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April 13th, 2015 @ 12:44 pm by Mark De La Paz

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A fresh week and we are once more amazed by how resilient the greenback is with Euro inching closer and closer to its prior swing lows of 1.0462 and the commodity pairs giving ground to the dollar as China released one of its worst trade balance ever at 3.1B down from the prior 60.6b and well short of the 43B consensus. At this piont we would like to unserscore once more the Philisophy that seems to be keeping the dollar afloat that the US economy remains the best among poor choices. Note that while the latest jobs data adid disappoint the US us stilll making Jobs at a strong clip with expectations now calling for the consumption side of the economy to pick up soon keeping the Fed on its toes over a possible mid year tightening.

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April 10th, 2015 @ 11:58 am by Mark De La Paz

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A week after the big shock on US jobs data and we have the dollar seeing new highs against the British Pound and broadly firmer elsewhere as markets have consigned the poor NFP reads into a one of a kind event that does not change the trend and prospects of a mid year tightening. One key figure for the quick recovery of the dollar sentiment has been New York Fed. Pres. William Dudley, who on two occasions, monday and Wednesday revivied the hopes of dollar bulls as he outlined the current Fed thinking. At its core Dudley is suggesting that the continued jobs growth in the US will ultimately lead to an improvement in end demand which should prompt the Fed’s action. While no timeline was given we would not that despite falling short of forecast for its lastest release the US jobs market remains potent and the series of strong reads previously underscores the growing competitiveness of the economy which should be the basis for even further growth.

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April 8th, 2015 @ 12:30 pm by Mark De La Paz

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If there is anything that underscores the waning confidence in the dollar story its perhaps how the market has performed today. With very little to be happy about in Europe and the UK or even among the commodity producers we have the greenback actually strangely losing ground across the board with the only saving grace being an even weaker gold or silver where we are in the process of covering a gap in the former and have done so already in the latter. Given the lack of leads on whats causing the Price Action we are looking at the coming release of the Fed minutes as the catalyst for dollar weakness as any hint of slowdown concerns coupled with the recent poor US jobs showing will once more see doubters of a US tightening making noises.

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April 6th, 2015 @ 12:33 pm by Mark De La Paz

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After Friday’s poor US jobs numbers, currency markets continue to see the dollar on the defensive with Euro and Cable making the most of the setback across the atlantic the pairs appoaching critical setups that could call for a further rally. Note that holiday hit markets saw US payroll figures collapsing from its string of back-to-back market beating results to read only 126K for the month of March well below the 246K consensus figure shaking the confidence of hawks looking for a US rate hike bythe middle of the year. This has allowed the other majors to be on the brink of a significant correction though liquidity remains to be an issue with many market centers still close.

GBPUSDDaily

Ahead we are looking for Cable to try to make a run for the key psychologucal resistance at 1.5000 though whats really important for us is the ability to pop the said level and close above it. Such an event would likely open the January consolidation from 1.4950 to the 1.5268 cieling with key objective for bulls at 1.5550 the key support for bears last year.

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April 3rd, 2015 @ 12:00 pm by Mark De La Paz

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Currency Markets are seeing the usual tight range ahead of a US jobs report with practically all the dollar pairs showing just half the average daily range though things are even tighter in the case of Yen and Loonie. Charts however are more interesting for Aussy and Kiwi with the hammer in yesterdays daily Aussy chart opening the potential for a pullback play from new lows while Kiwi is looking for a confirming follow through much as the greenbacks neighbor up the border. What should be interesting here is the potential for a win-win play among the commodity currencies with a strong read in US jobs suggesting a bounce for commodity demand and consequently their currencies while a weak read would have us argue a follow through to the technical setup and broadbased dollar dumping.

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Looking at the numbers consensus forecast for NFP is at 244K down from the previous 295K market beater though there is concern over potential weakness following Wednesdays weak NFP. The other side of the story ofcourse is the Unemployment Rate where expectations has us looking for a steady read at 5.5%. The best case for a stronger dollar would be for a beat of the 244K new jobs added and a less than 5.5% read for the jobless rate which would have us flocking to buy USDJPY back up though its 21DEMA and Cabdle getting rejected from just below its own 21D EMA line.

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April 1st, 2015 @ 12:39 pm by Mark De La Paz

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We have just seen a poor read in Associated Data Processing’s Non-Farm Employment Change report with the numbers far short of the 225,000 consensus to read 189,000. While there have been close calls to break the 200K floor this is the first time since June 2014 for us to see the number such, the last time private sector estimates came in at 179,000. While a single data point does not a trend make the numbers as they are should be worrying for dollar enthusiasts as this could presage a sub 200K read in the official government data which includes jobs from the public sector.

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We should recall that it has been the strength of US jobs creation that has underpinned talks of a rate hike by the Fed in the middle of the year. Remove this and other economic essentials are wobbly which should concern dollar bulls particularly with the economy now seeing a greater degree of correlation between peoples income and their spending. Less jobs means less ringing of the till.

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March 31st, 2015 @ 12:52 pm by Mark De La Paz

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There’s an old  adage in the equity markets that call for “Sell on May and go away” premised on a percevied cycle of equity weakness during the period. With global equities consolidating after recent highs however there is a growing belief that the period for risk aversion may be coming. At the moment we are seeing a broadly firmer dollar  woth two exceptions the Japanese Yen which ofcourse strengthens as equities weaken, and precious metals which given how cheap they are now has once more become a realistic safe haven. We note an interesting exception with respect to historical norms for risk aversion as the Swiss Franc is actually losing ground perhaps a reflection of the reduced confidence in the SNB of the market.

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Going forward we will suggest people keep a sell on rallies attitude for EURUSD and GBPUSD as people begin to price in another NFP release with many looking for a fifth consecutive market beating read. Though this Friday’s action will not be for the faint of heart given the almost global holiday for Good Friday in the Christian world.

 

 

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March 27th, 2015 @ 12:13 pm by Mark De La Paz

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There is something to be said about the dollars strength when strong secondary numbers could cause a 180 turn as the majors did yesterday following a soft read in the weekly claimant count and firmer figures for Flash Services PMI. Which now has the markets wondering what are we going to see in the days big double header for the US.

First we will be seeing Final GDP figures for Q4 where the market is looking at a 2.4% read against Q3’s 5.0% figure. This may have been a slow down but still underscores a growing economy and is an improvement from the initial estimates of a 2.2% read for the quarter. What should be interesting here for people is the GDP Price Index as a read which sustains the previous quarters strength or nearly so would likely lead to rate hike concerns rearing its head and consequently a stronger dollar play though consensus this time out is at a mere 0.1%.

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Also note worthy will ve Final figures from the University of Michigan with its Consumer Sentiment Index on the cards, though consensus expectations call for a bit of decline to 92.0.

From a technical perspective we are looking at the Euro and and Aussy with keen interest should a strong dollar play be confirmed as the former has a bearish engulfing in daily charts which also closed below the 21D EMA opening the possibility of a resumption of the bear market and a test of swing lows at 1.0479. And then there is Aussy where a strong dllar story could mean continuation of its rejection from 0.7912 with the 21D EMA at 0.7771 as our trigger for a move down to 0.7559.

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