FOREX TRADING

EUR/USD

Current level-1.4397

EUR/USD is in a downtrend, after peaking at1.5146 (Nov.25,2009). Technical indicators are neutral, and trading is situated between the 50- and 200-Day SMA, currently projected at 1.4793 and 1.4169.

Current rebound from 1.4335 is corrective in nature and while the pair stays below 1.4450 resistance, the bias will continue to be negative for a break below 1.4260, en route to 1.3740 support on the daily frame

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Dow -102 S&P -11.7 NASDAQ -22.2

ECONOMIC DATA

(RU) Russia Dec Official Reserve Assets: $439.0B v $441.8Be

(CL) Chile Dec Copper Exports: $3.2B v $2.9B prior

(IS) Israel Dec Consumer Prices M/M: 0.0% v 0.3%e; Y/Y: 3.9% v 4.2%e

(PD) Poland Nov Trade Balance: -€292M v -€750Me; Current Account: -€1.2B v -€975Me

(CA) Canada Nov New Motor Vehicle Sales M/M: -7.0%e v 3.5% prior

(US) Dec Consumer Price Index M/M: 01% v .2%e; CPI Ex Food&Energy M/M: 0.1% v 0.1%e; CPI NSA: 215.949 v 216.000e

(US Jan Empire manufacturing: 15.92 v 12.00e

(BE) Belgium Nov Trade Balance: €1.9B v €0.9B prior

(US) Dec Industrial Production: 0.6% v 0.6%e; Capacity Utilization: 72.0% v 71.8%e

(US) University of Michigan Confidence: 72.8 v 74.0e

(MX) Mexico Central Bank Interest rate leaves Overnight rate unchanged at 4.50%; as expected

JP Morgan’s disappointing earnings report is hammering US indices this morning. Investors have all but forgotten Intel’s hot quarterly report from yesterday. The final CPI reading of 2009 showed that consumer inflation was tame last year, with prices rising 2.7%, following at 0.1% increase in 2008. The January Empire Manufacturing was better than expected, with very strong growth in the prices paid (hit a one-year high) and new orders components. (more…)

Inflationary Levels Subdued Over the Short Term, Rising on the Long Term

The cost of living in the U.S continues to rise on the long term whereas the yearly Consumer Price Index reported today about the month of December showed rising inflationary levels on the long term while on the short term it is still below the Fed’s target rate.

The Commerce Department report, Consumer Price index inclined in the month of December by 0.1% compared with the previous rise of 0.4% while markets were expecting 0.2%, while on the yearly scale the index rose by 2.7% compared with the previous 1.8% and the expected 2.8%.

As for the Core CPI; which excludes food and energy prices, the index rose during the same month by 0.1% compared with the previous flat reading and the expected 0.1%, while on the yearly scale the Core CPI dipped slightly to 1.7% which came in below the previous and the expected 1.8%.

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Initial jobless claims for the week ending 01/09 will be released on Thursday January 14th at 8:30 AM ET and are expected at 437k. Initial jobs claims rose 1k during the week ending January 2nd to 434k, a reading of 447k was expected. The jobless claims report is important because last Friday’s report of an unexpected 85k decline in nonfarm payroll raises concern that the improvement in the labor market may have stalled. In addition, Fed policy is closely tied to the outlook for jobs with the Fed indicating that rate hikes are unlikely until jobs creation becomes sustainable. The jobs outlook will be key to the timing of the Feds rate hike cycle. Jobless claims have been trending lower and are at their lowest level in 16 months. The four-month moving average of jobless claims fell to the lowest level since mid-September. Despite the positive trend in jobless claims the US labor market remains weak. The Labor Department reported that job openings in US dropped by 50% in the last two years. In June 2007 there were 4.7mln job openings in the US and in November the number had fallen to 2.4mln. According to the Labor Department the number of job seekers outnumbers the available jobs in the US by 6 to 1. The jobless claims data and Labor Department report indicate that layoffs are slowing in the US but there is no sign of any significant pickup in hiring. The lack of jobs creation will have significant implications for the strength of the US recovery because it will limit consumer demand and may encourage the government to take additional steps to boost jobs growth. These steps could include a new jobs stimulus plan which could lead to increased pressures on the US budget deficit. According to the White House the stimulus plan has saved 2mln jobs. Most economists believe that a jobless claims decline below 400k would signal that jobs are being created in the US (more…)

Weak US Jobs Hurt Dollar

U.S. Dollar Trading (USD) weakened considerably across the board as December US jobs numbers missed forecasts. December Non Farms at -85k were expected at 0k. December Unemployment Rate remained at 10.0%. Adding to the USD weakness was the relative strength of the stock market after bad economic news. DJIA +11 points closing at 10618, S&P +3 points closing at 1144 and NASDAQ +17 points closing at 2317.

The Euro (EUR) the upside came squarely into focus with the market testing the upper end of the range. Holding the Euro back was the November US jobs revisions at +4k. Q3 EU GDP was unrevised at 0.4%. EUR/JPY spiked lower but recovered well into the US close on Buoyant Stocks. Overall the EUR/USD traded with a low of 1.4264 and a high of 1.4439 before closing at 1.4411.

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Many people think that the answer to trading lies in using the right indicators. Some people will not agree but their actions will tell you so. Because the first question they always have is “What indicators do you use?”

For a long time, I was stuck in finding the right indicator as well. I thought that if there was an indicator I could just follow blindly, that would meant my success in daytrading.

There are such systems, but they’re not cheap. I don’t have that much of capital to start with.

Hence, I have to go the hard way to look for the ‘right’ indicators.

I’ve lost alot of money in trading before, and most of the time was due to the misuse of indicators.

How would you make use of indicators in your trading?

For most people, daytrading meant waiting for a trend to start, wait for the trend to confirm, and pulling the trigger.

When does your indicator come into play? Is it to tell you when the trend has started, confirmed, or give you a safe, low-risk point to enter?

By reading my question above, you would have already guessed it’s the last option that is correct. I will explain why.

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Increasing Arguments To Cut USD Shorts

News and Events:

The USD remains buoyant as the tide of news and data seems to be shifting favour away from high beta currencies into year end. The last few weeks have seen a melee of separate factors jolt markets out of their habitual USD-selling mindset. Dubai’s debt worries initially sent investors fleeing for the reassurance of the USD safe-haven, subsequent Greece downgrades weighed heavy on the EUR, and then the massive shock improvements in US payrolls and retail sales led to a reassessment of whether the USD was a still a reliable candidate for funding carry trades. (more…)

Daily Technical Analysis

EURUSD Outlook

The EURUSD continued its bearish momentum after corrected higher on Monday. On h1 chart below we can see that the ascending triangle bullish correction scenario was failed as price violated the ascending triangle to the downside and had a significant bearish momentum, bottomed at 1.4503 and closed at 1.4536. I always like to see a clear chart patterns because it doesn’t matter whether they are valid or fail, usually give us a clearer direction. Technically this fact should keep my bearish scenario at least towards 1.4450 even 1.4250 this week intact. On the upside, immediate resistance is seen around 1.4600/25 area. Break above that area could trigger further bullish momentum.

On fundamental side, we will have manufacturing and services PMI numbers from the Eurozone which expected to be a catalyst today. Better than expected results should bring the pair higher while worse than expected results should continue the technical bearishness.

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