Dollar on the Rise (Bloomberg.com April 4th 2012)

April 4th 2012, Kristine Aquino & Monami Yui, Bloomberg.com

Hi everyone,
The USD rose up to more than what it had in a week against the Euro, reflecting signs of improvement in American employment. This improvement supports the US Federal Reserve's decision to hold off from increasing monetary accommodation (Aquino & Yui, 2012).

Definition: 

Monetary Accommodation or Accommodative Monetary Policy is an action taken by a central bank to set low interest rates to attain credit or prevent losing investors. It encourages spending by consumers and businesses when the economy is low by making money cheaper to borrow/obtain (Investopedia.com, 2012). 

What this means is that since the Federal Reserve is not implementing this policy, it shows that the US economy is experiencing some gains.

In other news, the Euro, AUD & NZD are experiencing declines as mentioned in the article below by Mario Singh.

To read the full article, go here:
Aquino, K & Yui, M 2012, Bloomberg.com

Uptrend Spotted in NZD/USD by Mario Singh (April 3rd 2012)

China reported positive figures over the weekend, sending risk currencies higher.

The Purchasing Managers’ Index, compiled by China’s logistics federation and the National Bureau of Statistics, rose to a one-year high of 53.1 in March from 51 in February.

As Australia’s largest trading partner, China’s news caused AUD/USD to spike up a hundred pips from Friday’s closing price.

Other risk assets followed suit.

Oil rose as much as 0.5% to hit $103.58 per barrel yesterday afternoon.

Numbers in Asia were also positively affected by China’s PMI figures. South Korea, Asia’s forth largest economy, saw a rise of 0.8% on their benchmark Kospi Index.

Amidst the euphoria which the markets so desperately need, analysts gave a cautious warning.

Although the PMI figure was reported as positive, the PMI figures from HSBC Holdings and Markit Economics actually reported a four-month low reading of 48.3. This contrasting figure showed that manufacturing and export orders actually declined.

The difference between the official figures reported by the National Bureau of Statistics and the unofficial figures reported by HSBC caused some volatility in the markets.

After spiking up 100 pips on yesterday’s opening, the AUD/USD pair fell 60 pips.

Elsewhere in Europe, finance ministers announced the firewall package over the weekend.

Essentially, they would commit 500 billion Euros in fresh bailout funds on top of 300 billion Euros already committed to rescue programs.

This figure does not take into consideration the one trillion Euros which the European Central Bank (ECB) lent to aid the region’s banks.

In a separate meeting this month, the G20 will decide whether Europe has done enough to warrant increased resources from the International Monetary Fund (IMF).

Over the weekend, Europe’s finance ministers insisted that they have fulfilled their side of the bargain.

Although EUR/USD spiked to a one-month high of 1.3380 when the news was reported, here’s a sobering thought.

The 500 billion Euros in fresh funds is not enough to bailout Italy and Spain. Over the next 3 years, Italy needs more than 500 billion Euros while Spain needs more than 300 billion Euros.

The commitment of 500 billion Euros is unfortunately, not enough to bailout Europe’s 3rd and 4th largest economies.

Top News This Week

Interest Rates announcements from Australia, Europe and UK throughout the week. I expect figures to remain unchanged at 4.25%, 1% and 0.5% respectively.

USA Non Farm Payrolls. Friday, 6th April, 8.30pm. I expect figures to come in above 205K (previous figure was 227K).

Trade Call

Short NZD/USD at 0.8175

On the H1 chart, an uptrend channel has been spotted on NZD/USD.

The bias is to go for a short once prices break below the lower channel and the minor resistance level located at 0.8182. We will go short once prices fall to 0.8175, which is 7 pips lower than the resistance level.

A stop loss of 40 pips is placed, which is located above the previous high. We will have 2 targets on this trade, First profit is taken at 0.8135 and the final position is exited at 0.8095.

Entry Price = 0.8175
Stop Loss = 0.8215
1st Profit = 0.8135
2nd Profit = 0.8095

(Source: Mariosingh.com)

Yen Loses Most Since '95 (Bloomberg, April 2 2012)

April 2nd 2012, Monami Yui, Allison Bennett & Kristine Aquino, Bloomberg.com

Over the week the Japan Yen slid 10% the last quarter against most of its counterparts, the biggest drop since 1995. A main reason for the JPY staying low is to keep its buyers coming at a satisfactory price, however despite all the efforts, international car manufacturer Toyota said that the Yen needs to be lower to help exports (Yui & Bennett, 2012). According to Toyota, based on last fiscal year’s profit forecast on an exchange rate of 78 yen to the dollar, and says it loses about 32 billion yen in operating income for every 1 yen gain against the greenback (Yui & Bennett, 2012). 


In other news, the USD fell against the Australian and New Zealand  at 0.8% and 0.4% respectively (Yui & Aquino, 2012). Besides that the Euro remains high against the Dollar as the USD lost 0.1%. 


So what is the future of the USD?
“Global PMIs are improving and that’s increasing risk sentiment across the markets,” said Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd. (NAB)“Across the board, you’re seeing the U.S. dollar a little bit weaker” (Yui & Aquino, 2012).


I guess we are just gonna have to see. See you all soon. 


To view the full articles, go here:
Dollar Declines Versus Peers, Bloomberg.com
Yen Losing Much since '95 Not Enough for Toyota, Bloomberg.com

VXSpotlight - Investopedia.com

Its Wednesday and the best things always come in 3s, right?

Today on Velomaxx Spotlight (VXS), we introduce you to Investopedia.com. 

 

Investopedia is the web's largest investment resource and it touches on everything investment from stock markets all the way to forex. 

Investopedia has its own Forex part which is thorough and definitely something we would recommend for anyone who has an interest in forex trading. 

On it you can find:

1) Live Rates that can be adjusted to by the Hour, 4 Hours, Daily and Weekly

2) Up-to-date updates on the market changes

3) Tutorials as well FAQs to answer your questions about the industry

and (my personal favorite) "Forex Term of the Day". 

So check out Investopedia by going to their website at http://www.investopedia.com/ and get a head-start and benefit from your trading.  Have a great day everybody!

*Velomaxx Spotlight (VXS) is a new function that we want to introduce by equipping our networks with up-to-date and reliable resources to be better traders. If you have come across a reliable website, book or magazine, send us a message and it might be featured on VXS. Thank you and have a great week. 

CAD, AUD & NZD Falls as USD Holds Gain (Bloomberg, March 28th 2012) )

March 28th 2012, Chris Fournier, Austen Sherman, Masaki Kondo, Kristine Aquino & Mariko Ishikawa, Bloomberg.com

G'day everyone,
Today the CAD saw a decline against most of its major peers as investors exited to seek a more secure site (Fournier & Sherman, 2012). The currency rose tremendously during week but quickly fell  as equities and commodities fluctuate (Fournier & Sherman, 2012). The past few weeks we saw an increase in the US consumers and that has prompted fall of the CAD.

It weakened 0.4% against the USD to 99.48 cents (Fournier & Sherman, 2012).

On the other side of the world, the AUD & NZD also witnessed declines as there is a drop in Asian stocks (Kondo, 2012). Since China is an important trading partner for both Australia & New Zealand, both currencies are headed to a drop as China reports a gauge for the nation's manufacturing on April 1 and slow growth in earnings for China's industrial companies (Kondo, 2012). Both currencies fell by 0.1% against the Dollar.

To read the full articles, go here:
1) http://www.bloomberg.com/news/2012-03-27/canadian-dollar-declines-versus-u-s-peer-as-oil-stocks-waver.html
2) http://www.bloomberg.com/news/2012-03-27/australian-n-z-dollars-hold-declines-on-global-stock-drops.html
3) http://www.bloomberg.com/news/2012-03-27/dollar-holds-gain-versus-yen-before-durable-goods-report.html

Spain May Yet Re-Ignite Euro-Zone Crisis (Mario Singh, March 27th 2012)

This week, Eurozone finance ministers will gather in Copenhagen for talks. The main agenda will centre upon strengthening of the region’s financial firewall.

The goal is to establish a massive bailout fund that could combine the European Financial Stability Facility (EFSF) and the system designed to replace it, the European Stability Mechanism (ESM).

The EFSF, which is due to expire next year, has a current total of 440 billion Euros.

It has since disbursed 192 billion Euros in three separate bailouts to Greece, Ireland and Portugal.

Under the current rules, the unused funds would be passed on to the ESM. The ESM itself would have a fresh war-chest of 500 billion Euros available for future use.

This would bring the entire bailout fund to about 750 billion Euros.

Besides increasing the size of the firewall to shield contagion, the European Commission is hopeful that the larger fund itself will encourage countries like China and the US to put up more money for the IMF.

Olli Rehn, the European Union economic affairs commissioner, said there was “no room for complacency” and urged the Eurozone “to conclude the comprehensive crisis response by reinforcing the euro area financial firewall”.

There is one country which could derail the plans of the Eurozone finance ministers – Spain.

Ahead of the meetings, Italy’s Prime Minister Mario Monti warned that Spain could reignite the European debt crisis, saying that Spain “hasn’t paid enough attention to its public accounts.”

As it is, Spain’s 10-year bond yields have been steadily climbing for the last three weeks, coming in at 5.39% last week.

Things are also not looking good for Spain Prime Minister Mariano Rajoy, who is struggling to reduce the country’s budget deficit in the face of a looming recession. Come 29th March, he would be facing his first general strike, as unions protest against changes to employment laws.

Top News This Week

Canada GDP m/m.Friday, 30th March, 8.30pm. I expect figures to come in at0.2% (previous figure was 0.4%).

Trade Call

Short CAD/JPY at 82.64

On the H1 chart, CAD/JPY has been on a steady downtrend – falling from a high of 84.96 to a low of 81.85 – a move of over 300 pips in just one week.

Current price movement is in a range, with Resistance located at 83.00 and Support located at 81.85. The bias is for us to go short.

We will go short once prices fall to 82.64. A protective stop of 40 pips is placed above the entry price, which is located a few pips above the Resistance level of 83.00.

We will have 2 targets on this trade. First profit is taken at 82.24 and the final position is exited at 81.84.

Entry Price = 82.64
Stop Loss = 83.04
1st Profit = 82.24
2nd Profit = 81.84

(Source: MarioSingh.com)

Yen Continues to Rise (Bloomberg, March 23rd 2012)

March 23rd 2012, Mariko Ishikawa, Candice Zachariahs, Kristine Aquino, Bloomberg.com

Today the Yen was set to rise against 16 of its major peers despite the concern of decline in the Chinese economy (Ishikawa & Zachariahs, 2012).

The Yen traded at 82.54 against the Dollar and has advanced 1.1% this week and yesterday touched 82.33, the highest since March 13th (Ishikawa & Zachariahs, 2012).

In other currency news, the Aussie Dollar fell this week at 1.8% the largest since the five-day period in December. The reason for this is the strong trading partnership Australia has with China, whose manufacturing may contract for a fifth month (Aquino, 2012).

To read the full articles, go here:
http://www.bloomberg.com/news/2012-03-23/yen-set-for-weekly-gains-as-stocks-fall-on-china-concern.html
http://www.bloomberg.com/news/2012-03-22/yen-gains-versus-euro-dollar-as-euro-area-industry-declines.html