Tag : forecast

Mulder FX Update II

Posted by Byung Koo at 9:14 pm

NEWS Alert:

Dear clients,

We’re heading to our first negative performance month-on-month! And immediately to a big drop. May isn’t over yet and also the markets are extremely, extremely volatile but out of the woods, won’t happen.

Right now our performance dropped -26% and of course depends on when your startdate is, it could be higher.

I don’t expected that the U.S dollar rally against all other major currencies. Only with tight money management in the past we could hold this current positions. A further rally in the U.S dollar before a correction won’t help our performance. We need a revovery in EUR, GBP, AUD and some other currencies.

So clients are don’t take any open postions more, because the have a margin call of 3.5% or below. We don’t want to hit the margin call of 1%.

These volatile times gives also us a insight of what kind of movements FX could have.
Account Balance will change very rapidly, mostly down the last week but hopefully a recovery in the next weeks.

Feel free to ask your questions. Our email is: info@mulderventure.com

Best regards,
Byung Koo Mulder
CEO of Mulder Venture BV

Euro on the Ropes as Greece Debt Crisis Grows Contagious

Posted by Mulder Venture at 6:26 pm

Euro on the Ropes as Greece Debt Crisis Grows Contagious

Fundamental Forecast for Euro: Bearish

-    Euro hits five-month low on S&P 500 tumbles
-    Fear of Greek debt crisis spreads to Spain and Portugal, sends Euro lower
-    Forex futures and options forecast for Euro shows many fear further losses

The Euro finished the week substantially lower against the safe haven US Dollar on sharp declines in the US S&P 500 and broad deterioration in financial market risk appetite. The ongoing budget deficit crisis in Euro Zone member Greece grew beyond its borders, causing a substantial widening in sovereign bond yield spreads for countries such as Portugal and Spain. Arguably the worst crisis to threaten the stability of the European Monetary Union to date, market reactions only exacerbated losses and the Euro was especially weak against the resurgent US Dollar.

Short-term forecasts subsequently depend on the trajectory of financial market risk sentiment, how it relates to European asset classes and the continued viability of the EMU. Though the 16-member Euro zone is no stranger to turmoil, sustained budget crises threaten to shake the foundations of the union and present real danger to the euro. Markets are subsequently likely to ignore anything but the biggest surprises in upcoming economic event risk and instead pay very close attention to ongoing activity in sovereign deficit troubles. The key question rolling forward is whether or not Greece can contain its growing budget deficit and whether any problems in one country can cause contagion across the broader Euro Zone. Similar budget issues in Portugal and Spain have come to the spotlight despite their comparatively manageable fiscal shortfalls and underline risks that fiscal troubles may spread to other EMU members.

Greece is in special danger not only due to the sheer size of the fiscal deficit as a percentage of GDP, but any political efforts to institute cuts in spending and rein in the deficit have been met with fierce popular opposition. The political deadlock is especially troubling given that the Greek government will need significant funding in the months ahead as the deficit grows and interest rate payments skyrocket.  If markets are unwilling to purchase Greek debt, then it seems likely that the strongest EMU countries may need to bail-out the debt-ridden country. Hawkish rhetoric from European officials suggests that few can stomach any such action, and it will be critical to see any and all developments in what remains a volatile situation across the common currency zone.

Fundamental data in the week ahead will likely take a backseat to broader financial market activity, but it may be important to watch any surprises in upcoming Q4, 2009 Gross Domestic Product reports from individual countries and the broader Euro zone economy. Consensus forecasts call for the second consecutive quarter of Euro zone economic growth at a 0.3 percent QoQ change. Any especially sizeable surprises could have pronounced effects on domestic financial markets and—by extension—on the highly risks-sensitive Euro currency. Long-term correlations between the Euro/US Dollar exchange rate and the US S&P 500 remain near record-highs and emphasize the pair’s sensitivity to risk appetite. Suffice it to say, any strongly negative GDP data releases or continued EMU deficit struggles could have similarly dire effects on the Euro.

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.