Whats really moving the market today?

I know your asking paul, but the drop in the euro was NOT caused by oil(imo). In a nutshell it was a combination of sovereign debt events coming to a head AND trichet not coming out hawkish when he needed to be.

While we were rallying on future interest rate hikes the market chose to ignore sovereign debt. When Trichet finally came out dovish on interest rates, which was way out of line with market expectations. Participants speculating on future interest rate hikes suddenly no longer had a reason to be long. All that was left was bad sovereign debt news in an overall overbought market. Combine this with margin hikes and commodity sell offs and you have yourself a very risk off environment.

This is just a loose generalized interpretation off the top of my head. If someone would like to correct me or elaborate feel free.

something to keep an eye on for EUR/USD traders

http://www.engadget.com/2011/05/18/t...-war-of-words/

Yes buddy I fully agree ,
I originally tried to just simple point out what effect the various fundamentals such as oil have and a little background to explain why .

Its like putting all the ingredience in a bowl to bake a cake .

For the reasons why they do what they do it would be easier to google and read about the reason ,you can go as in depth as you feel neccesary .

My main fundies are the strong background ,while the intraday fundies can cause price to move in either direction ,as can large trade order size ,at a level, maybe an option expiry is being defended .
But generally if the background fundies stay the same so will the main trend.
If an official comes on news and hints that interest rates might go up next month ,then its highly like that currency will rise ,traders seem to trade on what is likely to happen and not what has happened .

One month we were expecting a rise from ecb ,they didnt raise rates but get this ,at the meeting afterwards trichet hinted they might next month if inflation rises.
And eur rose till next month based on his words,not actions .

By the time he actually raised rates the move was mostly done .

We were expecting one in june ,at the last meeting it sounded like it wasnt going to happen so the previous move had to be erased since traders were anticipating multiple raises over this year.and part was likely priced into last months action.

To point 3 I can only go off the news resources info .
Oil had been showing dollar weakness for couple days.
gbp had also shown weekness for couple days.
The rumour had been put around that there was a two no touch option expiry by the asians being defended preventing us from correlating with oil and gbp.
Once one of the levels was touched making the option worthless we again correlated .and made up for lost time.

FOREXLIVE - There’s an article in FT Deutschland
Cites unnamed officials as saying Trichet warned euro zone finance ministers Monday, that ECB would no longer accept Greek government debt as collateral should there be a decision to lengthen Greece’s debt maturities. (LINK)

Continued: German govt source: ECB not accepting Greek bonds as collateral in event of restructuring has consistently been ECB’s position (LINK)

Spain sold bonds, bid to cover ratio down, yields up (LINK)

Helping lift the euro is "Talk ECB buying periphery bonds" (LINK)

Not everything you posted here is entirely true in my opinion. So, let's review it together.

If china revalues it's currency it doesn't have any negative effect on the global demand for the U.S. dollar.

If anything i would see it as dollar positive cause any slowdown in China that could come out of rate hikes could have a big impact on commodities and thus on the commodity currencies which would depreciate against the dollar which could very well cause a positive sentiment for the global demand of dollar (at least for some time).

OK, this is not true. The consensus is not putting their savings into a bank where there is 4% negative real interest rate. If they did it would be impossible for the inflation to be at that level in the first place. You have to understand where the inflation comes from. It isn't some sort of magical figure that comes out of thin air. YOU have to CAUSE it. All things being equal any negative yield environment will only motivate the consensus to consume or to take on investments that has a higher rate of return than the underlying inflation. This in turn CAN cause a speculative mania in certain asset classes that is (sadly) THOUGHT to be the hedges of inflation. THAT mania is what causes inflation to rise significantly without having real fundamental basis for it. And that inflation expectation don't necessarily have to come out of negative rate environment only. There can be several reasons for that but what i'm trying to say here is that inflation can only come if the consensus strongly expects it to come and thus having strong net demand for assets that you see inflating. If they are putting their money into a savings account then (simply put) they aren't expecting a shit and prices (inflation) can not rise (permanently at least).

See, THAT is the problem. It's clear that even you are EXPECTING the inflation to rise thus only fueling to that speculative mania. THAT is the scary boom. And the problem is you (among others) don't even know WHY you are expecting that inflation.

The whole point of this negative yield environment is that instead of saving, consensus should start to expand business or to take on new ones and get a loan for it in favourable conditions. I know what you mean by now that i encourage spending. Sure, i encourage spending but NOT reckless spending. But especially i encourage investing and NOT speculating. Speculating is NOT investing. If you buy gold you are ONLY speculating without creating any value. If anything, you are making things worse cause you allocate your capital where there is absolutely no use for it and the ONLY way you can benefit if you find another idiot who is willing to buy that same shit at even higher price.

And that is the threat. People have no idea what to do PLUS they are expecting inflation because the mainstream fuels it and thus are quickly starting to spend money on things that does NOT create ANY value at all and will only make things worse. That is the sad side effect of this seemingly loose monetary policy.

Thankyou for your view .
We can have long discussions but lets keep it simple .
The fed printed money ,everything cost more .
I dont believe demand has risen in a reccession i dont think they are producing less .
Call it what you want ,it cost more dollars to buy stuff ,FACT

They printing shit loads of money ,dollar weaker ,FACT

Better to work with the facts and results of the actions ,than try to figure out why ,we have the answer ,we have seen the results ,trade with that knowledge .
If they print more money expect more of the same ,dollar will weaken over time .
If they print pounds ,over time pound will weaken.
If they print money precious metals over time will rise .
If they print money your saving will deteriorate .
If they print money your groceries will cost more .

These things everyone can see .
Now the definition of insanity is to do the same thing expecting a different result ,ARE YOU INSANE ?.

Point one china currency pegged to dollar .You feel this will ahve no effect?

Point 2 look up money supply ,every deposit into banks can be reloaned adding liquidity ,depending on reserve rate $100 can add $1000 in circulation.This doesnt cause inflation?

Point 3 ,If they stop printing and raise rates ,start reversing liquidity by say buying back bonds then i will not expect inflation .
While the government does inflationary things ,i will try to stay sane and expect the result of there actions to be the same .

Unless the path changes ,stay on it.

look at it this way ,if they build a road dont buy a boat expecting it to change to a river ,expect if you see them making asphalt then more roads will come.

when they start talking of qe3 Expect dollar weakness for obvious reasons and expect everything q1 and q2 did to be exaggerated ,dont get me started about qe10 .lol.

Youtube ,jim rogers. and the german guy forget his name .

I get what you are saying and yes, it would be a long discussion.

If you read my post again, then maybe you can see that the discussion was about the causes of inflation not whether there IS an inflation. Of course, there's an inflation today, it is shown in the prices ...So, this argument doesn't get us anywhere.

money isn't being printed the way the mainstream thinks that's the problem.

Please read again what i wrote. I said if China REvalues yuan relative to dollar then it doesn't mean dollar will GLOBALLY WEAKEN ! Yuan gets STRONGER against most other currencies

It doesn't have a negative impact on dollar relative to eur, gbp, aud, cad etc.

Good you said that. Exactly what you said: CAN be reloaned but the reality is that lending is SUBDUED !

If lending is subdued then no one has any money to cause REAL demand (inflation) !

WHY do you think real estate is down WHILE gold is up ?? BOTH are hard assets. If compared together then real estate should be way more attractive because a) gold is in new highs while real estate way off it's top, b) you can at least get a rent.

Money supply itself is NOT the cause of inflation if noone can get that "available" money !! You can have gazillion dollars lying in the bank waiting to be reloaned but if noone is borrowing then that money doesn't get to the economy.

Sure, but if that happens then there are better opportunities in the markets than the dollar short trade.



And don't forget Ron Paul and Peter Schiff as well

AUD/USD

19 – 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

1. The ASX 200 has followed suit and is down as risk aversion across equity markets have taken hold in the past couple of weeks.

1. 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 highlights 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 formallyapproved (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.


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

1. The AUD staged a late recovery as weak US data saw the bond yield fall.

1. Gold markets rallied back yesterday in the commodity rally strengthening the AUD.

1. The ASX 200 also closed higher (Perhaps leas by the US Equities?)

USD

· The US dollar opened this week moderately stronger versus the euro Monday as traders continued last week's shift into safer assets

· Positive Company earnings reports coming out of the US yesterday saw a rally in US Equities

· Commodity and Equity Markets made slight recoveries yesterday weakening the USD across the board

· Building permits and housing starts figures came in weaker than expected

Option Barriers at 1.0500 on the AUD and 1.4045 on the EUR kept getting saved yesterday by positive news coming out of the Euro zone such as an announcement at 14:00 GMT that Germany could exceed 3% growth this year. The AUD barrier missed by 3 pips yesterday all before the


Wednesday

AUD

 

1. Gold range bound,

1. ASX 200 Sluggishly climbed higher

USD

 

1. FOMC minutes didn’t reveal any surprises. The consensus was that more discussion was needed in relation to strategies for normalizing monetary policies.

1. The Dow Jones continues its intraday up trend

1. Oil range bound

AUD/USD continued range like behaviour with an early dip in the Asian session countered by a late rally in the NY session closing at 1.0632


Where we’re at…

Thursday

AUD

 

1. No Big News coming out of Australia

1. The M1 inflation expectations didn’t hold any surprises this morning.

1. Gold down intraday, Barrier Put option at 1,499.88 has been defended, but as it struggles to follow the decline of the other commodities.

1. ASX 200 being pulled down by US equities following USD data.

USD

 

1. Unemployment claims came in better than expected but didn’t appear to have much impact on the market.

1. Existing home sales and Phillie Fed Manufacturing Index came in weaker than expected. AUD currently dropping. Dow Jones and NASDAQ dropping off sharply, as is Oil following this announcement.

Following the News coming out of the US it seems demand for dollar has picked up with Oil dropping and US equities following suit. Gold is lower intraday but holding up its intraday rally for now. It seems some risk aversion is in play.

Where we’re going…

AUD

 

1. There’s not much else in terms of important news announcements for the AUD. The USD and Gold side of things should lead the way.

USD

 

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.

I get your points buddy .
But can we agree whatever the reasons as far as trading .
In order of priority .
1) need to know what government policy is on interest rates ,main driver .

2) Oil plays a big roll with dollar as it relates to your currency Know what tends to happen up or down.

3) And monitor what effect ,commodities,indices, have on your chosen pair .

I personally feel along with monitoring intraday statistics ,knowing these things really help me with confidence to stay in winning trades.

Even if i dont truly appreciate accurately the reasons why .

All i really can be sure of is again and again the above things move in a direction that tends to correlate with my pair.

Once i know how, then I just monitor to see if they change especially close to my entry.

I hope we can agree on whats important ,regardless of our differing reasons why they do what they do.
After all were just here to make pips ,I dont intend running for office ,well not this week ,lol.
Wouldnt want the dollar to plunge on the rumour i might get control .
My wife would assasinate me for the good of mankind .

Really appreciating the AUD write ups cindy, thanks.

No probs, doing my best it's actually the first week I've done this. This thread has motivated me to get off my ass and get more focused. I'm finding it very slowly getting easier each day I do it, hopefully one day I can condense it a bit more and only focus on the factors that matter.

I've just taken a short on the AUD 1.0617. Not the best price or time of the day but..

The reason is because of the way Equities and Commodities reacted to the news coming out of the USD. It seems like further risk Avertion. The AUD broke the first trend line there then bounced off the second and rallied back strongly, assummingly shaking out Technical traders and allowing others behind the move to sell more.

Also the sharp pull back on the AUD was not matched by the pull back on the commodities and equities,

With no more major news coming out today I feel its gonna slide but with such big defense of that barrier down there I'm watching closely for news that may alter the sentiment. But I think it provides some decent grounds for the powers that be to have another crack at the barrier.

First white Chart is Oil...
Second white Chart is Dow Jones

Does anyone have any experience deciphering market fix rumors? I know the role of a fix in the market, but it seems half the time that information comes out about a fix happening it turns out it was misinformation. It leads me to wonder if it is genuine misinformation or if certain participants deliberately rumormonger them.

What I know for sure is that they can cause price movement. I'll do some research on the matter and see if I can come up with anything

Before the fix

IFR: Just a quick heads up in AUD/USD, where there is supposed to a RHS fix for the London close. The interest is though to be buy AUD against a range of Asian currencies, so AUD/JPY may also be affected. . .

After the fix

IFR: So much for the talk of a RHS fix in AUD, with the USD rate moving lower either side of the 4.00 London close. It is not unusual to have the market moving against rumoured moves, and this was blatantly the case. An investment house was a seller. . .

Hi all

Forgot to say that this is a great thread and I watch it every day!

Fundementals are vital - we need to know what's moving the market one way or the other. These situations can last over days or weeks - helps one to stay in a trade!

rgd

Well I zigged when I should have zagged.... I learned a lot from this one trade though... I guess I was a sucker

Absolutely.


agreed.


As far as what works for you go ahead.

i'm just glad to see that people are willing to participate in the debate

Same here, CindyXXXX. Thanks for starting the thread.

It would be best to direct this question to forexlive's team. They've talked about fixes before, they even have a Q&A category devoted to questions like this (see my 'reading suggestions' thread for links). You can either send it via e-mail or add it to the comments section. I do have my own interpretation of fixing rumors but I don't have enough experience with trading the fix to provide a reliable reply so I'm not going to provide one.

http://www.reuters.com/article/2011/...74H58420110518

I found the article i was refering to earlier lumesh.

Would you post what fundamentals you feel are priority .

If you feel there are ones more important than the ones i use please share .

Good idea, I'll shoot them an email. I never thought to do that. They are a really great team.