Japan sees investment opportunities in Asia, US

Japanese companies see plenty of opportunities to make acquisitions and investments in Asia and in environmental business in the United States, the Japan External Trade Organisation JETRO said on Friday.But the strong yen and credit crunch mean investment into Japan is likely to continue falling, Yasuo Hayashi, chairman and CEO of JETRO, which promotes trade and investment between Japan and the rest of the world, told Reuters.Here's the compiled news excerpt from Forexpros.com.
Hayashi said India would offer major investment opportunities because the authorities lacked basic infrastructure.

Japanese companies were also well placed to pick up investment projects in China, especially in the environment sector, he said in an interview.
"Japanese business is looking very eagerly at business in China and sales to China of environmental equipment," he said.

Even in the United States there were opportunities, despite the economic crisis, because the new administration of President Barack Obama wanted to invest in the environment sector, an area of expertise for Japanese firms, he said.

Japanese companies will also look for investment opportunities in Southeast Asia, including plans to construct an industrial corridor linking India and Vietnam, and in commodities-rich countries in Latin America and Africa seeking to develop their resources, he said.
The long-term approach of Japanese business meant it was well placed to exploit opportunities even when commodities and energy prices were low, he said.

"For companies that are cash-rich, strong and able, now is a good opportunity," he said.Because many Japanese companies have relatively strong balance sheets after restructuring following Japan's financial crisis, they are well placed to make foreign acquisitions as well as investments, he said."Many find it a good opportunity to purchase good foreign companies which are in trouble at a reasonable price," he said.

As a result, Japanese foreign direct investment (FDI), which fell 4.7 percent year-on-year in the first 11 months of 2008 to 4.48 trillion yen, could increase this year, he said.
But FDI into Japan would continue to decline, after falling 13.5 percent in the first 11 month of 2008 to 6.43 trillion yen, reducing the outstanding stock of inward investment in the country.Hayashi said investment to Japan was falling because the financial crisis made it difficult for investors to raise capital and the strength of the yen was also a deterrent.

The poor state of the Japanese economy, which suffered a record 9.6 percent fall in industrial output in December, also discouraged inward investment, he said.

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World crises are deepening

Somber figures from Japan,the US and other parts indicate World crisis are deepening. While Japan sank deeper into recession with industrial output tumbling and inflation slipping to almost zero, key U.S. data later on Friday is also expected to mirror the worsening global financial crisis.Here are news excerpts from Forexpros.com.

Japanese economy worsening:
Japan's industrial production fell a record 9.6 percent in December, while annual core inflation slowed to a mere 0.2 percent. Rising unemployment, slowing household spending and no improvement in the industrial outlook added to fears that Japan was flirting with deflation and would post a horror GDP figure in February if exports do not bail it out. Wider Asian stocks were down 1.1 percent, the first daily drop in a week. Those falls followed similar declines on Wall Street after record monthly U.S. unemployment figures.Japanese companies including the Toyota Motor Corp, Sony Corp along with rival Nintendo Co, Ford Motor Co and Eastman Kodak Co, provided daily evidence of how deeply the global crisis was biting, costing governments trillions of dollars and threatening millions of jobs in the company.

More bad news is expected in the United States on Friday:
Economists think the U.S. Commerce Department will say gross domestic product, the broadest measure of U.S. economic activity, shrank at an annualized 5.4 percent in the fourth quarter even as the recession in the US is getting hold. As more jobs and company wealth were lost, Obama railed against "shameful" Wall St bonuses paid to executives at a time when taxpayer money was being used to shore up the crumbling financial system. Four U.S. airlines, led by Continental Airlines Inc, also posted losses, while Boeing Co shares fell 5.9 percent after it said it planned 10,000 job cuts

The picture in Europe is hardly any sunnier:
German unemployment rose almost twice as much as expected in January, euro zone economic sentiment hit a new low, while hundreds of thousands of French workers staged a nationwide strike demanding more was done to protect jobs and wages.

Little appetite:
Australian private sector credit shrank in December for the first time since 1992 as foreign banks cut lending to local companies.
Reserve Bank of Australia figures showed that total credit fell 0.3 percent in December, well below a forecast 0.5 percent rise, fuelling expectations the RBA would announce another hefty interest rate cut next week. Across the Tasman Sea, the once-favored New Zealand dollar fell to another six-year low after the central bank said interest rates would likely have to be cut further, a day after the benchmark rate was slashed by 150 basis points.

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Intraday Currency Pair Update

Dear traders
Here’s the daily intraday Update for EUR/USD, EUR/GBP and GBP/ USD for Thursday 29th January, 2009 from AVAFX.

EUR/USD intraday: the downside prevails.
Pivot: 1.3210.
Our Preference: SHORT positions @ 1.32 with 1.304 & 1.2975 in sight.
Alternative scenario: The upside breakout of 1.321 will open the way to 1.333 & 1.345.
Comment: the pair has broken below its ST bullish channel lower boundary and remains under pressure, the RSI is turning down.
Trend: ST Ltd Upside; MT Bearish
Key levels Comment
1.345** Intraday resistance
1.333** Intraday resistance
1.321*** Intraday pivot point
1.311 Last
1.304*** Intraday support
1.2975** Intraday support
1.29*** Intraday support


EUR/GBP intraday: rebound expected.
Pivot: 0.92
Our preference: Long positions above 0.92 with targets @ 0.9315 & 0.938 in extension.
Alternative scenario: Below 0.92 look for further downside with 0.9125 & 0.905 as targets.
Comment: the pair is breaking above its declining trend line, the RSI is on the upside.

GBP/USD intraday: under pressure.
Pivot: 1.4255.
Our Preference: SHORT positions @ 1.4245 with targets @ 1.4015 & 1.39.
Alternative scenario: The upside penetration of 1.4255 will call for 1.4375 & 1.455.
Comment: the pair stands within a ST bearish channel, the RSI is on the downside.
Trend: ST Consolidation; MT Bearish
Key levels Comment
1.455** Intraday resistance
1.4375** Intraday resistance
1.4255** Intraday pivot point
1.4129 Last
1.4015*** Intraday support
1.39** Intraday support
1.375*** Intraday support


My site at Multiply Stevenson15
Multiply Forex Group Forexupdates
Visit Google Group Forexupdates

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US on Brink of Deflation

For the first time during the credit crisis, the Federal Open Market Committee’s statement yesterday indicated concern about the worldwide forex economy weakening “significantly,” with “some risk” that inflation would remain below ideal rates. The Fed signaled it’s moving closer to buying long-term Treasuries and expanding its $600 billion program to buy home-finance debt,reported Bloomberg.
Federal Reserve officials warned of a prolonged global economic slowdown that may push the U.S. to the brink of deflation.
The dollar has rallied sharply following the FOMC’s monetary policy announcement, surging from 1.3280 against the euro to just above the 1.31-figure and jumping to 90.75 versus the yen.Following is related news from Forexnews.com.

2009 Monetary Policy Remains Unchanged:
The Fed left monetary policy unchanged at its current range of 0%-0.25%, saying that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time”. The FOMC delivered a somber assessment of the economy; attributing the weakness to steep declines in industrial production, housing, and employment; thus prompting a retrenchment of spending by consumers and businesses.

Recovery Possible:
Although the Fed anticipates a rebound in the economy later in the year, it deems the downside risks as significant. Further, given the limited scope the Fed has to shift interest rates lower, it reiterated its stance to expand the quantity of agency debt and mortgaged-backed securities purchases to support the mortgage and housing markets. The FOMC also anticipates inflation pressures to remain subdued over the coming quarters.

Euro Withdraws:
US economic data is the focus for the Thursday session.The euro has retreated sharply following the FOMC’s policy statement. Traders are looking ahead to Germany’s January unemployment data, with the unemployment rate creeping higher to 7.7% from 7.6%.Visit my Google Group ForexUpdates for intraday currency pair updates.

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Tough time ahead for investors with the FOMC meeting beginning today

Investors will have a tougher time assessing Federal Reserve policy when officials today replace interest rates with emergency credit programs as their main tool for steering the economy. That means analysts can’t base their predictions for Fed decisions on a simple interest rate benchmark for the first time since the FOMC began releasing policy statements in 1994.The FOMC will release a statement at about 2:15 p.m (GMT) on in Washington at the conclusion of a two-day meeting.

The FOMC statement in recent years has followed a clear structure: After a decision on the main interest rate came a paragraph on the economy, one on inflation and another one on the policy stance. The release usually ran about 100 words, fitting on a single page.
Since October, US interest rates have been reduced from 2% to 0.25%. With the FOMC meeting starting on January 28th and Obama finally in office, investors’ attention is turning to policy decisions and the Fed’s response to the crisis.s
According to Reuters FEDWATCH, there is a 75% chance that interest rates will stay at 0.25% and a 25% chance that the rates will drop to 0% for the first time in USA history!
In this scenario, the USD is expected, by some analysts, to decline substantially against all other currencies.
Crude oil inventories will also dominate the calendar on the 28th, as the market will watch how big the slide in demand becomes (all eyes turn to China).
The combined two events are expected to have a significant impact on price action on Wednesday, and might provide big market movements and excellent profit opportunities!

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Yen falls for the second day; Pound on a high

The yen weakened for a second day against the dollar and the euro as gains in stocks reduced demand for the currency as a haven from the financial crisis. Japan’s currency also fell against the Australian dollar and the Brazilian real as measures of bond risk declined after Barclays Plc said it doesn’t need to raise further capital because revenue increased last year. The British pound and the euro strengthened as speculation eased that losses will widen at European banks.
“We’re seeing an improvement in sentiment because it appears Barclays has avoided a crisis,” said Akio Shimizu, chief manager of foreign-exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed lender. “People will trim their bets on declines in the euro and the pound. There’s a bias for the yen to weaken.” The yen declined to 89.50 against the dollar as of 1:29 p.m. in Tokyo from 89.10 late yesterday in New York. Japan’s currency fell to 118.46 per euro from 117.51. The euro climbed to $1.3236 from $1.3189.
Sterling on the other hand touched a one-week high of $1.4080 after Barclays said yesterday it retains more than 17 billion pounds ($23.9 billion) even after it wrote down another 8 billion pounds of bad loans. The currency rose to $1.4059 from $1.3993.

Britain’s currency plunged to $1.3503 on Jan. 23, the lowest level ever since September 1985, after the government announced a second bank bailout in three months and a further injection of funds into Royal Bank of Scotland Group Plc.

Recommendations:
UBS recommends selling the euro with a target of $1.25 and an automatic buy order at $1.3450 to limit losses, according to the report. The dollar gained 5.6 percent against the euro and 3.9 percent against the pound this month, extending rallies of 4.4 percent and 36 percent last year, respectively, as investors fled higher-yielding assets and sought protection in the world’s reserve currency.

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World News Update

Here is the world news digest from Bloomberg.com.President Barack Obama signaled that he would toughen restrictions on and oversight of banks as part of a fresh plan to aid the battered industry.
Obama blasted the banks yesterday over reports that they’ve spent money renovating offices after receiving billions of dollars from the government and vowed they would be held accountable for any aid they receive in the future.
The tough talk seemed designed to build support for a rescue plan that aides say Obama will roll out soon by reassuring lawmakers and voters that the administration will keep close tabs on money it hands out. Pressure for a plan is building after the Standard & Poor’s 500 Index fell for the third straight week, in part because of concerns about the health of the banks.

India's Prime Minister Manmohan Singh will undergo heart bypass surgery here for a second time as the ruling Congress party prepares for elections that must be held by May and the government battles an economic slump.
Singh, 76, will have the operation today at New Delhi’s All India Institute of Medical Sciences, the government said in a statement yesterday.
Singh’s heart problems may complicate election preparations and his government’s efforts to strengthen security following last November’s terrorist attacks in Mumbai that killed 164 people. He replaced the home minister after the assault and established a new federal agency to coordinate counter terrorism.
“The prime minister’s absence will definitely have some impact on the campaign,” said N.R. Bhanumurthy, an economist at the Institute for Economic Growth in New Delhi. “The Congress party would have banked upon him to sell their successes.”
Foreign Minister Pranab Mukherjee will deputize for Singh in his absence, NDTV 24x7 reported, citing officials it didn’t name. Mukherjee said that he planned to visit with Singh and had already met Congress party leader Sonia Gandhi, without elaborating.
“These are normal, routine things, the government is in place,” Mukherjee told reporters in New Delhi today, when he was asked about officiating as acting prime minister.

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Emerging countries currencies can continue to lose on risk

Emerging-market currencies will extend losses in the first quarter as investors’ appetite for risk worsens amid the global recession, according to Brown Brothers Harriman & Co. in New York,reported Bloomberg.com.
“Markets are only now beginning to fully appreciate the heightened risks to the global economic outlook and emerging markets remain vulnerable to class-wide waves of selling,” according to a weekly outlook report from Brown Brothers issued yesterday. “We remain most negative on emerging Europe, Middle East and African currencies due to poor fundamentals and are most constructive on Asian currencies in this environment.”
Investors should continue to buy dollars on dips against emerging-market currencies, the report said.
China on the other hand refuted U.S. President Barack Obama’s claims that China is manipulating its currency because economic conditions for the Yuan to gain “don’t exist".
The global recession has narrowed China’s trade surplus in the past few months and reduced inflows of dollars, cooling demand for the nation’s currency, Hua, chief economist at China Construction Bank Corp and formerly a senior economist at the World Bank, said in a telephone interview. China Construction is the nation’s second-largest lender.
“Naturally the conditions for the Yuan’s appreciation don’t exist any more,” he said. “The Yuan can’t be strong also because the dollar has much strengthened versus other currencies in the past few months.”
The new U.S. administration believes China is “manipulating” its currency, Timothy Geithner, Obama’s nominee for Treasury secretary, told lawmakers yesterday. The Yuan’s appreciation halted in July, after the currency gained 21 percent since a dollar peg was scrapped in July 2005.“I was very disappointed and surprised at the remarks,” Hua said. “We are concerned about rising trade protectionism in the U.S.”

China’s currency fell 0.08 percent to 6.8429 per dollar as of 1:08 p.m. in Shanghai, from 6.8371 yesterday, according to the China Foreign Exchange Trade System.

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Rupee and Asian Market update

Volatility in India’s rupee rebound from a four-month low as the currency declined on sales of the nation’s assets by overseas funds,analysts from Bloomberg reported.
A measure of India’s exchange-rate swings fell to the lowest since September this week, approaching levels before Lehman Brothers Holdings Inc. filed for bankruptcy, even as the rupee headed for a monthly loss. The deepening global economic slump can prompt foreigners to dump riskier emerging-market assets, increasing rupee volatility and losses,observed one analyst.Asian currencies including the rupee look set to decline against the dollar as investors remain risk averse amid the deteriorating global economic situation with the spot rupee market showing the way for options.

The rupee lost 0.7 percent this month, adding to the 19 percent slump since last year, as global funds sold $728 million more Indian stocks than they bought. All of the 10 most-active Asian currencies outside of Japan fell against the dollar this month.The rupee closed at 49.13 per dollar in Mumbai yesterday and could weaken to 50 in the coming weeks. Implied volatility on one-month dollar-rupee options was at 14.75 percent yesterday, the lowest since Sept. 26, Bloomberg data show. The gauge of fluctuations touched 33 percent on Oct. 27, the highest in at least nine years. Traders quote implied volatility, a gauge of expected swings in exchange rates, as part of option prices.

India’s Sensitive Index (Sensex) fell 6 percent in two days after Royal Bank of Scotland Group Plc forecast on Jan. 19 the biggest loss in U.K. corporate history, fueling concerns that mounting bank losses will renew risk aversion among global investors.
More excerpts from Forexpros.com. Asian markets overall opened slightly above the breakeven line, helped by the gains seen in the U.S. session. However, incoming data from the Asian economies look very downbeat.

The dollar traded in risk acceptance mode as stocks began their rally at about 11:00 EST, falling 0.78% on the euro, 0.27% to the pound and 1.77% against Australia's currency. The yen jumped after options expired at 10:00 EST, and the dollar ended up losing 0.40% for the day.

Crude oil was pulled higher by the gains in the U.S. stock market. Crude oil for February delivery gained $0.45 to $44.00.

Gold followed the commodities market closely, especially crude oil. Bullion for immediate delivery added $2.50 to $852.50.

Previous European trade: In Europe, the U.K. Ftse fell 31.52 points (-0.77%) to 4,059.88, while the German Dax rose 21.30 points (0.50%) to 4,346.77.

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Asian stocks continue to slump

Asian stocks declined for a second day, led by financial companies and metals producers, on concern mounting bank losses worldwide will deepen the global recession and squeeze demand for the region’s commodities.The following is excerpts from forex site Bloomberg.com.

Worldwide effects:
HSBC Holdings Plc, Europe’s largest bank, lost 3.7 percent in Hong Kong amid speculation banks globally need to bolster capital. BHP Billiton Ltd., the world’s biggest mining company, fell 2.1 percent after saying it will take a charge after closing a nickel mine. DBS Group Holdings Ltd., Singapore’s No. 1 lender, led the city’s equities lower after the government cut its economic forecast for the second time in three weeks.
It’s uncertain how big loan losses at the banks will be as the economy continues to deteriorate. The average valuation of companies on the measure has fallen about two-fifths in the past year to 10 times reported profit. Financial stocks led U.S. equities lower yesterday as Barack Obama was sworn in as president. The Dow Jones Industrial Average declined 4 percent, its biggest Inauguration Day decline. The concern is that banks around the world are short of capital said one analyst.

Leaders pledge action:
Australian Prime Minister Kevin Rudd said yesterday his government will take “whatever action is necessary” to stabilize financial markets. French President Nicolas Sarkozy also agreed to provide more funds to the country’s biggest lenders; a day after the U.K announced its second financial rescue plan in three months.

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Asian stock falls on concerns of recession deepening

Asian stocks and U.S. futures slumped since yesterday after the U.K. widened a rescue plan for Royal Bank of Scotland Group Plc, sparking concerns that more companies will need bailouts as the global recession deepens. Europe’s Dow Jones Stoxx 600 Index slid 1.7 percent yesterday, led by RBS after it forecast a loss of as much as 28 billion pounds ($40 billion) this year. Futures on the Standard & Poor’s 500 Index fell 1.6 percent today, pointing to declines when U.S. markets reopen following yesterday’s holiday for Martin Luther King Day. Barack Obama’s inauguration later today as the 44th president of the U.S. will likely be a focus for U.S. traders.
The yen rose to a record against the pound and gained versus the euro on speculation credit-market losses will widen after the U.K. increased aid to banks, curbing demand for higher-yielding assets funded in Japan’s currency.
The British pound fell to the lowest level versus the dollar in more than six years on concern the U.K. government will have to take full control of Royal Bank of Scotland Group Plc after announcing a bank bailout. The Australian and New Zealand dollars slumped against the yen as financial stocks led a decline in Asian shares.
In world news today even as Barack Hussein Obama, 47, places his left hand on the Bible of Abraham Lincoln to take the oath of office on the steps of the U.S. Capitol, the Lincoln Memorial will be within his gaze.

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Monday Morning In Asia Forex

Here's the combined news excerpts from the Bloomberg and the Dowjones.com.The dollar rose against the yen in Asian Forex Market Monday as players' sentiment toward the unit recovered slightly on positive expectations for the U.S. government's countermeasures to deal with the financial crisis. Players said the greenback may strengthen against the yen further this week, but at a gradual pace, and warned its downside risks still remain over the longer term. The yen fell to a one-week low against the euro and declined versus the dollar on speculation government efforts to rescue ailing banks will revive global credit markets.

President-elect Obama’s inauguration Tuesday can be expected to be positive for the dollar only in the short run. Dollar also rose on the US treasury’s statement that it is planning to bring in extra $20 billion into the Bank of America. Other dealers are apprehensive about dollars performance as Japanese exporters have recently been aggressively selling the greenback for account settlements.


For the rest of the global day, dealers said the greenback may not raise much ahead of Martin Luther King Jr. Day in the U.S on 19th January. Meanwhile, the euro's moves ahead will probably depend on the performance of equity markets worldwide. On Monday, it was higher against the dollar and the yen.

If stock prices rise further, the euro will likely gain against the dollar and yen. Usually when stock prices climb, players tend to be more aggressive about buying assets with higher returns, which often involves euro buying.

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Obama Dedicated to Creating "Green Jobs"

President-Elect Barack Obama touted his economic recovery program at a speech in Bedford Heights, Ohio, yesterday. With only four days until he becomes president, Obama is focused on hitting the ground running and building support for his massive fiscal stimulus.

His plan's dedication to green energy was the focus of the president-elect's remarks. The location of the speech - at Cardinal Fastener & Specialty Company which produces parts for wind turbines - was fitting for Obama's focus on growing green jobs.

"The need for this action has never been more urgent," Obama said in prepared remarks. "We've started this year in the midst of a crisis unlike any we've seen in our lifetime."

He noted that nearly 2.6 million jobs were lost in 2006 alone, a trend that most economists predict will continue for some time. Obama once again warned about the dangers of not passing a stimulus, warning that "this recession could linger for years - and America could lose the competitive edge that has served as the foundation for our strength and standing in the world."

His plan would create or save three to four million jobs, with 90 percent of the creation in the private sector, Obama said.
The downturn and credit crunch are severely threatening energy projects like wind power, Obama warned. Without financing half the planned wind projects in 2009 could be abandoned, he said.
The rising deficit, projected at $1.2 trillion for 2008, reflects massive government intervention in the economy. Deficits will remain over $1 trillion for several years, Obama warned, with his economic recovery plan estimated at $800 billion.

From rttnews.com

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Asian currencies climb, Yen deteriorates

The yen fell for a second day since yesterday against the euro on speculation stock gains and measures to stabilize the U.S. financial forex system will encourage investors to buy higher-yielding assets funded in Japan’s currency.
The yen also weakened versus the Australian and New Zealand dollars and South Africa’s rand after the U.S. Senate voted to release the second half of a $700 billion financial rescue package to U.S. President-elect Barack Obama
Against the Australian dollar, the yen slipped to 60.56 from 59.55 late yesterday in New York. Japan’s currency also declined to 49.12 versus the New Zealand dollar from 48.28. The yen weakened to 9.1044 per South African rand from 8.9936. Benchmark interest rates are 4.25 percent in Australia, 5 percent in New Zealand, 11.5 percent in South Africa and 0.1 percent in Japan.
Asian currencies strengthened, led by South Korea’s won and Indonesia’s rupiah, as stock-market rebounds in the U.S. and Asia helped shore up confidence in riskier assets.

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Forex Fundamentals

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Asian Market Morning Today

Here is the combined forex news excerpts from dowjones.com and rttnews.com
The euro and dollar were little changed against the yen in Asia Thursday, although they appeared poised to resume recent their downtrend as players stood on the sidelines ahead of the European Central Bank's rate decision later in the day.

"Because global stock prices are falling and economic indicators (from the U.S. and Europe) are unfavorable recently, many players want to sell" both the euro and dollar, said Yuji Saito, head of FX Group at Societe Generale.

But players were still in a wait-and-see mood during Asian trading hours because they want to get a better idea of how equity markets will react to the ECB's policy rate decision.
Here’s a related piece on the ECB cutting down the interest rates from Forexnews.com
As the economic contraction is worsening worldwide, the European Central Bank (ECB) is expected to cut rates again this week by 50/75 basis points. Timing is right with inflations at such low levels. With such a volatile environment, the Federal Reserve will keep rates near 0 for most of 2009, while the Obama's administration is expected to implement a large stimulus package soon after taking power. However, the effort will not be painless. The effects of the fiscal and monetary incentives will be seen only in the second part of the year and the new government will relay on the financial markets to pay for enormous amount of debt. As a result, inflation should again trend much higher, once the economy will start to move again, and this will come at the expenses of the U.S. dollar

In Asian trading Thursday, the impact of short-term-focused players' euro and dollar selling was canceled out by buying from European and other non-Japanese banks, some dealers said. "The euro and other units have been relatively stable in Asia these days due to European and other banks' debt finance," said Hideki Amikura, a senior dealer at Nomura Trust and Banking.

As regards the Indian market on Thursday is trading sharply lower on account of profit taking and weak cues from overseas markets following a rally on Wednesday. Stocks across the sectors are coming under selling pressure. Realty, IT, banking, metal and oil/gas are leading the decliners

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Dollar slumps against Pound and Euro with Retail Sales decline

Here's the top story of the day on forex.The dollar relinquished its recent gains versus the majors, tumbling by over four big figures against the pound to 1.4960. The forex economic data released earlier in the session was mixed, with durable goods, factory orders, pending home sales and non-manufacturing ISM reported in the Tuesday session.

The dollar declined from a five-week high against the euro as well on the speculation reports this week which show U.S. retail sales and manufacturing has weakened as recession continues to spread through the world’s largest economy. The Australian and New Zealand dollars rose from four-week lows on speculation a rebound in Asian stocks will give investors the confidence to buy higher-yielding assets

Although the calendar for today that is Wednesday is light, traders will closely scrutinize the December ADP private sector payrolls figure – which is estimated to post a loss of 475k jobs, deteriorating sharply from a month earlier at a loss of 250k jobs. The report will be assessed as a proxy to Friday’s key non-farm payrolls figure and unemployment rate, which are seen at -500k and 7.0%, respectively. Further, the unemployment rate will be at its highest level since 1993.

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Euro deteriorates to One-Month Low

The euro fell for a third day against the dollar, impending a one-month low, as traders furthered bets the European Central Bank(ECB) will reduce interest rates, decreasing the appeal of the area’s assets. Euro-the 16-nation currency was close to the lowest in a month against the Japanese yen. NZD also fell the most in three weeks .euro is expected to fall further, according to experts. The forex market is currently focusing on how much the ECB rates will fall as compared to the rest central banks.

EUR/USD Intraday outlook for today

Support for the Day: - 1.3308 and 1.3285(main), where alteration is possible. Break could give 1.3264, where alteration also might be possible. Then follows 1.3233. Break of the concluding would end result in 1.3204. If a strong desire, we would see 1.3180. Carry-over will give 1.3163 and 1.3142.

Resistance for the Day: - 1.3503, 1.3544 and 1.3590(main). Break could give 1.3633, where an alteration is possible. Then comes 1.3667. Break of the concluding would outcome in 1.3682. If a strong desire, we could see 1.3736. Continuation will give 1.3770.

The euro is predicted to decline to $1.25 by next week.

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Getting the right Forex broker

Some more factors, continued from the last post,need to be considered while researching for a reliable forex broker.

Leverage Offered;
In forex leverage is crucial as the price deviations which is the actual source of profit, are simple fractions of a cent. Leverage, in forex as elsewhere, the ratios between the total capital available to the real capital, is what the broker lends the trader for trading. A ratio of 200:1 would mean the broker lends $200 for every $1 of real capital. Forex Brokers may provide leverage as high as 250:1, however, lower leverage translates into a relatively lower risk of lower margin call the trader may need to pay. Again, lower leverage will mean lower returns on the investment as well.
The best idea here is that if you have limited capital, get a forex broker who offers the highest leverage.


Types of accounts:
Many forex brokers let you open more than two types of accounts. The mini account usually can be opened with a deposit as low as $250. A standard account can be opened with a capital of $2,000, which mostly offers a variety of leverages. With Premium accounts the capital is obviously significant and different amounts of leverage can be used, not to mention additional services and tools.
The forex broker here needs to compliment our capital by offering relative leverage, tools and services,.

Other factors:
Forex Brokers may resort to “premature buying and selling” near decided points. The only way of finding out honest brokers is through fellow traders. Forums come in handy in such situations to discuss about brokers who are known not to commit such shady acts.

Similarly, trading with borrowed money means the broker can liquidate the position on a low margin call, which can prove dear to us a trader. Online discussion platforms can prove a good place again to discuss forex brokers.

Forex is increasingly getting people interested. That however cannot substitute for the research we need before zeroing in on a broker. As also for working out a strategy that’s best for us. The top way remains that we try out forex on a demo account before gong live.

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Choosing a broker

Deciding upon a forex broker is one of the biggest trading decision a trader/investor can make.While choosing broker, certain common factors can be kept in mind.

Low spreads
The spread calculated in pips is of course the price difference when a currency is bought and sold. This is how Forex brokers make money –they don’t charge commission –it’s the difference they earn. While comparing forex brokers thus it’s the difference in pips that counts as important as the commission would. The significance of spreads cannot be over emphasized.
Brokers offering Lower spreads will save us money.

Regulation
Most Forex brokers are tied to banks or other lending for the capital to provide the leverage they do. Forex brokers need to be registered with the Futures Commission Merchant (FCM). Forex brokers are also regulated by the Commodity Futures Trading Commission (CFTC). Other relevant financial details and statistics should be available from their website. Its best if the broker is backed by a reliable institute.

Tools and research
Almost all Forex brokers provide the clients with trading platform in at least eight languages with essential features such as technical analysis tools, real-time charts, news and data and many a times also support for trading systems.
It’s a good idea to always check out free trials before zeroing in on a broker. Needless to say the brokers with all the tools and extensive research, commentaries, economic calendars and other suitable features should stand out.

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Indicators for Forex Trader

Industrial produce

Industrial production report, as the name suggests is the report based on the production and its changes of factories, industries, utilities and mines across the country. The report also shows the optimization of their utilization- the degree to which their capacities are being used.
Forex Traders who rely on this indicator are mostly concerned about the utility production which is highly volatile because the utilities industries are heavily influenced by changes in weather. Weather changes can cause revisions between the reports which consequently can cause volatility in the currency of the country.


Consumer Price Index
The CPI is the most widely known indicator which measures the consumer good price change over more than 180 different categories. The CPI report is often compared with the export report to find out what profit (or loss) the country is making on its goods and services. Closely related other indicators, which can be helpful to forex traders, can be the purchasing managers index (PMI), the employment cost index (ECI), durable goods report, and the hosing stats.

Exports are always well scrutinized by the forex traders in any case since the export prices often change with any gain or loss on the nation’s currency.

All the above and previously mentioned indicators can prove to be a valuable resource to the forex traders when applied judiciously.

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Economic Indicators in Forex

Forex traders depend on the same two essential analysis- the fundamental and the technical. Technical analysis are used much for the same purpose-price is supposed to mirror all news while the charts become the matter of analysis.
Fundamental analysis looks more on the inherent value of the investment and takes into consideration the economic conditions that influence a nation’s currency. Some major fundamental factors that affect the value of a currency in forex:


Economic indicators
Economic indicators comprise of the reports given by the government or even by a private association that contain details about the nation’s economic growth and development. Apart from these other factors and policies are also bound to have a direct /indirect influence on the nation’s development.

Such reports are published at regular intervals providing indications and insights into the nation’s improvement (or decline). Forex and stock market is directly influenced in price and volume in case there is any departure from the standard.

Economic reports are good source of vital statistics such as the unemployment figure, housing, etc. Needless to say each indicator serves its own purpose- some of the more important can be outlined as:


GDP or the Gross Domestic Product
GDP is by far the most comprehensive indicator of the country’s economic health. GDP is the market price of all the products and services produced in a country in one financial year. GDP can and does a double edged sword as so most investors consider the preliminary and the advance reports released in the months before the GDP figures come out.


Retail Sales
Retail sales reports compute the total sales receipts of all the retail stores of the country. The measure is gotten from a varied sample of the stores around the country. The retail sales reports is practical in that it is timely and measures the consumer spending patterns that takes into consideration the seasonal variables. Retail sales reports are used to forecast the performance of other lagging indicators. The reports are good for determining immediate direction of the economy. Retail sales reports are almost equivalent to the sales activity of a public company.

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More about Orders used in Forex Trading

This post continues from the last post, more about certain other orders used in forex.
Stop Limit Order
Stop limit order, as the name suggests, is a mix of the stop and the limit order. Stop limit order identifies a stop price to a forex trader while the limit price is where the position is closed. When the stop is selected, the order price becomes the limit order. Stop Limit order is beneficial while the trader will want to sell or buy a breakout, however wants to manage the price received or given.

Market on Open (MOO)
This type of order gets executed at the open price of the market. Usually because the forex market is volatile at the open it gets hard for the forex trader/broker to get the correct price therefore the deal may differ from the price at which it opened.

Market on Close (MOC)
This type of order gets executed, obviously, at the closing of the forex market. In some of the markets, especially in the dynamic ones, the real close price may differ from the deal price.


Market If Touched (MIT)
This type of order is not accepted by all types of forex exchanges. Similar to the stop order, this order gets executed when the market rate touches the MIT price we have selected. There it becomes the market order.


Day Order
Day order automatically ends at the close of the day. If an order to sell or buy has been placed for a particular security at a price and it did not fill the order, the order gets terminated at the close of the forex trading day.

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Placing Order in Forex Trading

Placing the correct order is probably one of the most significant parts of forex trading after deciding upon the right strategy. It is important to understand and put the right orders when we trade.

Limit order
Limit order is used to enter and exit the trades. It refers to the price the forex trader is ready to pay or accept. A buy limit order will be put when the order is placed the below the prevailing market price to state the highest most price the trader is ready to pay. Likewise, the sell limit order placed above the market price and it indicated the lowest price the seller is ready to accept.

When the forex trader already has a long position in the market, he can use the limit order to notify the broker the price at which he wants to sell once the targeted price has been reached. Limit order is also used to tell the broker the price at which the trader wants to make an entry in the market. If XYZ Company is trading at 44.50 and the forex trader wants to buy that at 42.00 then he can put the buy limit order at that rate.

Market Order
Market order informs the broker whether to buy or sell at the prevailing market price. This is most preferred in fast markets movements or while the forex trader wants to guarantee a position and wants to defend against losing a chance. Here the broker tries to buy or sell at the prevailing market price.


Stop loss order
Stop loss is of course the one of the most popular and important orders used. Stop loss order can make the forex trader make a new position, restrict the loss on an open position, to defend a profit. Stop order identifies a rate where an order the trader wants the trade to be executed. Buy stop order will be place over the prevailing market price whereas a sell stop, will obviously, be places under the current market prices.
When the stop order is reached, the order is executed. With a long position, the sell stop order is placed under the market rates to restrict the loss. As the market moves further up the order can be extended to defend the profit. This is referred to as the “trailing stop” order.
The sell stop order can also be used t make an entry into the market with the decline in the market. The buy stop order can be placed over the market rate to start a new position or even to end the current short position. Because the stop order turns out to be the market order, the real fill-in price may exist ahead of the stop price. And, more so in a hasty market.

The next post sees more about some other orders.

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Test the Trading Strategy

Forex trading a few decades back was carried on by veteran traders with just the pencil and paper. And they happened to be some of the most sophisticated traders ever in the history-with no computers or dealing desks. It is here, where the importance of formulating strategy comes into focus. For, that is what most decides whether the trading will be successful.
Some questions must be considered before zeroing in on a given forex strategy for its accuracy, including some of these:
• Is the strategy based on range or the trend.
• If the strategy is range based what can it offer to trade around the trends and vice versa.
• Is the strategy for intraday or planned for longer trading signals.
• If the strategy is for day trading what and how many hours do you need to watch the screen.
• If the strategy is for longer term, what is calculated drawdown in pips.
• Does the strategy have any historical performance on real accounts for more than one year.
• Does the strategy have particular money and risk management rules attached to it.
• What have been the highest and lowest risks to reward ratio of the previous year’s trades.
• Does the strategy have an exit or stop loss for varied market scenarios


Its best never, and I don’t usually say ‘never’, to apply a new strategy on live account unless it has been tested at least over more than a year or has been approved by some expert trader. Expert traders are wise as they have already practiced disciplined trading for a long time before trying anything with the real money. Forex trading can be best treated a science and not a gamble.

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Future spread trading

Future spread trading is by far one of the most lucrative and still the safest way for trading futures. This is sole reason why almost all professional trader use spread to enhance his profits. I think spread trading is especially beneficial to novice traders and traders with small(less than $10,000) or marginal accounts.Four important benefits can be outlined

Easy trading
For novel and experienced traders alike it is easy to detect a trend when using chart formations or indicators. Spreads have the peculiarity to make trends more radically than absolute future contracts. Spreads also trend without the interference or disturbance caused due to computers, scalpers or other market movers.

Small margin
Most spreads have lesser margin requirements allowing traders to put on increased positions. This is an advantage for traders with small accounts, as mentioned above. And it offers great leverage as well.


High return on margin
Every point in spread holds the same price as versus absolute future contracts. There is still amazing difference between the return on margin. Also, we can trade almost 6 times as much spread than future contracts.


Low time needed
A spread need not be watched all day long. No real time data is required either. Spreads can be traded most successful utilizing the data at the end of the day. Spread trading is also excellent thus if you do not/ cannot watch the computer screen all day long.

Futures spread trading has long been being traded by professional traders although it has had a low key profile up till now.

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Trade Exits vital in Trading

The final result of a forex trade depends immensely upon the exit of the trade. The exit is as important as the entry of the trade. If the entry is timely but the exit is not, there are chances of loss. On the other had if the entry is poor while the exit is well-timed, we may recover a profit still. It’s more the exits that determine the success of a trade than the entry. This can be easily tested. Any entry strategy can be combined with varied exit strategies. It will be quickly seen that results can be tremendously changes with small modifications to the exits. The importance of apt exit cannot be overly emphasized –trade results are not independent of the exit. The simple truth is that exits can make or break a trade.


To gauge the soundness of an entry strategy, the trader can start to simply exit the trade following a number of bars. When the entry is combined with judicious exit, the strategy can turn out to be excellent.An entry gets the trade started in the right route. The effectiveness of an entry can be testers by measuring the percent of time it gets the trade begin in the right direction. For instance, an entry “X” has 60% successful trades after five days, it is better that entry “Y” which ash only 40% success.

It can be seen that it has only been decided as to which the better entry is while there has been no comparison of the profitability itself. Thus we can see the purpose of entry is just to get the trade started in the right way.After this everything depends on exits. Entry ‘Y” can happen to make more money because a specific exit we would choose .we can easily adjust to find that entry.For best results right entries need to be coupled with right exits.

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