Forex Crunch Forex Daily Outlook – September 17th 2009

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Forex Daily Outlook – September 17th 2009 Posted: 16 Sep 2009 10:59 PM PDT Many currencies are enjoying YTD highs against the beaten dollar this morning. The calendar is packed with events from all over the world. The Swiss rate decision might include an intervention in the markets. Let’s see what’s up today. Take a deep breath. The BOJ left the interest rate unchanged at 0.1%, low even for over zero-interest-rate-policy countries. Apart from the Overnight Call Rate, in their Monetary Policy Statement, the BOJ upgraded the forecast for the economy. The upcoming BOJ Press Conference should supply more data. USD/JPY is now trading at 91.10. British Retail Sales are expected to rise by 0.2%, after a 0.4%. At the same time, Consumer Inflation Expectations are also due. Later in Britain, CBI Industrial Order Expectations are expected to stay negative, but rise from -54 to -49. GBP/USD is now trading around 1.65. Note that the Pound crosses, such EUR/GBP are not so favorable for the Pound. For more on GBP/USD, read the British Pound Outlook. The rising EUR/USD, now at 1.4740, will expect the Trade Balance firgure later on, which is expected to show a surplus of 1.2 billion. For more on this week in the Euro, read the EUR/USD Outlook. For an updated technical analysis for the EUR/USD, read Casey Stubbs’s latest analysis. It’s Canada’s turn for the CPI release. It’s expected to rise by 0.2%, after falling last month. Core CPI is expected to rise by 0.1% after not moving last month. Later in Canada, the Leading Index is expected to show a rise of 0.5%. The Canadian dollar is making nice gains. For the weekly overview, check out the Canadian Dollar Outlook. For an updated technical analysis, read James Chen’s latest piece. In Switzerland, it’s time for a new Libor Rate. Many forex traders fear that the SNB will intervene in the markets and send USD/CHF upwards. It’s currently trading at 1.0303, very low. The SNB will state their policy via the SNB Monetary Policy Assessment. For more on the Swissy, read the USD/CHF Outlook. In the US, the falling dollar will meet two housing figures: Building Permits are expected to rise from 560 to 580K. Housing Starts are expected to rise from 580K to 600K. Amidst fears regarding the job market, Unemployment Claims are expected to rise from 550 to 554K. Also in the US, the Philly Fed Manufacturing Index is expected to rise from 4.2 to 8.2 points. Happy forex trading!

Get Carried To Profits With The Carry Trade Posted: 16 Sep 2009 06:34 AM PDT Guest Post by ForexTraders.com If you’re going to learn about just one market-moving catalyst when it comes to foreign exchange trading, history shows it should be interest rate decisions by the world’s major central banks that move currency market more than any other news event. The reasoning behind this is pretty simple. The forex market typically views a currency from a country with high interest rates as more valuable than a currency from a country with low interest rates. That may be simplifying things a bit, but the fact is forex traders need to know when interest rate decisions are coming because being unprepared can mean you miss some great pip-making opportunities. One way to take advantage of interest rate decisions and more importantly, discrepancies, is by using the carry trade. Before you start executing carry trades, you obviously need to know what a carry trade is and if your forex broker will allow you to put  a carry trade on. Many of the best forex brokers allow their clients to use this strategy. After all, forex brokers make money on every trade you place and they’re not going to discourage you from using one strategy over another. With that, let’s take a more detailed look at exactly what a carry trade is. As we said earlier, the primary objective of the carry trade is to exploit differences in the interest rates of two countries. The most often used pairs in the carry trade are the Australian Dollar/Japanese Yen (AUD/JPY) and the New Zealand dollar/yen (NZD/JPY). The carry trade has been around for more than two decades, but only recently joined the commonly used forex lexicon. The reason for this is because the Bank of Japan has kept interest close to zero for more than a decade while the Reserve Banks of Australia and New Zealand have raised their interest rates to combat inflation in their rapidly-growing economies. Other pairs to carry trade with are GBP/JPY and GBP/CHF, but only when interest rates are high in the U.K. Essentially, a carry trade means you use a low-yielding asset like yen to buy a high-yielding asset like the Aussie dollar. Now the best part of the carry trade is you don’t even need the currencies in the pair to move because you’re earning interest for as long as you hold the trade. Think of your carry trade as high-yielding savings account. This how you garner interest. Let’s say Australia’s interest rate is five percent and Japan’s is one percent. Take the difference, four percent, and multiply it by the value of your trade. Then divide that number by 365 (the number of days in a year) and the result is the amount of interest you’ll earn on a DAILY basis. You could earn more interest in a week-long carry trade than you could in a year with a traditional savings account, so as you can see, the carry trade is a powerful tool that all forex traders should have in their arsenal. So don’t ignore the carry trade and make sure you’re trading with one of the best forex brokers that can help you with your carry trading strategy.

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