Tag : EURUSD

Mulder FX Update!

Posted by Byung Koo at 8:40 am

Dear clients,

An update from the front of FX trading. This times are very volatile in FX markets. The performance changed and will be change very rapidly. Last week we get a hit in performance, main reason is development in EUR/USD. We could managed a little with some currency pairs like USD/CAD and AUD/USD. Only performance plummeted last week.

FX trading is high risk, because high leverage. So movements like last week are extremely rare but it could happen. I think everyone will agree that stories in EUR, CHF and GBP are spectacular.

Our prediction still stands, EUR will recover from here and we will move above 1.30-1.35 again. Patience is key in this and also money management. Most of the clients are around 10% margin call, so far away of the 1% and our own bottom of margin call of 3,5%.

We believe in our strategy because we had the same period last year. We were in short positions in EUR/USD at 1.45-1.51 and on November when EUR/USD reached 1.5175, we also dropped in performance. Everyone knows what happened in December till now.
On that moment everyone in the markets said 1.60 again and maybe new highs in EUR/USD. Right now everyone talks total different and someone believe a parity in EUR/USD.

We are open for all reactions and opinions. We monitor this every day but we hold on our proved strategy for the coming months.

Feel free to ask your questions.
Best regards,

Byung Koo Mulder
CEO of Mulder Venture BV, Mulder FX

FX Trade Idea: EUR/USD

Posted by Byung Koo at 4:17 am

Expect the unexpected. All eyes are on the Euro right now but the past tells us every time, currency pairs move in waves.

It isn’t that the dollar is strong but the euro is weaker than the dollar for the moment. To say it even better, it is the perception that the euro is weaker than the dollar.

The task for the leaders of the EU is to solve this issue and traders will look at the valuation of the euro. Behind the deficit crisis I still think Trichet will raise rates sooner than Bernanke will. Doubts and uncertainty is killing for a currency as can be seen in euro as well as in sterling. On the day Obama wins his health bill, U.S. deficit extended for the next 10 or more years, the EUR/USD dropped even further.

For short term when we break  EUR/USD 1.3850 we could move up and see 1.40 again within 3-6 months. Last  November everybody talked about seeing the EUR/USD at 1.51 might take us to new highs but everything changed very rapidly.

So back to common sense, like in the stock markets of March 2009. The world and many investors with them thought we where in a new Great Depression. Now stock markets are near the highest levels in one year,  investors start to get exited again and we know what can happen than.

See charts of 5 and 10 years, right now we are on a critical point. 1.30 is key level  to hold, otherwise we will break 10 year trendline. I believe the low will be around 1.32 but also I expect the unexpected.

We are already in position and will increase our position when the opportunity is there.

USD/CHF Technical View

Posted by Mulder Venture at 5:14 am

22 December we posted our target for USD/CHF at 1.0850, we’ll see a top around 1.09-1.0925. For our existing clients we will take positions at this level.

We expect the U.S. Dollar to weaken for next coming weeks. Latest Economic figures out of the US, the consumer confidence and housing figures have deteriorated, paired with that  Bernanke said again they will keep interest rates at current level. Of course U.S. dollar will be the safe haven currency when the stock markets goes downward but we expect the stock market to at least remain steady as investors standby the sideline until the first week of March for NFP(Non-Farm Payrolls) figures. Following these figures FX traders will start to take bigger positions and as a result bigger movements are to be expected.

For the next upcoming days/week the EUR/USD will move in range 1.3450-1.3700.

US Dollar Extends its Run but How Long will Risk Aversion Hold?

Posted by Mulder Venture at 9:24 am

US Dollar Extends its Run but How Long will Risk Aversion Hold?

Fundamental Outlook for US Dollar: Bullish

-    Risk appetite takes the lead on the US dollar’s rally
-    Non-farm payrolls has a limited impact on volatility, but the fundamentals are still weak
-    Will the dollar’s drive straight through next week or are there correction in store?

Considering the extraordinary rally the dollar was able to muster this past week, and the momentum it has added to the currency’s impressive bull trend; it may seem inappropriate to start speculating on when this drive will stall. However, it is vital to always have a view on the life span of a trend. Otherwise, how would we know when to take profit or otherwise stick it out for the full breadth of a developing move? The primary fundamental drive behind the dollar’s current run is a deep source of momentum. The reversal of risk flows in the financial markets can last for some time and entail substantial shifts in underlying capital. Throughout 2009, investors were looking to reinvest their speculative capital that had been idled by the worst financial crisis in memory. From cash and other ‘risk-free’ assets, investors were looking to first put their money back to work and second to avoid excessively risky markets. This meant a large influx of capital into specific markets. Naturally, a bottleneck of liquidity would form; and asset prices would rise dramatically in response. And, though values were undoubtedly depressed when the market’s first reversed higher in the beginning of the year, they were equally overinflated by the end of the year. What we are experiencing now is a move to find an equilibrium that is supported by the potential for growth and expectations for returns. This brings us to the critical question: how much excessive premium is there left to work down?

It is a complicated task to determine when the markets are fundamentally overbought or oversold – especially in the time frame of just the forthcoming week. There has been a move to deflate risk in the capital markets for approximately three weeks now; and the progress that some benchmarks (like the Dow) have made is very modest compared to the initial buildup. For this reason alone, it is reasonable to assume that a natural retracement can develop for a considerable time. However, for the dollar, the currency has already retraced more than 50 percent of its losses against the euro since its early-December reversal. As long as the risk aversion trend maintains its momentum, the greenback will benefit; but the amplitude of the currency’s move can diminish. A market flow reason for this is that the market may be comfortable in reinvesting in safe havens other than the US dollar and Treasuries. Another factor in this move is that carry positions that were funded using the US dollar (which has the lowest three-month Libor rates among its major peers) are being unwound and capital is being repatriated to the US. In near-term, the bearing on sentiment will depend on the catalysts available and the ease in developing trends. The focus will remain on big-ticket concerns like sovereign debt risk, efforts to curb speculation and the focus on potential points of systemic risk. And, with a relatively light scheduled docket, there may be little standing of the way of such trends.

The dollar’s broader trend will be defined by the general quality and direction of risk appetite; but in the end, this will be developed through the unpredictable nature of group fear and greed rather than any definable economic indicators. Among the few definable drivers that can have a meaningful effect on the sense of risk appetite for the global markets are the first readings of 4Q GDP numbers for the European region and Fed testimony on systemic risks. Other scheduled indicators like the advanced retail sales report, University of Michigan consumer confidence survey and trade balance will likely play a reduced role with short-term volatility.

Euro: Can the ECB Make Conditions Even Worse for the Currency?

Posted by Mulder Venture at 11:32 am

Fundamental Forecast for Euro: Bearish

-    Greek debt sales show little confidence in the country’s and the Euro Zone’s future
-    German business confidence hits an 18-month high
-    Did EURUSD find a medium-term top in January?

Fundamental pressure has been building up behind the euro for quite some time; but for a long time, the strong current of capital away from the US dollar was compensating for the currency’s shortfalls. However, now that the dollar is finding its bearings, the market’s second most liquid currency will be left to its own devices (though we can’t discount the impact that a strong dollar bid can have on EURUSD and therefore the euro itself). Looking for significant threats on and off the economic docket, there is plenty to keep track of. But the greatest risk to calm markets likely comes from unexpected indicators and unpredictable events.

While there is an extraordinarily busy economic docket for the euro over the coming week, these events can be accounted and prepared for. The same cannot be said for the wavering level of confidence among international investors for the regional economy. There are many reasons to doubt the strength of the Euro Zone and its currency; but the most politicized and media-hyped peril is Greece’s burgeoning budget deficit. The Greek Finance Minister has repeatedly assured the market that the government was taking the necessary steps to reduce its budget shortfall and they were not seeking a bailout from the European Union nor trying to sell debt to capital-rich countries like China. At the same time, the EU has repeatedly warned Greek that it was not doing enough to meet its goals to bring its deficit back within the limit within their time frame. Perhaps more disconcerting is the suggestion by EU Economic and Monetary Affairs Commissioner Almunia that there is no “plan B” for Greece and that “in the euro area, default does not exist.” If the economy cannot meet the group’s strict rules and the nation’s neighbors do not provide assistance, something will have to give. Whether that means a bailout (that spreads the pain) or a defection from the euro (which throws the stability of the currency into immediate doubt); the outlook for the currency is not bright. What’s more, Greece isn’t the only troubled EU member. Ireland, Spain, Portugal, Italy and many others are feeling the pain.

Where the euro finds some reprieve from the tumultuous seas that surround the health of its individual members and whole, there will be plenty of scheduled event risk that could generate volatility or add a fundamental aspect to sentiment concerns. Looking over the calendar, the ECB rate decision is top event risk. However, there is a very low probability that the market will be able to draw enough from the event to alter the time table for an eventual return of rate hikes. This past week, ECB member Mersch remarked that the group would not likely discuss altering policy until the March meeting. Fundamentally, there is little to encourage a near-term rate hike. Inflation pressures are muted, the economic outlook is tepid and policy officials realize that raising rates too early can turn a difficult recovery for many members into an impossible one.  Other economic readings will be several steps down in terms of economic impact. Factory and service activity indicator, retail sales and trade figures are all second or third tier indicators.

US Dollar Forecast to Appreciate versus Euro Ahead of NFPs Data

Posted by Mulder Venture at 9:32 am

Fundamental Outlook for US Dollar: Bullish

-    US Dollar surges to 6-month highs against Euro
-    Japanese Yen and US Dollar surge on financial risk aversion
-    January effect in the S&P 500 points to US Dollar gains in 2010

The US Dollar was far and away the best-performing G10 currency on sharp losses in the US S&P 500 and broad deterioration in financial market risk sentiment. A positive surprise in highly-anticipated US Q4 GDP results likewise helped boost the low-yielding Greenback, and the currency now boasts three consecutive weeks of fairly substantial appreciation against the Euro. Given previous bearish extremes in US Dollar sentiment and positioning, we have frequently argued that the otherwise-downtrodden currency could stage a major comeback through the new year. Already we see that both the Euro/US Dollar and S&P 500 have posted significant declines on the month, and the January Effect in stocks and currencies points to further Greenback appreciation into February and beyond.

The first week of February likewise promises a great deal of economic event risk, and forex options markets have priced in considerable price moves in the days ahead. The critical question is whether the US Dollar will react positively to better-than-expected data or instead respond to cues in the S&P 500 and other measures of financial market risk sentiment. Traders will get their first clue on the results of Monday morning’s US Personal Income and Spending as well as ISM Manufacturing survey results in rapid succession. Consensus forecasts call for modest pullbacks in Income and Spending growth in December, while domestic Manufacturers are likely to report slower gains in activity for January. Substantive surprises in either release could easily force US Dollar moves, but the true fireworks may wait until later-week ADP Employment Change, ISM Services, and US Nonfarm Payrolls releases.

US Dollar traders will pay extremely close attention to surprises in NFPs results, while earlier ADP and ISM numbers will likely shape consensus estimates for the monthly employment figure change. Economists currently predict that the US labor market added a net 13,000 jobs through the month of January, but the monthly figures are notoriously difficult to predict, very volatile, and prone to major revisions. Suffice it to say, most analysts often question the flawed report’s relevance to the US Dollar and other major asset classes. Yet traders respond to the data at hand, and any significant surprises in earlier ADP Employment and ISM Services Employment Index figures could easily set the stage for similar surprises in clearly market-moving Nonfarm Payrolls numbers.

Current market conditions make it extremely difficult to predict price action a day ahead and much less a week in advance. Yet recent momentum clearly favors US Dollar appreciation, and our research on the “January Effect” for currencies and the S&P strongly suggest that the Dollar could finish the year considerably stronger against the Euro and other major counterparts. What happens between now and December, however, is anything but clear. Shorter-term traders should keep a close eye on the S&P and other risk barometers surrounding major news events out of the US and other large economies. We remain bullish the US Dollar on the Euro’s break below 1.40, but sharp Greenback gains warn that a very-short-term correction is possible.

Euro sinks below $1.40, first time in 6 months

Posted by Mulder Venture at 1:29 am

The euro fell below $1.40 Thursday for the first time in six months as risk-averse investors parked money in dollars following disappointing economic reports.

More worries about public finances in the eurozone also brightened the dollar’s shine.

Weaker-than-expected news on employment and durable goods orders, a looming overhaul in U.S. banking rules and fears of default on European government debt all helped drive the dollar higher Thursday, continuing its gains over the past two months.

The 16-nation euro fell as low as $1.3938, its weakest level since July 2009. In later trading Thursday in New York, it fetched $1.3978 compared with $1.4038 late Wednesday.

The British pound dropped to $1.6127 from $1.6179, while the dollar was flat at 89.90 Japanese yen.

On Thursday, the government said orders to U.S. factories for big-ticket manufactured goods rose a meager 0.3 percent in December, while a drop in the number of newly unemployed people filing for jobless benefits fell short of expectations. The disappointing reports compounded uncertainty about how strong the U.S. economy is.

Meanwhile some investors are looking ahead to when the Federal Reserve may feel ready to raise interest rates off their historic lows, which would be a positive factor for the dollar.

On Wednesday the Fed held short-term rates near zero but also said economic activity continues to strengthen. One Fed official voted against the Fed’s plege to keep rates at record lows for an “extended period.”

“The upgraded outlook, the single vote to revoke the ‘extended period’ mantra, and the continued planning to unwind credit easing are all important steps toward tightening,” said UBS currency analyst Geoffrey Yu.

Low interest rates can weigh down a currency as investors move funds to other currencies that have higher yields. The U.S. has one of the lowest official interest rates of the major economies, and many emerging-market countries have substantially higher rates.

UBS is predicting a value of $1.35 for the euro as concerns over Greece’s public finances continue. Greece’s problems are also causing anxiety about high levels of indebtedness in other European countries such as Portugal.

Forex Trading: USD against major currencies

Posted by Byung Koo at 3:12 am

Tomorrow biggest news event of every month. NFP(Non-Farm Payrolls), Wednesday we saw an worse drop in jobs in ADP report.

The U.S dollar trading this week in a small range against major currencies, except Australian dollar who rally since the beginning of the week. What we could expect next week for the U.S dollar?

We will see a stronger U.S dollar next week and it will start Friday after the numbers. Because it’s very unclear where the U.S economy stands, the number will be bad or good. Analysts expectations are 0k. The number implicate that they even don’t know. Two scenarios:
What’s gonna happen in U.S dollar if we get another surprise and let’s say the number is + 25k-50k. First move in the U.S dollar is down against major currencies. People believe in more risk appetite but after the news settled the U.S dollar will start to rally because the expectations in rate hike later this year will raise fast. The movement will hold and even rally more next week.

Different scenario, bad numbers like Wednesday, like -50k-100K. The same patron will follow as above but on other reasons. First move in the U.S dollar will be down, because investors/traders see a bad number about U.S economy, so last number was one surprise not more, no continuous. This movement should also be covered by a rally in dollar because the stockmarkets will going down rapidly and investors buy the dollar, investors look for safe haven currency and downgrade risk appetite. This movement will start later than first scenario, because often you will see stockmarkets will hold steady on Friday trade, but for sure next week the U.S dollar will rally more than in first scenario.

Trade with smaller lots sizes than normal, because the movement after NFP are big for sure. First important number of the year 2010, so look out and trade carefully.
For exactly levels to take position is hard to say but few examples.
EUR/USD key level to take short positions: around 1.4550 if EUR/USD in range of 1.43-1.44 before numbers. Would EUR/USD stands before numbers like 1.4450 or higher, take short position at around 1.4650. Main key level in EUR/USD and also major resistance level is 1.47. Mulder Currency Fund would trade on the short side but main key level and support level is in EUR/USD around 1.4175, break this level we will see 1.40 very rapidly.

For many investors in other major currencies against the U.S dollar the movement will be more volatile. GBP/USD trade right now around 1.60. Go short on 1.6250 and main support level is 1.5800. USD/JPY shortposition at 93.50-94 and support level at 92.

After the numbers their will be also a big movement in other currency pairs, major movement expected in GBP/JPY and EUR/JPY.
Different story, Yen is last week ultra-weak, so if the NFP are better than expected, big movement up and not with 100 pips, maybe 300 pips.
Key resistance level and Mulder Currency Fund take short position in EUR/JPY at 136.00 and for GBP/JPY 151. Sometimes I think by myself I put my order too high, no fill but for sure after few secondes after NFP numbers I happy I put that order. For all traders if you trade well and love the volatility in the currency markets, you could earn a lot of money in one hour. Sometimes the same money what you earn in the rest of the whole month.

So please trade careful!

Forex Trading: EUR/USD 2010

Posted by Byung Koo at 12:01 pm

In 2009 the U.S. Dollar dropped against other major currencies. From safe-haven currency to carry trade currency. From 1,2450 in March to 1,5150 in December. Back to 1,25 in 2010 it won’t happen I guess but only way for the U.S. Dollar is up against the euro. My prediction for end 2010 EUR/USD is 1,35.
Reasons for this, the FED is no longer implementing quantitative easing. Economic growth in the United States is likely to have a positive impact. EU suffer of deficit problems in more countries in 2010. Volatility in financial markets(mostly down) will investors boost the dollar.

For long term investors in currencies:
Short levels
1,4698, 1,4845en 1,5034
Buy levels
136,54, 1,3350, en 1,3152

Forex – EURUSD Breaks Lower, Eyes 1.4200 Levels

Posted by Mulder Venture at 12:40 am

EURUSD has now fallen over 4.5% in the 2 weeks since the surprise non-farm payrolls, and the exit of USD short positions in the market now looks less like a temporary correction and more like a trend reversal with every passing day.

Despite still being in the sweet spot of low US rates against a backdrop of improving global data, the truth is that US data has just been a little bit too good lately. Fed policy makers remain understandably cautious about the outlook for 2010, which is why even subtle alterations to the wording of their statement have significant impacts on market psychology. The acknowledgement yesterday that the decline in the labour market is “abating”, gives markets the first hints that the US is getting back on track sooner than anticipated, and the USD will not settle for its role as carry trade funding currency for long.

EURUSD’s collapse through 1.4480 support overnight leaves very little technical support expected until 1.4180 levels, and given the ongoing negative news about Greece’s credit rating and the fragile state of Austria banking system, the fundamental outlook offers little consolation for EURUSD bulls.

Another currency suffering today is GBP, after this morning’s reading of UK Retail Sales was starkly lower than consensus forecasts, printing -0.3% MoM, 3.1% YoY (expected: 0.5% MoM, 3.7% YoY). GBPUSD had been trading around 1.6230 levels ahead of the release, but 1.6200 support rapidly gave way to a slump down to 1.6111 lows, and a close below 1.6150 leaves us open now to a revisit of 1.6000.

The US economic releases this afternoon are by no means first tier data, with only Leading Indicators and Philadelphia Fed expected; however given the pervading mood of the market to unwind USD shorts, we would expect upside surprises to have a disproportionately large effect on USD pairs.