are all different animals.

I just prefer to keep things simple and uncluttered so there are no indicators involved at my end either. Price action trading has served me very well for many years. So if it ain't broke I don't tinker with the approach that suits me. If you understand price action then it follows you do know which trades not to take as well as the set ups that are high probability trades.

makingpips

Well I dont think its priced in.. 4 big figs correction isnt significant.. We arent talking about bubbles here.. we are talking about slowing of Chinese growth and because Aust isnt deversified its hangin in there by a thread.
The next shake out can be severe. 10 big figs +

Your next question - Global double dip? Well last time they bought US Treasuries- This time im thinking more like guns and ammunition.

I love this thread already. Very nice analysis bug and cindy. I've been watching the AUD personally.

The important thing for AUD right now is commodities. We are never going to get back up to 1.1 if commodities don't come with us. The problem is, I honestly have no clue what commodities are going to do at the moment. US happenings are going to be crucial.

Option hunters look hungry for 1.0500. They'll be looking to strike at the first sign of a sentiment change in their favor. RBA minutes is due out soon, participants want to know whats going on with interest rates. So the news could effect current sentiment.

Edit:
http://www.smh.com.au/business/rba-m...517-1eqpc.html

Buying interest at 1.0500/15 (Link)

Welcome Tactical

Yeah I've always made it a habit myself to stay out of the interactive trading threads. I originally put it in the discussion forum but it got moved . Oh well maybe whoever moved it missed the point. Just reading through the previous posts. Back later to tap something out before London.

Forgot to say g'day and welcome frankkn. I know what you mean about the University Econ!

Nice post Paul. I hope you drop in every now an then to share your thoughts.

Where i get my fundamental info:

http://www.tradingeconomics.com/(gives you the fundamental info on all countries on the planet)

http://www.actionforex.com/analysis/...-fundamentals/

http://www.actionforex.com/analysis/...-fundamentals/

http://www.fx360.com/commentary/Index.aspx (just kathy lien)

Thanks for the links ddd

I just want to add that posting analysis is not the only thing you can do here. Feel free to pose questions or thoughts you have or to teach others about anything relating to the thread topic. It's up to you

Pauls post was really good to anyone who is not experienced in this area (like me). I highly recommend having a read of it.

Ok gotta go do some work. Back latez

I also wanna say that this isn't limited to a news thread as someone suggested earlier. its "anything that will move the markets"

This could be any number of things:

 

1. News
2. Sentiment
3. Stop hunting
4. Risk on/off
5. interest rates (and differentials)
6. Events
7. Politics
8. Central bank Interventions
9. Uninformed capital flows (unproift motivated market participants conducting daily business transactions)
10. Liquidity or lack there of

(probably some of those things above are essentially the same)

What we want to try and do is focus on the factors that matter at any point in time so hopefully after some practice it becomes second nature as to gauge what the market is thinking and how to go about finding this out and of course with the aim of using it to our own advantage.

As traders we are not so much concerned about the trivial details that concern analysts but more determined to get into the minds of the people that matter (will move the market).

If anyone can add to the list above, feel free

hi,


good thread, i just don't know where to start

I guess i'll start quoting some of the posters comments and explain them as i see it cause few members are posting somewhat misleading information here

FOREXLIVE - M&A speculation fuelling EUR/JPY, CHF/JPY buying
As I mentioned earlier, real money funds were busy buying EUR/JPY, CHF/JPY and CAD/JPY overnight. There is speculation in the market that two big separate M&A deals involving Toshiba and Takeda Parmaceutical will mainly benefit the CHF but also the EUR, CAD and AUD. (LINK)

Comparing fiber and yuppie it's pretty obvious that there's some JPY selling going on against EUR.

Forexlive Asian market wrap

What a great thread guys- I've literally just reached that point in my trading where I realise I want to know more about this part of 'what effects currencies', and ultimately my trading- I'm such a newbie by comparison to some of the people on this thread, it's embarrassing. Just wanted to say it would be great if we could keep this up.

Otherwise, my comment is that everybody (governments/companies/economies) seem to be behaving like a deer in the headlights right now- almost too frozen to take any decisive action in any direction. From a psychological point of view, it looks a lot like the bystander effect , but on a global scale.

My eye is on the US Dollar- if that can either collapse completely or alternatively demonstrate a clear 'potential' path to recovery, I believe the markets will go back to work.

I'm keeping my trades shorter term right now i.e. hours instead of days.

Yes, every economy needs oil and the higher the price of oil the more you have to pay for it thus making any other area in the economy grow slower cause there are less money to buy other things.

Oil market isn't what we would call an efficient market. Supply has been constant and the real demand isn't that much changed either. So, the conclusion is that Oil is a speculators market. That is why you are seeing a 5%-10% movement in a day simply cause there aren't enough liquidity. When did you last see a 1000 point drop (or rise) in eurusd ?


Now, to the point. Actually, it's not. I know you certainly are left with that impression but trading the dollar out of the correlation (and the deviation) with oil isn't really wise. There are enough evidence to support that so i'm not stopping here any longer.

However, if you do want to play the oil correlation then at least you should use the currency that relates fundamentally with oil - canadian dollar. But in all honesty, i don't think it's still a very good idea.


Again, same problem plus the underlying statement is wrong. The question is who is buying the stock. If foreign investors are buying U.S. stocks then they HAVE TO convert their currency into U.S. dollars. That will RAISE the value of the dollar. And that is one of the main drivers of currency market. Luckily for you most of the STOCK MARKET investments are done domestically so the stock market doesn't have a big impact as such on domestic currency. if you are an U.S citizen and working in U.S. getting paid in U.S. dollars and invest that money into U.S. stock market then nothing really changed. You simply converted your dollars into dollar-denominated asset. FOR YOU it doesn't matter what the dollar value is against a FOREIGN currency.
Secondly, what you are seeing in the U.S. stock market today isn't really a risk-off rally no matter what the mainstream says. Even Bernanke is wrong (whether deliberately or not is for you to decide) by saying that the economy has benefited from QE implying that stocks are up. Stocks are up simply because any stock market benefits from very low interest rate environment. Couple that with the QE and stimulus and there is no other way for the stock market to go. The question is whether it can stay that way when there is no more stimulus. It's actually good that you (and the whole media) believes that it's a risk-off rally cause it spurs the confidence so desperately needed for the economy to start expanding again.

Think about it. If it truly were a risk-off then why the fck are gold and bonds and other so called safe heaven assets up as well ?? You should at least admit that not everything makes sense here.


I think you meant commodities UP.


As much as you hate me saying this then that was NOT the reason eurusd went down.

AUD/USD

17- May - 2011

Where we’ve been…

The last 2 weeks have seen the AUD plunge from it’s record 1.100 against the USD down 500 pips from the high. Opened this week at 1.0528 down from last weeks open of 1.0736.

AUD

 

1. Gold has sold off dragging the AUD down with it
2. The ASX 200 has followed suit and is down as risk aversion across equity markets have taken hold in the past couple of weeks.
3. Last weeks employment figures completely missed expectations and fell well below prompting an expectation for the RBA to put a rate hike on hold.

USD

 

1. The increased uncertainty surrounding the situation in the EUROZONE with the sovereign debt crisis has caused a dumping of the EUR and increased demand for the USD. As the Dollar index and the EUR/USD are highly correlated it appears that the EUR makes up a large portion of the Dollar index and therefore the situation in the Eurozone could be a strong factor in the USD strength.

1. A stronger dollar weighed on oil prices by making commodities like crude more expensive for investors trading in other currencies.

The combined force of a plunging gold market, and increased demand for USD has led to the immense selling pressure placed upon the AUD/USD of late with poor economic data adding fuel to the fire.

Monday:

AUD

 

1. Data for new Australian home loans came in weaker than expected at -1.5% down from the expected 2.3% increase, as well as a decline in new motor vehicle sales down -3.5% from the previous month indicating an increased unwillingness for the Australian public to spend.

1. This is most likely due to the increasing inflation and expectations of rate rises in the following month dampening the demand for finance, however those rate rises may now be put on hold after the new employment figures of last week and so these two economic releases may see an increase and “adjustment” in the next month.

USD

 

1. A sharp widening in interest rate differentials between Germany and the US yesterday supported the EUR and saw intraday weakening of the USD across the board. AUD/USD.

1. Bernanke spoke on Monday the market is listening to every word closely for hints on a tightening of monetary policy but at the conference Bernanke didn’t give much away.

Barrier option at 1.0500 seems to have been defended. It seems the widening IRD between the USD and Germany yesterday were very convenient with it also saving a 1.4045 EUR/USD barrier option

Nothing earth shattering yesterday in the way of news however may highlight some future events to watch out for on both currencies.

The Eurozone meeting held yesterday also held no surprises or insights as to the sovereign debt situation. The 3-year EU/IMF €78B Portuguese bail-out package was unanimously formally approved (including Finland). The Greece situation is still in discussion and Mr Junker said he hopes to conclude it in mid June at the Eurogroup and EU summit meetings.

Where we’re at…

Tuesday

AUD

 

1. The RBA minutes this morning from the May 3: "Members judged that if economic conditions continued to evolve as expected, higher interest rates were likely to be required at some point," the RBA minutes said. They will act to keep inflation between the target rate of 2 -3% and the minutes seemed to indicate they wouldn’t wait until the CPI figures in late July. HOWEVER this meeting was held AFTER the employment and spending figures of last week and perhaps this factor will come in to play and delay the rate rise as the market seems to have anticipated. This may mean now that the CPI figures in July will now become a crucial element in the rate decisions of the RBA.

1. RBA minutes didn’t seem to have much affect on the AUD/USD

Barrier option still in tact at 1.0500

Where we’re going…

AUD

 

1. There’s not much else in terms of important news announcements for the AUD.

USD

 

1. FOMC minutes Wednesday

1. Employment claims to come out on Friday, probably not the markets main concern right now.

1. Upcoming US Bond auctions during the week could add more buying pressure the USD particularly with the risk aversion in play there should be a higher demand for “risk free” assets.

The situation in the Greece and Portugal debt situation and global risk factors should lead the way in the coming week the main factor for the AUD/USD with the focus on the USD (strength/weakness). Euro group meeting today (right now) may lead to some clues as to potential outcomes for the current situation in EURO land

Options expiry on Friday should add some volatility to the market.