Tag : Interest Rates

Forex Trading: GBP/JPY

Posted by Byung Koo at 3:25 am

For the speculative trader!

Big movement expected after BOE meeting, expectations no change but look out for policy statement.
The British pound may have fallen against most of the majors, but the currency did manage to make slight gains against the ultra-weak Japanese yen.
UK data was in line with expectations, as the purchasing managers’ index (PMI) for the services sector rose to 56.8 in December from 56.6. This indicates expansion in the sector for the eighth straight month, and adds to evidence that the economy is slowing recovering from recession.

Today the Bank of England (BOE) is anticipated to announce at 13:00 CET that they’ve left rates unchanged at 0.50 percent, but this won’t even be the market-moving part of the announcement. Instead, traders will be looking toward the BOE’s policy statement. This has consistently been the prime “news event” of recent rate decisions. Last month, the BOE indicated that they would likely wait until their February meeting before considering any changes to the Asset Purchase Facility (APF), which is currently aiming to purchase £200 billion worth of high quality assets. With no program changes expected this time around, there is potential for the British pound to gain on neutral news as traders will price in an end to the BOE’s quantitative easing program.

Trade idea:
Take a short position at 149.50 with a stoploss on 150.50 or take a long position at 145.75 with a stoploss on 144.60. Mulder Currency Fund puts this two orders in book before announcement of BOE and we will wait for the possible big movement.

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: AUD/USD

Posted by Byung Koo at 12:53 pm

In 2009 the Australian dollar appreciated a lot against the U.S. dollar but in my believe target for AUD/USD for 2010 will be 0,77. End of 2009 RBA raised the interest rate three times, on 7 October, 4 November and 2 December. The Reserve Bank’s objective of achieving an inflation rate of 2–3%, in latest report inflation was 1,3%. In latest Minutes of RBA you could hear, we won’t raise interest rates further in short term. The possibilities of rate hike by FED in 2010 increased a lot in late December, USD is in favor against the Australian dollar. Together with a drop in crude oil price in 2010(demand not so high as predicted) to 60 USD. The Australian dollar would drop sharply in 2010. In graphics you see a perfect triangle.

Forex Alert
Mulder Currency Fund will take a short position at 0,91. We could see this in the first weeks of January(see graphics).

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

2010 U.S. will lose their triple-A status

Posted by Mulder Venture at 10:57 am

The Big Trend

Excessive government spending causes foreigners and even our own citizens to continue to shun the dollar, which will continue to decline through 2010. China will begin to let the yuan appreciate, probably with an informal peg to a basket of competitive exporters. The yuan’s appreciation will export inflation to the U.S., not only in the obvious end-products, but also in the form of parts that are manufactured in China and used in assembled products here in the U.S.

Most economists expect inflation to remain flat due to high unemployment. Unemployment will likely remain around 10%, but it is normally around 5%. The dollar’s further devaluation (which by definition, is inflation) coupled with China’s appreciating yuan, will cause inflation here at home, long before most believe.

The Misplaced Assumption

The general assumption for interest rates is that they will remain low throughout 2010, with the Fed raising around mid-year. I expect the Fed to keep the funds rate near 0% through the end of the year and will likely use every arrow in his quiver to keep long-term rates low, at least until the end of April when the current “first-time” home buyer tax credit expires. Upon exhausting what can be done by the Fed, I expect the yield curve to steepen, with the 10- & 30-year Treasury yields rising sharply. Expect the 30-year yield to close above 6.5%.

The Watch List

Watch gold to rise above $1,500 during 2010. Miners, food and clean-water companies will have a good year. Especially companies selling products to the Chinese government or to the growing Chinese middle-class, regardless of the company’s domicile. People who stand to have a good year will likely consist mostly of conservative candidates come next November.

The Bold Prediction

Great Britain’s government debt, followed by U.S. Treasuries, will lose their triple-A status. Heavy deficit spending by Washington will continue to drive the dollar down as more countries and investors become concerned that the U.S. will not be able to pay debts through taxation or budget surpluses. As Treasury rates begin to rise, so will the deficit, both through the government’s overspending and due to the increased interest rate expense on current debt. The expectation, first with investors and then with rating agencies, will become one where the U.S. turns on the printing press. Expect AA+ by end of year.