i start to beleive that it doesnt really matter what the number will be...if the market is still dollar bulls then it can have the wider deficit ever and we can still see the dolar rally....
(like back in I think November when we had a record deficit of $68bill and the dollar not only didnt get a drop but we had new lows for the euro of 1.18 i beleive or something like that...)
so we shall see from the morning what the move will be and dont forget its friday so we might have some rounding up in positions ahead of weekend....
Watch the Trade Balance numbers tomorrow morning. The numbers will probably be greater than what is expected. I't will be a good scalping opportunity.
Ignored
Gerard,
You seem to have some inside information that most of us do not. Would you mind elaborating on why you're so confident the numbers will be higher than expected? Sounds like you have an "in" somewhere that could be helpful.
Tomorrow's report will reflect the numbers for April. In April oil prices hit an all time high. This should be reflected in tomorrow's report. The expected 3Billion increase doesn't strike me as enough.
if the number is more negative for trade balance, then doesn't that mean a bearish dollar? so it's a good excuse for the euro to recover from today's lost?
True. But the dollar was also low in April, which should have given exports a bit of a boost.
I am predicting a better than expected trade balance and further slide in the EURUSD pair.
Quoting Gerard
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Tomorrow's report will reflect the numbers for April. In April oil prices hit an all time high. This should be reflected in tomorrow's report. The expected 3Billion increase doesn't strike me as enough.
It wouldnt recover by much IMO. The EURO is in a downtrend now.
Quoting nitman
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if the number is more negative for trade balance, then doesn't that mean a bearish dollar? so it's a good excuse for the euro to recover from today's lost?
I think we can do better on this forum than to speculate on which way a moderately important economic report will go. I'm not sure how much trading experience you have, Gerard, but I think a post like yours can be somewhat misleading to a new trader. Any moderately significant news announcement is always an opportunity for scalping. In my view, trying to anticipate which way it's going to go based on what that news report will say leads to certain disaster.
Consider this for a moment. Yesterday the ECB announced a rate increase. The increase was perfectly in line with forecasts. Everyone knew that it was going to happen, at that level. The problem is that there were a significant number of traders who HOPED the ECB would raise rates higher. There's no economic survey to indicate the HOPE traders have in a particular report. With any data, trade data as well, we know what the economic forecast is, but, can you tell me what the enormous market makers are hoping the numbers will come out to be?
Here's another arguement why we wouldn't want to make predictions about a movement based on a news report. It's true that the trade balance will come out today, but, are you aware that there's a sister report to this report? It's called Net Foreign Purchases. A large trade imbalance isn't good for the dollar, but it won't be reflected in the currency market if traders believe the imbalance will not be covered by Net Foreign Purchases. So, not only do you have to predict what traders expect the trade imbalance numbers to be, you also have to predict what they think the net foreign purchases number will be as well, which does not come out today. Additionally, Bernanke is speaking today at 11, albeit at a commencement ceremony. Nevertheless, you never know how the market will react to anything he says. In fact, they may ignore the trade numbers until he speaks.
My suggestion for new traders is to work on a system for trading news and announcements. There is usually good movement during these times. However, it takes experience and quite a bit of economics background, as well as some good inside information about trader sentiment, to be able to predict movement direction based on the fundamentals of an eco report. Watch the charts. They'll tell you what you need to know.
I don't necessarily disagree with you, but remember, I'm interested in a scalping opportunity. You're right, a lot more info goes into deciding what and why to scalp than simply a report release. If someone is new to this it requires a bit of homework; so a bit more detail about why this was such a good opportunity would have been helpful.
Because of the long term structural problems facing the US Dollar, even though the numbers came in under expectations the market still reacted:
If you're a scalper this is exactly what you are looking for. In fact it is more than I had expected in light of the numbers. Don't jump in until the market starts to move.
Bernanke: it's a graduation address, who knows what he is going to say?
I actually feel sorry for the guy. He's between a rock and a hard place. His only choice is a Hobson's choice.
Thanks for adding the depth. I guess I visit these forums so much and I see a lot of vague information being passed around. Indeed, I'm probably a culprit, too. Not to single you out, but, I think I would have liked to have seen an initial post like ...
"Tomorrow's trade balance numbers may provide an excellent scalping opportunity and this is my strategy for entering and exiting the trade ..."
I think that would have been an excellent post kicking off a very interesting thread on scalping.
Regards,
stockwet
Quoting Gerard
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Dear Stockwet,
I don't necessarily disagree with you, but remember, I'm interested in a scalping opportunity. You're right, a lot more info goes into deciding what and why to scalp than simply a report release. If someone is new to this it requires a bit of homework; so a bit more detail about why this was such a good opportunity would have been helpful.
Because of the long term structural problems facing the US Dollar, even though the numbers came in under expectations the market still reacted:
If you're a scalper this is exactly what you are looking for. In fact it is more than I had expected in light of the numbers. Don't jump in until the market starts to move.
Bernanke: it's a graduation address, who knows what he is going to say?
I actually feel sorry for the guy. He's between a rock and a hard place. His only choice is a Hobson's choice.
(I write a weekly market report for my company. This is one reason among many that I feel the dollar is in trouble.)
(The reason I post it here is because I think any long term technical play in the currency market has a better probability of succeeding if it matches the long term fundamentals. A long term position opposed to the overall long term fundamentals is, in my opinion, too risky.)
Long Term Fundamentals: Fed Policy - A Hobson's Choice
The Fed, under present national and international conditions, must choose between price inflation and asset inflation. The only politically available choice is asset inflation.
Overvaluing US Dollar denominated assets in order to continue attracting foreign capital fuels the economy but only adds to the long term structural debt problem facing the US economy.
Bernanke, like Greenspan before him, chose the route of least resistance. In the end, when nervousness about US debt turns into flight from US Bond and Capital markets, it will be the two of them who will take on an unfair share of the blame. The Fed has been in the role of compensating for an out-of-control fiscal policy for decades. Borrowing to spend has become the American way of life and things are only going to get worst.
What this asset inflation truly generates is phony collateral for runaway debt. There is only one way to create genuine wealth: consume LESS than current production or income, invest in tangible income-creating goods and services.
The crucial problem in creating wealth by inflating the value of assets such as stocks and homes is that it takes place outside the GDP: it inflates asset prices by inflating credit, not by producing income from goods and services.
Over consumption using phony collateral is one of the America's structural diseases. Increasing foreign debt coupled with decreasing income growth is the other. Debt deflation and rising interest rates will be the eventual outcome.
Having raised interest rates yet again, is an indication that the Fed has lost control.
Greenspan could have asked Bush to extend his stay for a few more months; it would have made him the longest serving Fed Chairman in US history. He opted out because he knows what the future may very well hold. All bubbles burst. America may very well be the next Japan.
In a Nutshell:
The point to understand is that the full inflationary impact of excess money and credit in the U.S. has been partially diluted by foreign investment. The U.S. consumer increases consumption as a result of taking on more debt. This increase in demand-side consumption is made possible through cheap and abundant credit (inflationary). Since the U.S. economy is unable to meet all of consumer demand, excess demand is made up through foreign imports of both goods and capital. This also lessens the impact of inflation since foreign goods help meet excess demand while keeping a lid on prices.
Foreign goods can also be manufactured at a lower price.
When new money and credit are created, they enter the system through various avenues. The money and credit can actually be spent on domestic goods and services, foreign goods and services or financial assets leading to higher asset prices. Goods inflation and asset inflation are really two different sides of the same coin.
