Forex Crunch Forex Daily Outlook – September 10th 2009 |
- Forex Daily Outlook – September 10th 2009
- New Zealand Rates Unchanged – Kiwi Makes A Roundtrip
- Second Wave of Dollar Weakness Began
- Forex Trading: How to Limit Your Risk
| Forex Daily Outlook – September 10th 2009 Posted: 09 Sep 2009 05:00 PM PDT  After more dollar weakness, this day is fully packed with indicators.: rate decisions from Britain and Canada, employment data from the US and Australia and many more important releases are due today. Take a deep breath. After NZD/USD practiced a knee jerk reaction on the rate decision, will we see the same on British and Canadian rate decisions?
Australia starts the day with MI Inflation Expectations. Australia doesn’t suffer from deflation. The bigger news from Australia come later, with the employment figures. Employment Change is expected to show a squeeze of 14.3K jobs, while the Unemployment Rate is expected to rise from 5.8% to 5.9%. On one hand, low expectations could yield surprises. On the other hand, other Australian releases disappointed this week. For more on the Aussie, read the AUD/USD Outlook. Moving to Europe, French Industrial Production is expected to rise by 0.6%, double last time’s rise. The ECB Monthly Bulletin will be published later and may give an insight to how the ECB sees the Euro zone’s economy. Deutsche Bundesbank President Axel Weber will speak for the second time this week, and may also move EUR/USD at its new ground. For more on the Euro, read the EUR/USD Outlook. In Britain, Halifax HPI is finally due after a long wait. It’s expected to rise by 1% this time, similar to last month’s rise of 1.1%. A bigger event is due in Britain immediately afterwards. A new interest rate is announced in Britain at 11:00 GMT. While the Official Bank Rate isn’t expected to budge from the historic low of 0.5%, the focus will be on the Quantitative Easing program, also known as the money printing scheme. After Mervyn King and co. expanded it last time, tensions are high towards this release. The MPC Rate Statement will explain the situation of the British economy. For more on GBP/USD, read the British Pound Outlook. Double-feature Trade Balance releases are due in Canada and in the US at the same time: 12:30 GMT. The Canadian number is expected to show a small deficit of 0.1 billion, while the American deficit is expected to rise from 27 billion to 27.1 billion. Half an hour later, an interest rate decision is due in Canada. Mark Carney is expected to leave theOvernight Rate unchanged at 0.25%. Loonie traders will listen carefully to the BOC Rate Statement. For more on USD/CAD read the Canadian Dollar Outlook. In the US, weekly Unemployment Claims are expected together with the Trade Balance release. After four consecutive misses, Unemployment Claims are expected to improve to 560,000 jobless claims. It may well be worse. In the afternoon, indicators make way to speeches: FOMC members Dennis Lockhart (”16% real unemployment rate”) and Donald Kohn will speak. Timothy Geithner will testify about the controversial TARP program. Last but not least, Japan’s Final GDP will be release just before midnight. The second quarter growth of 0.9% is expected to be confirmed. That’s it. Happy forex trading!      |
| New Zealand Rates Unchanged – Kiwi Makes A Roundtrip Posted: 09 Sep 2009 02:49 PM PDT  The interest rate in New Zealand remained unchanged at 2.5%. In the official RBNZ rate statement, the first paragraph talks about recovery while the last paragraph hints of future rate cuts. The kiwi went down just before the statement only to go up. A similar knee-jerk reaction was seen with Non-Farm Payrolls. Such events are only for brave traders. Alan Bollard didn’t surprise with the decision to leave the rates unchanged. Here’s the negative sentence from the statement:
But the beginning is much better:
Read the full statement here. Confused? So is the kiwi.
NZD/USD fell from 0.6963 to 0.6930 in the minutes before the announcement. After the announcement it shot back up. To exactly the same place. This knee-jerk behavior, or V-shaped graph occurred in the recent Non-Farm Payrolls release in the US. Kathy Lien elaborates about it here. Earlier today, the kiwi flirted with the magical and round number of 0.70. During the second wave of dollar weakness, NZD/USD managed to reach 0.7007 before returning to around 0.6960 towards the rate decision – levels in which it traded yesterday, after the first wave of dollar breakouts. NZD/USD was the second currency pair to make a breakout, right after AUD/USD was the pioneer on Friday. NZD/USD is a relatively easy pair to trade. Though it isn’t my favorite, it still ranks high on my list of most predictable currencies. New Zealand is at the end of the world, and also the kiwi doesn’t usually enjoy the limelight.    |
| Second Wave of Dollar Weakness Began Posted: 09 Sep 2009 06:49 AM PDT  After yesterday’s dollar fall and breakouts, the greenback made a small recovery. At the start of the New York session, the dollar tumbles again. For some currencies, this means erasing the dollar’s gains. But for EUR/USD – this means new ground. The US dollar index is at new lows. Yesterday’s European session pushed most currencies out of long term ranges. EUR/USD was the strongest example, after AUD/USD and NZD/USD already showed the way with early breakouts. Also the Swissy and the loonie reached new ground, and only the Pound stayed behind. There were doubts regarding the breakout of EUR/USD. Will it hold? Is it real? After hovering in the new ground of around 1.45 but not too far from the support line of 1.4444, EUR/USD proved that the breakout is mighty strong. New Breakouts and Corrections EUR/USD now trades at 1.4560, leaving the old line behind. The target price of 1.4720 looks more real today. Casey Stubbs looks on the next steps in the path of EUR/USD. Also USD/CHF is at new lows, 1.0420. NZD/USD made small gains from yesterday’s peak, reaching 0.6997. The magical number of 0.70 scared it at the moment. Most currencies just returned to yesterday’s gains and didn’t advance: AUD/USD returned back up to 0.8640, USD/CAD is far from yesterday’s levels due to very weak Building Permits, and is now at 1.0780. The Pound is still behind, trading at 1.6530, far from 1.6660. US Dollar Index Lows Apart from the Euro (and the Swissy), the notable thing that makes this move a significant second wave of dollar weakness this week is the US Dollar Index. It went below 0.77 in a sharp move, breaking yesterday’s one year lows. Will these big waves of dollar weakness continue? What do you think?    |
| Forex Trading: How to Limit Your Risk Posted: 09 Sep 2009 06:17 AM PDT  Guest Post by ForexTraders.com If you’ve traded any security, you’ve heard the old axiom about keeping your losers to a minimum and letting your winners run. The latter part of that expression is self explanatory. Most forex traders know that they don’t want to cut their winning trades. Simply keep moving your stops up as the trade continues to move in your favor and you’ll be on course for locking some nice profits. Cutting losing trades before they turn into disasters is what many traders struggle with when they enter the world of online forex trading. Bailing on any trade, winner or loser, is an emotional thing for traders, especially rookies, but it should be mechanical, not emotional.
Keeping your losses to a minimum is perhaps the most important thing you’ll do on your road to learning forex trading. We’ve all heard the statistic that 90% of all traders fail and that number is so high because many traders don’t know how to keep their losses to a minimum. Minimizing losers is integral the development of any forex trading strategy. And when we say keep your losses small, we’re not necessarily talking about the amount of losing trades you have. We’re talking about the dollar amount of those losers. After all, it’s possible to take 10 forex trades and have seven losers and still end up profitable. Yet, the only way to do this is keep the losses small in dollar terms. So how does someone that has just taken on learning forex trading go about keeping his losses small? The first thing to do is understand the risk-reward profile of each trade. Let’s say you’re trading a heavily traded pair like the EUR/USD during an especially volatile time, maybe after unemployment data has come out. Here your risk-reward profile maybe a little different than during a calmer market period. If you see that risking $1 to only make $1, that’s not a trade worth taking. Optimal risk-reward would be risking $1 to make at least $2, if not $3. That’s just one part of the equation, though. Many seasoned forex traders will also set strict risk parameters for each trade they take. For example, a veteran trader that has $10,000 in his forex brokerage account might limit his risk to three percent on every trade. Meaning that if his trade goes against him by $300, he’s out, no questions asked. Think about that for a minute. If you’re trading a standard forex lot where each pip is worth $10 and you’re willing to lose $300 on the trade, that’s 30 pips so you’re giving the trade plenty of room to breath while still being fairly conservative. There’s no hard and fast rule for how much a forex trader should be willing to lose on a particular trade. If you’ve got $100,000 in your brokerage account, you can be a lot more liberal than you can with $10,000. The point is keeping your losses small is what’s going to keep you in the game.    |
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