USD found support yesterday supported by a weak EUR, but USD/Majors back in ranges ahead of US data.
Overnight News Bullets
- UK HBOS Plc houses Sep, out at -0.6% vs 0.4% exp. YoY out at 10.7% vs 11.1% exp.
- UK BoE leaves interest rates at 5.75% as expected.
- EC ECB leaves rates at 4.00% as was market consensus.
- US Initial Jobless Claims Sep 29, out at 317K vs 310K exp.
- US Continuing Claims Sep 22, out at 2541K vs 2550K exp.
- CA Building Permits Aug, out at 1.4% vs 1.6% exp.
- CA Ivey Purhasing Managers Index Sep, out at 56 vs 60 exp.
- US EIA Natrural Gas Storage Change Sep 28, out at 57 vs 65 exp.
- JN Official Reserve Assets Sep, out at $945.6B vs a prior reading of $932.2B.
- JN Leading Economic Index Aug, out at 30.0% in line with exp.
- JN Coincident Index Aug, out at 83.3% in line with exp.
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 |
| 07:30 | SW | Budget Balance (Sep) | 9.6B (prior) |
| 08:00 | NO | Industrial Produiction MoM/YoY (Aug) | 7.8%/2.9% (prior) |
| 08:00 | NO | Ind. Prod. Manufacturing MoM/YoY (Aug) | 0.2%/4.5% |
| 10:00 | EC | Euro-Zone OECD Leading Indicator (Aug) | 107.9 (prior) |
| 11:00 | CA | Unemployment Rate (Sep) | 6.0% |
| 11:00 | CA | Net Change in Employment (Sep) | 17.5K |
| 12:30 | US | Change in Nonfarm Payrolls (Sep) | 100K |
| 12:30 | US | Unemployment Rate (Sep) | 4.7% |
| 12:30 | US | Net Change in Manufacturing Payrolls (Sep) | -10K |
| 12:30 | US | Avg. Hourly Earnings MoM/YoY (Sep) | 0.3%/3.9% |
| 12:30 | US | Avg. Weekly Hours (Sep) | 33.8 |
| 13:10 | US | Fed’s Kohn Speak on Economic Outlook | |
| 17:00 | US | Baker Hughes US Rig Count | 1760 (prior) |
| 19:00 | US | Consumer Credit (Aug) | $9.5B |
This and Next Week’s Highlights:
| Date | Region | Release |
| 8 Oct | UK | PPI, Industrial & Manufacturing Production, NIESR GDP Estimate |
| 8 Oct | GE | Factory Orders |
| 9 Oct | GE | Trade Balance, Industrial Production |
| 9 Oct | JN | Eco Watchers Survey |
| 9 Oct | SW | AMS Unemployment Rate |
| 9 Oct | UK | Trade Balance |
| 9 Oct | CA | Housing Starts |
| 9 Oct | US | FOMC Minutes from Sep. 18th, ABC Consumer Confidence |
| 10 Oct | NO | CPI, PPI |
| 10 Oct | US | Wholesale Inventories |
| 10 Oct | UK | Leading Indicator, Coincident Indicator, RICS House Price Balance |
| 10 Oct | JN | Machine Orders, Money Supply, Current Account, Trade Balance |
| 11 Oct | AU | Unemployment Rate, Participation Rate |
| 11 Oct | JN | BoJ Target Rate |
| 11 Oct | SW | CPI |
| 11 Oct | E-Z | GDP |
| 11 Oct | US | Trade Balance, Import Price Index, API/DOE Inventories |
| 11 Oct | CA | Housing Price Index, Int’l Merchandise Trade |
| 11 Oct | NZ | Retail Sales |
What's going on?
- Oil protected gains above $81 a barrel, snapping five-day string of losses after news of unexpectedly low U.S. distillate and natural gas stocks stoke fears over peak winter supplies. WTI November contract was closed at $81.44 on Thursday, only to concede 19 cents on Friday’s Asian session.
FX
USD likely to weaken again on worse than expected Nonfarm and Unemployment Rate
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| EUR | USD | JPY | GBP | CHF | AUD | CAD | NZD | NOK | SEK | PLN |
| + | - | | | | | + | | + | + | |
FX Trading Strategies
| Pair | Supp. | Resis. | Comments |
| EURUSD | 1.4060 | 1.4210 | As we expect the US Job report to come out on the weak side, the
pair has further upside potential. We buy the break of 1.4150 bid, stop offer at 1.4125, targeting 1.4225. |
| GBPJPY | 236 | 237.83 | Buy break of resistance, stop offer at 237.58, targeting 239.60 |
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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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