Expect A Slow Day, With An Empty Calendar And Labour Day In the US | |
December-2007 Eurodollar Futures have now tested 95 twice in the past week and have been rejected. The market is still betting against Bernanke.
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Overnight News Bullets - E-Z Consumer Confidence (Aug) out at -3 vs. -2 expected. Industrial Confidence (Aug) out at 5 vs. 4 expected. Business Climate Indicator out at 1.41 vs. 1.30 expected. Economic Confidence out at 110 vs. 110.3 expected. Services Confidence out at 20 as expected.
- E-Z Unemployment Rate (Jul) out at 6.9% as expected.
- E-Z CPI Estimate YoY (Aug) out at 1.8% as expected.
- UK GfK Consumer Confidence Survey (Aug) out at -4 vs. -7 expected.
- US Personal Income (Jul) out at 0.5% vs. 0.3% expected.
- US Personal Spending (Jul) out at 0.4% vs. 0.3% expected.
- US PCE Deflator YoY (Jul) out at 2.1% as expected.
- US PCE Core MoM/YoY (Jul) out at 0.1%/1.9% vs. 0.2%/2.0% expected.
- CA GDP MoM (Jun) out at 0.2% vs. 0.0% expected. Quarterly figure annualized at 3.4% vs. 2.8% expected.
- US Chicago PMI (Aug) out at 53.8 vs. 53.0 expected.
- US Factory Orders (Jul) out at 3.7% vs. 3.3% expected.
- US U. of Michigan (Aug F) out at 83.4 vs. 82.5 expected.
- US Baker Hughes Rig Count out at 1829 vs. 1816 prior.
- AU AiG Performance (Aug) out at 52.4 vs. 57.4 prior.
- AU TD Securities Inflation MoM/YoY (Jul) out at 0.5%/2.9% vs. 0.6%/3.0% prior.
- AU Building Approvals MoM (Jul) out at 0.4% vs. -2.0% expected.
- AU Company profit QoQ (2Q) out at 1.4% vs. 2.0% expected.
O/N Data Heat map: | EU | US | JP | UK | SZ | AU | CA | NZ | NO | SE | FR | | | - | - | + | | - | + | | | | |
Calendar Today's Highlights: | Time (GMT) | Region | Release | Consensus | | 06:30 | SW | Swedbank PMI Survey (AUG) | 59.5 | | 07:30 | SZ | SVME-Purchasing Managers Index (AUG) | 62.0 | | | AU | Reserve Bank’s Interest Rate Meeting | | | 23:01 | UK | BRC August Retail Sales Monitor | | | 23:50 | JN | Monetary Base YoY (AUG) | Prior -2.3% | This and Next Week’s Highlights: | Date | Region | Release | | 4 Sep | AU | GDP, RBA Cash Target, AiG Performance of Service Industries | | 4 Sep | SZ | GDP | | 4 Sep | NO | Norway PMI | | 4 Sep | UK | PMI Construction, Nationwide Consumer Confidence | | 4 Sep | EC | Euro-Zone PPI, Euro-Zone GPD | | 4 Sep | US | ISM Manufacturing, ISM Prices Paid, Construction Spending MoM, Total Vehicle Sales, ABC Consumer Confidence | | 5 Sep | EC | PMI Composite, Euro-Zone Retail Sales | | 5 Sep | UK | BRC August Shop Price Index | | 5 Sep | US | MBA Mortgage Applications, Challenger Job Cuts, ADP Employment Change, Pending Home Sales, Fed’s Beige Book | | 5 Sep | CA | Bank of Canada Rate | | 5 Sep | JN | MOF Foreign Net Bonds/Stocks investment |
What's going on? - December-2007 Eurodollar Futures have now tested 95 twice in the past week and have been rejected. The market is still betting against Bernanke.
- Carry Trades: JPY-crosses will follow Europe higher today on disappointing Japanese data and stronger stocks.
FX USD making a strong reversal against EUR after Bernanke ![http://www.saxobank.com/__DotNet/Site/Analysis/GetImage.aspx?ResUID=9dd16402-7b26-4da6-a832-c7db16a14597]()
| EUR | USD | JPY | GBP | CHF | AUD | CAD | NZD | NOK | SEK | PLN | | | | - | - | | - | + | | | | | FX Trading Strategies | Pair | Supp. | Resis. | Comments | | USDCAD | 1.04 | 1.07 | We expect a follow-through in CAD-crosses today on back of the strong GDP on Friday. Sell the break of 1.0505 offer, targeting support around 1.04. Stop bid at 1.0535. | |
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FOREX : Foreign Exchange Market
FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.
The FOREX came into existence in 1971 when the fixed currency exchanges were abolished. Currencies no longer had fixed values after that; on the contrary, their rates (mostly taken in comparison with the USD) were fluctuating, and changed on a daily basis. Throughout the seventies and the eighties the FOREX grew steadily, showing more advancement in the later years. The market has stupendously grown from $70 billion USD a day to the staggering amount that it transacts today on a daily basis.
There are actually about five thousand trading institutions in the FOREX. These include international banks, central government banks such as the US Federal Reserve, and commercial companies and brokers for all types of foreign currency exchange. The best thing that shows the unbiased nature of the FOREX market is that it has no fixed headquarters anywhere – it operates primarily from all major cities like New York, Tokyo, London, Hong Kong, Singapore, Paris, Frankfurt, etc. One can even use the telephone or the internet to make the transactions. The major businesses at the FOREX are the buying and selling of products in other countries. Several transactions are also conducted from the currency brokers or traders who stand to make small profits with the daily fluctuations in the market.
Most of the FOREX business is centered on big banks and financial institutions, but it doesn’t mean that the FOREX is inaccessible to small investors. The recent changes in the financial regulations have effectuated this accessibility. Earlier, a minimum transaction size was required to conduct business with the FOREX. But the current rules have made it possible to break large inter-bank units into smaller bits. Each bit is worth as less as $100,000. This makes it possible to each individual investor through loans that are extended for trading, known as leverage. The ratio to control the lots is 100:1. This means, every $1000 USD will allow one to control $100,000 on the FOREX.
The benefits of trading with the FOREX are mentioned below:-
(1) Liquidity of Investments – As the FOREX is a huge market, the funds have a very high degree of liquidity. This is because of the presence of the international banks who provide their bids and carry out a large number of transactions on a daily basis. Therefore, there is always a buyer or seller for any type of currency.
(2) Highest Degree of Accessibility – The FOREX is open 24 hours a day for 5 days a week. Every Monday morning the exchange opens at Australian Standard Time and closes on Friday afternoon at New York time. Greater accessibility is provided because the transactions can be conducted from the person’s home or office.
(3) Open Market – At the FOREX, there are no secrets. All the fluctuations that occur in the market are made accessible to everyone at the same time. There is no insider trading in the FOREX.
(4) No Commission – There is no hassle of paying commission to the brokers in the FOREX. Here the brokers earn by setting up a difference between the buying price and the selling price of a currency, which is known as a spread.
It must be understood by now that for the FOREX to work effectively, the currencies must always be traded in pairs. For instance, the Japanese yen must be traded against the euro. When one kind of currency is sold, there should be another to be bought in its stead.
The profit happens because there is always mobility between the different currencies. Even if there is a miniscule change in the exchange rate, then it could mean substantial changes in the profits due to the large amount of money involved in the transactions. People are thronging to the FOREX and not any other institution due to the trust that they have in it. To add to the advantage, the market is absolutely well-advanced and uses sophisticated software for dealing out its transactions.
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