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Monday, 08 November 2010 06:53

Forex: Euro Looks For Support, U.S. Dollar Benefits From Flight to Safety

Contributed By: DailyFx

Talking Points

* Japanese Yen: Rallies Across The Board
* British Pound: Holds Narrow Range
* Euro: Investor Confidence Advances to Three-Year High
* U.S. Dollar: Fed Officials on Tap

The Euro slipped to a low of 1.3890 on Monday as investors scaled back their appetite for risk, and the single-currency may depreciate throughout the North American trade as risk sentiment continues to dictate price action in the foreign exchange market. With the U.S. dollar regaining its footing, the EUR/USD looks as though it will retrace the advance from October as it appears to have carved out a near-term top ahead of 1.4300. However, as the euro-dollar bounces back from the 61.8% Fibonacci retracement from the 2009 high to the 2010 low around 1.3890-1.3900, we may see the pair hold steady throughout the day as the economic docket remains fairly light for the remainder of the day.

Nevertheless, investor confidence in the Euro-Zone rose to a three-year high in November, with the Sentix survey advancing to 14.0 from 8.8 in October to exceeded projections for a 10.0 print, while the trade surplus for Germany widened to EUR 16.8B in September from EUR 9.0B following a 3.0% in exports. At the same time, we saw industrial outputs in Europe’s largest economy unexpectedly contract 0.8% in September to mark the biggest decline in over a year, but it seems as though currency traders are showing little reaction to the mixed batch of data as fears surrounding the European debt crisis resurface. European Union Economic and Monetary Affairs Commissioner Olli Rehn has flown into Ireland today to review the government’s new budget plan, which will increases tax revenues by as nearly EUR 6B over the following year, and the uncertainties surrounding the economic outlook may continue to drag on the exchange rate as investors weigh the prospects for a sustainable recovery. As the governments operating under the single-currency tighten fiscal policy to address the budget deficit, there could be increased pressures on the European Central Bank to support the real economy as the rebound in global trade cools, and the Governing Council may uphold the expansion in monetary policy throughout the beginning of 2011 in order to balance the risks for the region.

The British Pound extended the decline from Friday, with the exchange rate slipping to a low of 1.6102 during the overnight trade, but the GBP/USD may continue to push higher over the near-term as it maintains t he upward trend from May. As the Bank of England holds the benchmark interest rate at 0.50% and maintains its asset purchase target at GBP 200B, the neutral policy stance endorsed by the central bank could spur a rise in interest rate expectations as the recovery in the U.K. slowly gathers pace, and members of the MPC may see scope to start normalizing monetary policy over the coming months as price growth continues to hold above the government’s 3% limit for inflation. However, as the BoE is scheduled to deliver its quarterly inflation report due out later this week, the GBP/USD may be confined within a narrow rate in the days ahead, but hawkish commentary from the BoE could spark another short-term rally in the exchange rate, which could lead the pound-dollar to retrace the decline from earlier this year.

The greenback advanced against most of its major counterparts, while the USD/JPY slipped to a low of 81.00 as the Japanese Yen rallied across the board, and the rise in risk aversion may dictate price action throughout the day as the economic docket remains fairly light for Monday. We have Fed policy makers scheduled to speak throughout the day, with James Bullard lined up to speak on deflation at 17:30 GMT, who will be followed by Richard Fisher at 18:00 GMT. In addition, the Fed’s Kevin Warsh is scheduled to speak on the economy at 20:30 GMT, and comments from the central bankers could spark a shift in market sentiment as central bank maintains a cautious outlook for future growth. Nevertheless, as equity futures foreshadow a lower open for the U.S. market, the drop in risk appetite may keep the U.S. dollar afloat throughout the day, and the greenback may appreciate further throughout the day as market sentiment continues to dictate price action in the currency market.

Published in Forex News
Monday, 08 November 2010 06:53

Best Trade Involving the Regional Currencies Might Be Long NOK/SEK

Contributed By: DailyFx

OVERVIEW – Economic developments in the region are becoming less and less influential in terms of their impact on price action in the local currencies, with the direction in the markets highly contingent on the overall direction in the US Dollar. The FX markets have broken away from traditional correlations of risk on and risk off, with the dominant theme now one of US Dollar sentiment. Should the US Dollar manage to mount a significant recovery, then we would expect to see the local currencies come under pressure across the board. However, should the US Dollar continue to slide, then we foresee additional upside in the Nordics, with both the NOK and SEK outperforming all of the major currencies. We would however suggest that it may be worth looking at being long the NOK against the SEK at this point, with the NOK/SEK cross looking quite stretched and due for a material bounce. There are no key economic releases slated for Monday.

Eur/Sek Although the overriding trend is still intensely bearish, the market looks to have finally found some form of a base by 9.09 after triggering an inverse head & shoulders pattern. From here, look for additional upside back towards a measured move objective by 9.50 over the coming days. Ultimately, only back below 9.13 would delay and give reason for concern.

Eur/Nok Overall price action remains quite choppy with the market confined to a well defined range over the past several weeks between 7.80 and 8.20. The latest rally attempts have once again stalled out just over the 8.20 range resistance, and the risks from here are for range trade resumption back towards the 7.80 area over the coming sessions. Only a close back above 8.20 would negate outlook.

Usd/Sek The latest rally attempts have once again stalled out and any hopes for the formation of a material base by 6.50 are looking less and less likely. The underlying trend remains intensely bearish and a close below 6.50 will solidify this fact and open the door for the next major downside extension. At this point, only a break back above 6.83 would negate outlook and give reason for pause.

Usd/Nok The latest rally attempts have once again stalled out and any hopes for the formation of a material base by 5.70 are looking less and less likely. The underlying trend remains intensely bearish and a break below 5.70 will solidify this fact and open the door for the next major downside extension. At this point, only a break back above 5.96 would negate outlook and give reason for pause.

Gbp/Nok Overall price action remains quite choppy with the latest sharp sell-off being very well supported ahead of psychological barriers by the 9 handle. From here, we will use the 9.50 level as a gauge for directional bias. While the market holds below, we would expect to see downside pressures persist, but back above will relieve downside pressure and potentially open some fresh upside back towards the 10.00 handle.

Nok/Jpy Remains confined to a multi-day range broadly defined between 13.25 and 14.50. The market has most recently stalled out by the range highs, and as such, the preferred strategy is to look to sell in favor of a continuation of the prevailing range trade. Ultimately, a close back above 14.50 would be required to negate.

Published in Forex News

Contributed By: DailyFx


On Friday, in our Opening Comment, we warned of a potential pullback in the Euro, despite the fact that at the time there were no real signs of such reversal on either the technical or fundamental front. In our analysis, we cited our in-house proprietary model that tracks retail positioning as the source for our reversal warning. While the Euro had remained well bid into Friday, retail traders had actually been cutting back on their Euro shorts to suggest that they had finally given up on selling the Euro, making it an optimal time for a reversal to finally take place. We also highlighted the fact that because most analysts and market participants (including my own technical bias) were now targeting a direct retest into the 1.4500 area following the break back above 1.4160 last week, the probability for a let-down had dramatically increased as it is often the times when there is no reason for a market to reverse that it actually does so.

Relative Performance Versus USD Monday (As of 11:35GMT)

1. YEN+0.18%
2. STERLING -0.31%
3. CAD-0.45%
4. AUSSIE-0.52%
5. SWISSIE-0.59%
6. EURO-0.83%
7. KIWI-1.18%

Clearly, the fundamental catalyst for the latest pullback in the Euro has been driven by a solid employment report out of the US on Friday, which once again has investors reconsidering the latest Fed policy and stance towards QE. While the Fed did indeed announce additional QE measures of up to $600B, there were no guarantees that all of this would in fact be necessary and there was every indication that should conditions improve, the Fed would reserve the right to tighten up on policy. This of course would be a net US Dollar positive (not positive for US equities) as interest rate differentials would undoubtedly narrow back in favor of the Greenback. Furthermore, the latest solid economic data and reversal in the US Dollar would also have investors reminded of the fact that 3 new members are scheduled to join the FOMC in January, all of whom share a more hawkish approach to monetary policy.

An op/ed piece published in the WSJ on Monday reaffirms this fact, with Fed Warsh echoing our sentiments exactly. Here are some excerpts form the piece: “The FOMC did not make an unconditional or open-ended commitment. I consider the FOMC’s action as necessarily limited, circumscribed andsubject to regular review”…….“Policies should be altered if certain objectives are satisfied,purported benefits disappoint, or potential risks threaten to materialize”…..“Evidence that recent weakness in the dollar,rising commodity prices and other indicators feed into final prices could mean the Fed’s price stability objective might no longer be a compelling policy rationale”….“In such a case – even with the unemployment rate still high – wewould have cause to consider the path of policy. This is truer still ifinflation expectations increase materially.”

Finally, although we did not mention this in our report on Friday, we are not at all surprised to see negative headlines resurface in Europe relating to the distressed Eurozone economies. Indeed, Ireland is back in the news with a report saying that Ireland may need a bailout from the IMF. This is generally the way markets work and how sentiments shift so quickly when the price begins to reverse one way or another. Renewed upside pressures in the Greenback, result in renewed fears over developments in economies and currencies of those countries affected by the market reversal. Any positive data out of Europe on Monday has been completely ignored in light of these renewed European debt concerns, with some solid German trade and current account, along with a much better Eurozone sentix investor confidence, failing to prop the beleaguered Euro, while the much weaker than expected German industrial production has only helped to accelerate declines. Elsewhere, Swiss unemployment held steady as was expected.

Looking ahead, economic releases are few and far between in North American trade, with the only meaningful data coming from Canada housing starts (183k expected) at 13:15GMT. However, Fed officials make up for the lack of US data, with Fed Bullard at 17:30GMT, Fed Fisher at 18:00GMT and Fed Warsh at 20:30GMT. US equity futures are pointing to a lower open, while commodities are also trading in the red.



EUR/USD: The latest break to fresh multi-day highs beyond 1.4160 has lacked any real follow through, with the market stalling out ahead of 1.4300 and reversing course quite sharply. From here, it is difficult to establish any clear directional bias, but while the price holds above 1.3695, the overall pressure remains on the upside and dips can be expected to be well supported. Back below 1.3695 will however relieve topside pressure and force a shift in the structure.

USD/JPY: While we like the idea of the market establishing a major base by current levels over the medium and longer-term, short-term price action has still not confirmed any signs of a bottom, with the price action over the past few days more characteristic of a bearish consolidation ahead of the next drop towards the record lows. Ultimately, a close back above 82.00 will now be required to relieve downside pressures. However, we will be on the lookout for an opportunity to buy on dips below the 79.75 record lows.

GBP/USD: The market has been holding above 1.6000 barriers over the past few days, and has most recently pushed beyond 1.6100. This opens the door for additional upside over the coming days, with the 1.6500 figure standing out as the next major resistance point. There is some short-term support by 1.6075, and a break and close back below this level will be required to take the pressure off of the topside.

USD/CHF: We contend that the market is in the process of carving a material base by 0.9460, and any setbacks should be very well supported ahead of 0.9500 in favor of a sustained recovery. The market should in fact hold above the 0.9580 area on a close basis which represents a 78.6% fib retracement off of the latest move. Ultimately only back below 0.9460 would negate and give reason for pause. Look for a break back above 0.9740 to accelerate.

Losses in Eur/Usd have been led by Russian commercial and Middle Eastern sellers with semi-official demand failing to hamper the drop. Macro funds and real money supply in Cable with an ACB on the bid, and a US prime name seen on the offer repeatedly in Eur/Jpy

Published in Forex News

Contributed By: DailyFx

Fundamental Outlook

The Bank of England is expected to release their quarterly inflation report on Wednesday, November 10, 2010. The report is of great importance due to the fact that it precedes the BoE minutes on November 17th. Inflation forecast by the central bank is expected to take into account the spending cuts announced by the government last month, which is approximately 800 billion pounds. The increase in the value added tax (VAT) measures is projected to keep prices at their elevated levels; however, tough austerity measures to be implemented by the government in the upcoming months will weigh on growth and may force policy makers to follow the Fed and purchase treasuries next year. In turn, the BoE could increase its mid-2011 inflation forecasts (which will raise interest rate expectations) or keep expectations unchanged in order to see the impact of the planned VAT hike on inflation expectations. Not to overlook, economic activity in Great Britain doubled economists’ expectations in the third quarter as figures rose 0.8 percent; thus, traders should not rule out higher growth estimates for 2010 year end. Meanwhile, I expect the BoE to raise concerns of consumer spending as households begin to save amid uncertainty in growth. All in all, a hawkish BoE will validate my bullish GBPUSD bias.

Technical Outlook

GBPUSD Daily Chart


GBPUSD: The pair has recently bounced off of key support at the 50-day SMA, which coincided with the rising trend line. In turn, the pair had reversed course and continued its northern journey. Upside risks remain so long as price action is capped by the 10 and 20-day moving averages. Meanwhile, the MACD has yet to reverse to the downside. I will look to tighten my stop ahead of the quarterly inflation report in order to avoid any unforeseen losses.

Published in Forex News

Contributed By: DailyFx


The dollar index notched up its best day of gains since mid-October and its second best day of gains in four months as NFPs on Friday came in much better than expected. I had considered the eventualities of a stronger NFP reading Friday and how investors would react considering the open-ended language from the Fed, which allows them to slow bond-purchases as they deem necessary. Following a better than expected NFP reading many players will now be wary of the Fed doing exactly that (slowing their purchases) as the economy improves, which boosted the dollar late last week and has allowed the index to start the week on the front foot.

After this strong reading we have noticed a material shift of focus back onto forgotten topics, like Ireland and Portugal, which have been cited over-night has part of the catalyst for sharp euro declines. We find this to be a remarkable coincidence that over the same period that NFPs knock QE2 prospects all of a sudden traders are interested in what is taking place in Europe once again. Therefore, we finally see the possibility of the dollar forming a material base, something we have been looking for over the last week, as focus shifts away from the dollar and back to the euro which is likely to come under pressure since its recent rise is not representative of the underlying fundamentals in the euro-region.

Technically, the index may be in the process of carving out a double-bottom with a break and close back above 77.00 confirming the initial forming of a bottom. We will then look for a break out of recent trend highs above 78.30 which should accelerate gains in the index back toward the psychologically important 80.00 level.

Published in Forex News
Monday, 08 November 2010 06:34

Euro Reverses from Former Congestion Zone

Contributed By: DailyFx


The EURUSD has reversed after entering the congestion area from January of this year. The congestion area is 14215-14580 (2010 high to date). Near term, the decline appears impulsive and near term support is 13850 and 13800. I favor short positions on rallies. 14000 and 14100 (former supports) are now resistance.

Published in Forex News

USD Dollar (USD) – The Dollar strengthened versus most of the major currencies after U.S. nonfarm payrolls rose more than expected last month (151K vs. 63K forecast) and caused big movements on the pairs. There were also declarations from Bernanke regarding inflation, in which it is expected to be kept low and stable, supported by a stronger Dollar. The NASDAQ and Dow Jones increased a by 0.06% and 0.08% respectively. Crude oil strengthened by 0.5%, closing at $86.91 a barrel, the highest price in two years. Gold (XAU) rose by 1.1%, closing at $1397.70 an ounce, a new historic record. Today, FOMC Member Bullard and Warsh will Speak.

Euro (EUR) – The Euro weakened versus the Dollar after Retail Sales dropped 0.2% in September (-0.2% vs. 0.3% forecast) and positive payrolls data which came from the US, supported a stronger Dollar. The EUR/USD has a strong upwards trend, and as long as the price is above the 10 moving average and shows a positive RSI, a long position is preferred. If the pair breaks below the 1.3980 level, the price could decrease to 1.3900. Overall, EUR/USD traded with a low of 1.4024 and with a high of 1.4230. Today, German Industrial Production is expected to decline from 1.70% to 0.40%.

EUR/USD – Last: 1.3944








British Pound (GBP) – The Pound declined from near a ten month high in Forex trading versus the Dollar as a government report showed U.S. employers added more jobs than forecast last month and declarations from Bernanke about lower inflation expectations, led investors to prefer the Dollar instead of the Pound. The momentum of the GBP/USD is absolutely bullish, and as long as the price is trading above 1.6100 levels and above the 10 moving average, a long position is preferred. Overall, GBP/USD traded with a low of 1.6166 and with a high of 1.6279. No economic data is expected today.

GBP/USD - Last: 1.6120








Japanese Yen (JPY) –The Yen was weak versus the Dollar after very good data from the US supported a stronger Dollar, drifting the Yen as well. The USD/JPY has been trading around 80.00-81.00 area. In the last few days, the main support line on the daily chart is still located at 80.00, and the momentum is still bearish as long it‘s trading below the 82.00 level. Overall, USD/JPY traded with a low of 80.62 and with a high of 81.46. No economic data is expected today.

USD/JPY-Last: 81.22







Canadian dollar (CAD) – The Canadian Dollar erased an earlier loss versus the US Dollar on Friday as a report was released showing the U.S. added more jobs than forecast in October. In addition, the Unemployment Rate came out better than forecast (7.9 vs. 8.0), and Building Permits came out at 15.3% vs. 3.0% forecast, both supporting a stronger Canadian currency. The support level of the USD/CAD on the daily chart is located at 0.9980, and if the USD/CAD breaks below this level, a short position is preferred and the momentum continues to be positive for the Canadian Dollar. Overall, USD/CAD traded with a low of 0.9991 and with a high of 1.0089. Today, Housing Starts are expected at 181K vs. 186K prior.

USD/CAD - Last: 1.0019










Published in Forex Articles

USD Dollar (USD) – The Dollar fell sharply against the other major currencies in Forex trading after the Federal Reserve announced a fresh round of asset purchases to kick start a slow growing U.S. economy. Initial Unemployment Claims in U.S. increased more than forecast to 457,000 vs. 437K forecast succeeded to support a weaker Dollar. NASDAQ and Dow Jones strengthened by 1.46% and 1.96% respectively, crude oil jumped by 2.1%, closing at 86.5$ a barrel, Gold (XAU) accelerated by 3.4%, reached to a new historic record (above 1390$ during the session) , closing at 1383.1$ an ounce. Today, Nonfarm Payrolls is expected to be 45K vs. -95K prior, Unemployment Rate is expected to remain at 9.60%, Fed Chairman Bernanke Speaks.

Euro (EUR) – The Euro traded near a nine month high against the Dollar as speculation the global economic recovery is gaining traction damped demand for the US Dollar as a refuge. In addition, the interest rate remain unchanged at 1.0% . The EUR/USD has a strong upwards trend, as long the price is above the 10 moving average and shows a positive RSI a long position is preferred. Overall, EUR/USD traded with a low of 1.4102 and with a high of 1.4282. Today, Retail Sales are expected to become positive 0.10% vs. -0.40% prior, German Factory Orders are expected to decline from 3.40% to 0.50%.

EUR/USD – Last: 1.4194







British Pound (GBP) – The Pound was higher against the Dollar, touching a ten month record after the release of U.S. data on Initial Jobless Claims which drifting higher yielding assets, moreover, the interest rate remain unchanged at 0.5%. The momentum of the GBP/USD is absolutely bullish, as long the price is trading above 1.6100 level a long position is preferred. Overall, GBP/USD traded with a low of 1.6087 and with a high of 1.6299. Today, PPI Input is expected to rise from 0.70% to 0.90%.

GBP/USD - Last: 1.6258







Japanese Yen (JPY) –The Yen strengthened against the Dollar, following the Federal Reserve’s announcement of a second round of quantitative easing, also the Unemployment Claims data support a weaker Dollar during the session. moreover, the interest rate remain unchanged at 0.10%. The USD/JPY has been trading around 80.00-81.00 area in the last few days, the main support line on the daily chart is still located at 80.00, the momentum is still bearish as long it‘s trading below the 10 moving average and the 82.00 level. Overall, USD/JPY traded with a low of 80.58 and with a high of 81.22. No economic data expected today.

USD/JPY-Last: 80.82







Canadian dollar (CAD) – The Canadian Dollar continued to rise versus the Dollar as oil jumped and stocks increased, drifting the Canadian as well. Ivey PMI came out at 56.7 vs. 65.8 forecast. The support level of the USD/CAD on the daily chart is located at 1.0000, if the USD/CAD breakdown this level a short position is preferred and the momentum continues to be positive for the Canadian Dollar Overall, USD/CAD traded with a low of 1.0010 and with a high of 1.0097. Today, Employment Change is expected to rise from -6.6K to 10.0K, Unemployment Rate is expected to remain at 8.0%,Building Permits is expected at 3.40% vs. -9.20% prior.

USD/CAD - Last: 1.0030










Published in Forex Articles
Friday, 05 November 2010 10:11

European Stocks Mixed after US Jobs Report

Contributed By: DailyFx

Europe Session Key Developments

* IBEX 35 Experiences Largest Decline Among 5 Major Indexes
* German Dax Rallies to Two Year High

European Stocks Mix after US Jobs Report
European Markets closed mixed as the Stoxx 600 was on the verge of extending a six-month high, after U.S. payrolls climbed more than forecast, increasing optimism the overall economy will recover. Total payrolls advanced 151,000, exceeding the median estimate of economists surveyed by Bloomberg news and following a revised 41,000 drop the prior month that was smaller than initially estimated. The recent market rally has been facilitated by the US Federal Reserve’s decision to pursue further quantitative easing by purchasing 600 billion dollars in assets. The overall effect and the risks associated with this purchase are unknown, but as of now, investors seem to be speculating a positive outcome. However, many are weary that the Fed’s QE will not do as much as anticipated and the market has already priced in any effects. In corporate news, earnings across Europe seem to remain strong as the majority of large corporations seem to be beating estimates. At the end of the day, 5 of the 18 western European markets climbed.

FTSE 100 / 5,875.35 / +12.56 / +0.21%
The FTSE 100 fluctuated between gains and losses as 6 out of 10 sectors closed in the green. The benchmark gauge rose after better than expected US payrolls propelled the index to its highest level in more than 2 years. Vedanta Resources, Xstrata Plc and Antofagasta Plc all advanced more than one percent as copper reached a 28-month high after workers went on strike n Chile. Smith & Nephew Plc climbed 5.1 percent as the company announced third quarter profit that outpaced expectations. ARM Holdings Plc, a UK designer of semiconductors, increased 3.3 percent as CEO Warren East announced the tablet PC market could grow to as much as 60 million unit sales next year. Royal Bank of Scotland Group Plc fell 3.8 percent as the lender reported a smaller than expected net loss.

CAC 40 / 3,916.73 / -0.05 / -0.00%

The French benchmark gauge declined today, trimming its weekly advance to 1.9 percent. Alston SA fell 2.6 percent to 34.87 Euros after Societe Generale SA lowered its recommendation for the world’s largest power equipment maker to “sell” from “hold.” Etablissements Maurel & Prom SA advanced 1.3 percent as the company announced third quarter sales that outpaced expectations. Lafarge SA fell 2.2 percent after two straight days of gains. The company reported an 8 percent decline in third-quarter profit.

DAX / 6,754.20 / +19.51 / +0.29%
The German index slightly advanced at the end of the trading session on Friday. The benchmark gauge rallied to a two-year high after US payrolls beat forecasts in October, boosting optimism about the overall economy. HeidelbergCement AG advanced as Ludwig Merckle increased his stake in the world’s third-largest maker of cement and concrete. Pfeiffer Vacuum Tecyhnology AG advanced 3.5 percent as Goldman Sachs Group Inc. recommended buying the share. Singulus Technologies AG slumped after forecasting an operating loss. Deutsche Bank AG advanced 1.6 percent as CEO Josef Akermann announced that he sees enormous potential in the Chinese market.

IBEX 35 / 10,428.10 / -174.70 / -1.65%
The Madrid benchmark index experienced the largest loss among the 5 major benchmark indexes as 9 out of 10 sectors closed in the black. Banco Sabadell SA fell for a third day, losing 3.8 percent, as the company announced that shareholders holding more than 90 percent of Banco Guipuzoano SA have accepted its takeover bid. Grifols SA fell 2.6 percent after the largest maker of blood-plasma products in Euroope announced it would seek ways to expand in the US. Service Point Solutions SA declined 1.8 percent, the third decline this week alone. The company will finance acquisitions through share sales as it resumes takeovers after a two-year halt.

S&P/MIB / 21,816.10 / -256.94 / -1.16%
The Italian index closed the week in the red after yet another decline. A2A SpA dropped for a fourth day this week, losing 1.7 percent. Cheuvreux downgraded the stock to “outperform” from “selected list” as the third quarter based on a weaker outlook by the company. Banca Monte dei Paschi di Siena SpA declined 3.5 percent after Bank of America Merilll Lynch Global Research announced that Italian banks took a more conservative view on revenue evolution in light of moderate growth expectations for the overall economy. Fiat SpA advanced 1.6 percent, gaining for a third straight day after S&P assigned a prelimary BB+ rating with a negative outlook to Fiat Industrial, the unit that the CEO is spinning off.

Published in Forex News

Contributed By: DailyFx

The Japanese Yen is little changed after the Bank of Japan kept its benchmark overnight interest rate target between 0.0% and 0.1%, while maintaining its asset purchase program at $5 trillion Yen and its credit-loan program at 30 trillion Yen. The central bank also got into more specifics with regard to what type of exchange traded funds and real estate investment trusts it would buy with the funds.

Some market participants speculated that the BOJ would increase the size of its quantitative easing program from $5 trillion Yen after the central bank moved the date of the November meeting forward so that it would follow shortly after the Federal Reserve policy meeting. But as the Japanese currency did not advance meaningfully on the Fed action—it actually fell versus some of its rivals—there was little urgency for the BOJ to act after having done so just last month.

Traders will have to watch to see whether USD/JPY can hold recent lows near 80, just above the all-time lows of 79.75. If it can, there is a good chance the pair may finally be bottoming out. Otherwise, a break would simply be seen as a resumption of the downtrend that has plagued this pair for months now.

Traders may wish to focus on Yen crosses such as AUD/JPY, NZD/JPY, and CAD/JPY, for they have the potential to advance irrespective of what the U.S. Dollar does.


Published in Forex News
Page 22 of 35

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