tag:blogger.com,1999:blog-69447204227527624602024-02-07T15:49:58.509-08:00OmiCronFX OmiCronFX shows the way in profitable Foreign Exchange tradingStackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.comBlogger678125tag:blogger.com,1999:blog-6944720422752762460.post-50608820485334551592017-08-15T04:25:00.001-07:002017-08-15T04:25:15.681-07:00Is the US dollar’s decline since January 2017 a ‘Black Swan’ event?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk8t-rCihVddxHFEBuLS5rYpcOptshikRaBdhs1KHWD5ULXnHbOvR3pJxOawpj_xB7ax5vFaBIoy_xq8iG8CvPaCsTBAwoETX-hz9VmqLc6VTLCd5S8wraNGfLFotzl1EEapn1H2mWt_hf/s1600/2017-08-15_10-31-50.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="495" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhk8t-rCihVddxHFEBuLS5rYpcOptshikRaBdhs1KHWD5ULXnHbOvR3pJxOawpj_xB7ax5vFaBIoy_xq8iG8CvPaCsTBAwoETX-hz9VmqLc6VTLCd5S8wraNGfLFotzl1EEapn1H2mWt_hf/s1600/2017-08-15_10-31-50.jpg" /></a></div>
<br />
<div class="MsoNormal">
<i><span style="font-size: 12.0pt;">The OmicronFX algorithmic Forex trading system is
proving its reliability by being consistently profitable throughout 2017. It
was able to ride out a long-term extreme global economic event, and still show
profits.<o:p></o:p></span></i></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>The US dollar decline
as an extreme economic event<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The US dollar has been in a prolonged fall since the start
of the year. On July 23rd last, <b>Morgan
Stanley</b> said that “Our MS positioning indicator shows the most extreme USD
bearishness since its inception in 2009”. According to <b>The Wall Street Journal</b> on Aug 7<sup>th</sup>, the US dollar has
been “… suffering through one of its worst stretches in years”. The reasons for
this fall have to do with political events in Washington as much as with
economic announcements from the Federal Reserve - specifically, the belief by
the markets that Donald Trump will not now be able to carry out his tax reforms
because of the difficulties he is having with the US Congress, and even the
Republican Party, for which is supposed to hold the presidency. It is now also understood
that the Trump administration has come around to the belief that a weak dollar
is good for the US. However, there are real signs now that the Greenback has
reached a significant low, and is starting to rise again. Fundamentals,
including payrolls, retail sales and even GDP in the US are showing
increasingly valid signs of what could be termed robust good health.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>The factors for
success<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The success of the OmicrFX system in coming through this event was a combination of (1) the capital retention policies we have always used, (2)
the price action experience gained over the long development period of the
software, (3) as much diversification as was possible (bearing in mind that ALL
currencies ultimately respond to what is happening with the US dollar), (4) the
fundamental principle that the system incorporates of always playing both sides
of a move, so that there will be hedges in place for much of the time, and (5) last,
but not least, patience and perseverance during drawdowns. This last was made
possible by careful monitoring of the key indicators of leverage used and
drawdown size, to ensure that positions were never in danger from elevated
gearing.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b>The system is now
well developed<o:p></o:p></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It is important to state that this is not a solicitation for
investment. We cannot do that until such time as we are regulated. However, through
our professional advisors, we have engaged with the Central Bank of Ireland
with a view to becoming regulated under MiFID, the Markets in Financial
Instruments Directive of the European Union, to allow for trading on behalf of
clients throughout the countries of the European Economic Area (EEA). This
process is both expensive and time-consuming.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
If you would like to receive regular updates on the
performance of the various Forex trading accounts that we operate, as well as
our progress towards regulation, please send an email to the following address:
<a href="mailto:seamus.mckenna@omicronforex.com">seamus.mckenna@omicronforex.com</a>,
or sign up to receive occasional emails by clicking here: <a href="http://ethicalhft.com/Managed.html">http://ethicalhft.com/Managed.html</a><o:p></o:p></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-48541513504002704232017-03-26T14:13:00.001-07:002017-03-26T14:15:49.340-07:00Forex can seem easy, but consider that an amateur has never won the US Masters<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOf1Y4G8xLtL251WK5A4wBUi9SbNYiw516j693K5icl4d_4-H_Krk7fndiBpbVcoqiWeI4TLJtHWxGejoj6ovEQ4gHEiXrKZewg_ZcQ1zpPTd42rnsAc1pymsdqtHvBe_GKySvr-ycqBry/s1600/sunset-787826_640.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOf1Y4G8xLtL251WK5A4wBUi9SbNYiw516j693K5icl4d_4-H_Krk7fndiBpbVcoqiWeI4TLJtHWxGejoj6ovEQ4gHEiXrKZewg_ZcQ1zpPTd42rnsAc1pymsdqtHvBe_GKySvr-ycqBry/s1600/sunset-787826_640.jpg" /></a></div>
Two amateurs are invited to take part in the US Masters golf tournament in Augusta every year. They are the winner and runner-up of the United States Amateur Championship, known as the U.S. Amateur for short.<br />
<br />
Although there are many well known names among these invitees, those who went on to turn professional and carve out a niche in golfing history for themselves after they did so, such as Jack Nicklaus and Tiger Woods, none of them managed to win the Masters while they were still holding amateur status.<br />
<br />
There is a good reason for this. Professional golf requires extreme reserves of mental strength and stamina, as well as a total dedication to practice and training.<br />
<br />
It is the same with succesful Forex trading. For a newcomer, Forex can seem disarmingly simple. How hard can it be? After all, currency pairs can only go up or down, and you do not have to be correct all of the time. But people quickly find out that nothing could be further from the truth. For the unwary, the market is getting ready to chew up these newbies and then spit them out again, minus their equity.<br />
<br />
But Forex can be very profitable. For those who have served their time putting in the training, and who have studied how best to give themselves an edge, that is. And that is what we have done here at <a href="http://www.ethicalhft.com/">EthicalHFT</a>. Please feel free to browse our site and find out how we operate. Do not forget to read the pages about the risks that are involved.StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-37744914616494557812017-03-12T10:28:00.002-07:002020-03-27T06:11:36.356-07:00Most retail traders lose money: regulators<b><a href="http://www.ethicalhft.com/About.html">www.ethicalhft.com</a></b><br />
<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhud-1v_hQ0tDOHSLlOdE2DOCT6jYBJLCd7aO73xYGfeNKdk9qmkVAAJr_LJqRc-WWiXSkLvRg0KDughz6ZSsj7_1Qdd1Q1I50YMhtyZwUDs67PyH3ljoSunHRiQFNQeMH3YfcOCDcMdCqw/s1600/Central+Bank+cover.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhud-1v_hQ0tDOHSLlOdE2DOCT6jYBJLCd7aO73xYGfeNKdk9qmkVAAJr_LJqRc-WWiXSkLvRg0KDughz6ZSsj7_1Qdd1Q1I50YMhtyZwUDs67PyH3ljoSunHRiQFNQeMH3YfcOCDcMdCqw/s1600/Central+Bank+cover.png" /></a></div>
<b>The Central Bank of Ireland</b>, the financial regulatory authority for the Irish Republic, has issued a consultation paper on some topics that concern retail investors, mainly as they relate to trading Contracts of Difference (CFDs). The regulators have put forward the possibility of banning trading in CFDs altogether, although it is probably more likely that they will stop short of that and put in place safeguards for retail investors in Ireland that are more stringent than at present.<br />
<br />
One of the things that bothers the Central Bank is the use of leverage. They make the very valid point that allowing clients to purchase instruments with a total value approaching 50 times their initial deposit is setting those clients up for failure in most cases. That some brokers allow leverage of up to 400 times the initial deposit means that customers who take anything close to maximum advantage of this are almost certain to lose.<br />
<br />
According to the consultation paper, the Central Bank of Ireland, the Autorité des Marchés Financier (AMF, the French regulator) and the Financial Conduct Authority in the UK have all done research that shows that anything between 80% and 89% of retail investors lost money in 2014, 2015 and 2016.<br />
<br />
Here at EthicaHFT, we are very careful about the use of leverage. The absolute maximum we can go to during the week the 100 times equity. At weekends this reduces to 30 times so, as we hold positions over the weekend, our maximum is 30 at all times. In practice, we rarely make use of more than 15% to 20% of that lower leverage allowance.<br />
<br />
Among other things, the Central Bank of Ireland is considering making it a compulsory requirement that traders cannot have more than 25 time their initial deposit as leverage. That is fine with us.<br />
<br />StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-7913669402490184862017-02-28T07:58:00.001-08:002017-02-28T07:58:14.195-08:00The power of compounding<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0_lAs8Cf3TrhxEfnKdSY_n1IoKaX-E2vS24jm35z7UDSKdyob9aSxoWJTeiLGKOabxZ3NW4wvE3mv4C5oPbN1_tA-vzSkBlCPiGu_bUMnYXdoSdn4NIj5coXAfsXBayG9Eym9lT_3GAw0/s1600/Compound+growth.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0_lAs8Cf3TrhxEfnKdSY_n1IoKaX-E2vS24jm35z7UDSKdyob9aSxoWJTeiLGKOabxZ3NW4wvE3mv4C5oPbN1_tA-vzSkBlCPiGu_bUMnYXdoSdn4NIj5coXAfsXBayG9Eym9lT_3GAw0/s400/Compound+growth.jpg" width="400" /></a></div>
<div class="MsoNormal">
When people trade Forex they often forget about the power of
compounding. Some brokers even inadvertently make it difficult to get the
benefit of this very powerful force, by insisting that all trade sizes have to
be in ‘lots’ or ‘micro lots’. This means that position sizes can only be
incremented in large amounts, so that compounding can only be done on long time
scales, such as every month or so, if it can be done at all.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The compound interest formula is one of the simplest there
is. To make it work, it is only necessary to know the starting amount (which we
designate to be ‘P’, which stands for Principal), the number of compounding
periods, which we call ‘t’, for time, and the interest rate to be applied on
each occasion the amount is compounded. This means, for example, that if we
compounded each week for a year, we would have 52 compounding periods, but if
we compounded each month the number of periods would be 12. The interest rate
in the first instance would be the profit rate achievable per week, and in the
second case it would be rate we could reach every month.<o:p></o:p></div>
<br />
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Here is the formula (‘A’ is the amount we will arrive at
when the compounding is complete):<o:p></o:p></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJ7uTy64YdMU8RBoh80uoP_EP4i5myIg4yvfNqPrYSMRKxDrnR6n6U96ob3S10TU4iWQvwg00GfA4NDHQRRq2MyYTRhLS-JjglCIeQWjvOtPFM94NV52SinYD6w8Wd5c0C9ilVhlTt5IFE/s1600/Compound+formula.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhJ7uTy64YdMU8RBoh80uoP_EP4i5myIg4yvfNqPrYSMRKxDrnR6n6U96ob3S10TU4iWQvwg00GfA4NDHQRRq2MyYTRhLS-JjglCIeQWjvOtPFM94NV52SinYD6w8Wd5c0C9ilVhlTt5IFE/s1600/Compound+formula.jpg" /></a></div>
<div class="MsoNormal">
In plain English: Amount equals principal, multiplied by one
plus the rate, to the power of the number of compounding periods.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="separator" style="clear: both;">
<span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-IE; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">The more often compounding can be carried out,
the more the effect will be seen. That is not all. Compounding also has a
beneficial effect on the downside. On those occasions when a drawdown takes
place in the account (and they will occur), our software reduces the amount of
the position size using the same principle as when compounding on the upside.
This has the effect of reducing the amount of drawdown during those periods
when it happens. </span></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-41320419577201253602017-02-20T01:35:00.001-08:002017-02-20T02:56:20.071-08:00High Frequency Trading had a bad name<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyLvuXIBcQgPbMBCRmExg5fgGBhGyxFcCIN7gXH7fQoWu35jjZ_wo6XiBwoI7sOq8TTOOffxDR6K0CXL_rnM6MVN-MHWzkVXgZgtO8pbI2Davaw8mG52iUfU0bPoDHNcYacQRDR0evsXVL/s1600/A+Forex+trading+floor.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyLvuXIBcQgPbMBCRmExg5fgGBhGyxFcCIN7gXH7fQoWu35jjZ_wo6XiBwoI7sOq8TTOOffxDR6K0CXL_rnM6MVN-MHWzkVXgZgtO8pbI2Davaw8mG52iUfU0bPoDHNcYacQRDR0evsXVL/s1600/A+Forex+trading+floor.jpg" /></a></div>
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
High Frequency Trading (HFT) has been given a bad name by the activities of certain users of the technique who have been guilty of obtaining an unfair advantage through the use of secretive, high-tech methodologies that remove the risk from their operations, to the detriment of others.<br />
<br />
When a company can trade any commodity, especially currency pairs, and boast that it never made a daily loss in years of activity, one can be sure that its "traders" are bending the rules. Many of the nefarious practices that have come to light are detailed in Michael Lewis’s famous book, “Flash Boys”. The good news is that the regulators have now woken up to what was happening, and have used their powers to create a more level playing field for all.<br />
<br />
The use of computers and computer software to interact with the market, often known as “algorithmic trading”, is of course legitimate. Here, the edge is provided by the experience and skill of the practitioners, and by their willingness to put in the effort to use all the resources at their disposal to learn about the price action of currency pairs, and their reaction to fundamental events.<br />
<br />
That is what we do here at Ethical HFT (<a href="http://www.ethicalhft.com/">www.ethicalhft.com</a>), the managed Forex account arm of OmicronFX Limited. We call it ethical because we do not indulge in practices that are illicit in order to get our results, while at the same time we make the very best use of modern technologies and systems.<br />
<div>
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-47664932850613966742015-12-17T23:08:00.003-08:002015-12-17T23:09:13.993-08:00Merry Christmas and a Happy New Year | The commentary will be on holidays from today<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTi6iHDIwMd4pIlOKa9ky-RO15OAudzcMJUAa9oUAOY4P7w-4czl7vtk_UsrvvPQDzLQeZhZ6pAFcwDnEchWiBGk8HNveBwXeeFBInJQP8jkd0HDyEx-5-ofCwukarzapj5b8RT062yWaC/s1600/Merry+Christmas.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhTi6iHDIwMd4pIlOKa9ky-RO15OAudzcMJUAa9oUAOY4P7w-4czl7vtk_UsrvvPQDzLQeZhZ6pAFcwDnEchWiBGk8HNveBwXeeFBInJQP8jkd0HDyEx-5-ofCwukarzapj5b8RT062yWaC/s1600/Merry+Christmas.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">OmiCronFX
and Seamus wish all readers, wherever they may be, a very Happy Christmas and a
Prosperous New Year in 2016<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-size: 12pt; line-height: 107%;">We will be
on holiday from today, and look forward to being back in the New Year.</span>StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-15169690982740157982015-12-16T23:37:00.000-08:002015-12-16T23:45:35.840-08:00No surprise: US Fed raises rates | Will inflation take over from jobs as the key indicator to watch?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaLk1fIUvKmvJiU28nCmNBUjC_MKC6NKFR38rzs0KUeFCB3p0okkUzJD4LyMFk_1zEIGn0aKg4lDoaC16Pq4NqYsMpVvpOeM-ttswhnlhr1h2PexGKH5KHJiY7FtLh9Ep9pK27g0th0lbt/s1600/Crude+oil.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaLk1fIUvKmvJiU28nCmNBUjC_MKC6NKFR38rzs0KUeFCB3p0okkUzJD4LyMFk_1zEIGn0aKg4lDoaC16Pq4NqYsMpVvpOeM-ttswhnlhr1h2PexGKH5KHJiY7FtLh9Ep9pK27g0th0lbt/s1600/Crude+oil.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The first
interest rate rise in nearly a decade took place in the US yesterday, after
being really well-signalled in advance. Now the focus of market participants
and commentators must turn to the expected size and frequency of rate rises
each time the Federal Open Market Committee (FOMC) meets through 2016 and
beyond. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Many
commentators expect that there will be a new rate rise after every second
meeting of the committee, making for a total of four rises expected during next
year. Experience would dictate, however, that fundamental economics are not
normally that well-mannered and predictable. And the Fed is on record as
saying, many times, that its decisions on interest rates and stimulus in
general will be “data dependent”. That, of course, is good news for currency
traders, who thrive on the levels of uncertainty that can lead to long-term
volatility in Forex.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The rate
rise yesterday had a tentative feel to it. Economic stimulus, in the form of
the re-investment of the proceeds from maturing bond holdings that are left in
the Fed’s treasury as an overhang from Quantitative Easing, will continue.
Interest rate projections as far out at 2018 have been lowered by the Fed, and
all the talk is of a very gradual and careful path back to normality.
Expectations for GDP rises have also been curtailed slightly.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Inflation takes over from jobs as the
key indicator to watch<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">But the
biggest caveat of all has to do with inflation. The U.S., and the developed
world as a whole, are a long way away from the 2% across-the-board rate of
inflation that all would like to see. The downward pressure on consumer prices
will continue for as long as energy and other commodities continue to fall, and
yesterday oil took another sizeable hit (see chart above). A barrel of oil on
the NYMEX exchange is now well below the $40 that many saw as a floor not too
long ago.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">The Fed has
a dual mandate – it is responsible for controlling inflation as well as for
stimulating and maintaining jobs. Up to now the U.S Non-Farm Payrolls figure
each month has been the statistic that was most closely watched by the markets
as the indicator of what the Fed might do. Are we likely to see the Consumer
Price Index take over this role?</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-59417933961407826812015-12-15T23:16:00.000-08:002015-12-15T23:25:34.482-08:00Single currency plunges ahead of FOMC | U.S. core inflation news will comfort the Fed<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOcX14h-8a2X5_zmPqDbup9NOI3DxKdSHmoc1_Nuw1I2uDbCJBclVkpzMIFnecIYXeOJHdV3Cb71Fk2Sl13C2a9MCV3O0LRFCJjOBl9xgfwGNY-k0DYBLtsMZdtlF9KJ1oG8mb4aFjuJHw/s1600/EURUSD+hourly.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOcX14h-8a2X5_zmPqDbup9NOI3DxKdSHmoc1_Nuw1I2uDbCJBclVkpzMIFnecIYXeOJHdV3Cb71Fk2Sl13C2a9MCV3O0LRFCJjOBl9xgfwGNY-k0DYBLtsMZdtlF9KJ1oG8mb4aFjuJHw/s1600/EURUSD+hourly.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Yesterday
saw a dramatic fall in value of the Euro against the U.S. dollar, as traders positioned
themselves in anticipation of the Federal Open Market Committee (FOMC) interest
rate decision later in the global day today. A rise of 25 basis points is
widely expected by all markets and commentators, so the U.S. dollar was being
bought across the board during the North American session yesterday.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In truth,
the Single Currency had got more than a little bit ahead of itself, on the back
of the so-called “failure to deliver” on the part of the ECB in its monetary
policy statement of December 2<sup>nd</sup>, when it did actually accelerate
Quantitative Easing (QE), only not to anything like the extent that the Forex
market had been expecting. Prior to that particular meeting, the Euro was well on course to fall to 1.05 dollars. At its peak yesterday
it touched 1.1060 (see chart above).<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Because of
the Fed meeting later, today has the potential to deliver extreme short-term
volatility in the Forex markets – when and if the U.S. main interest rate is
increased, it will be the first time this has happened in over nine years. So great
care is called for in trading.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%; mso-fareast-language: EN-IE; mso-no-proof: yes;">U.S. core inflation news will comfort the Fed</span></b></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Official inflation
figures released yesterday show that core U.S. inflation, the Consumer Price
Index (CPI) with volatile energy and food prices excluded, showed a
satisfactory annual rise of 2%, which is the Fed’s target inflation rate for a
sustainable economy. The full inflation story is less benign, with the headline
rate coming in at only 0.5% rise year-on-year. However, most economists believe
that the fall in the price of oil and other commodities will eventually come to
an end, and headline inflation will then start to move closer to the core rate.
In the meantime consumers are experiencing something of a windfall because of
lower prices for fuel and other related consumables. That, in itself, cannot be
bad for the economy.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-83671383931797857162015-12-14T23:28:00.003-08:002015-12-14T23:28:58.572-08:00Bankers worry in New Zealand | … and Texas<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQTGaCrpWH8SIPYSXEK70WhdpxiN_HwE_UJmCXbwx5HWV0_a1-sSSqBJIWkRGFOvULv85YDa_ZgVY7mqvkJoutq5Gkf9GM5lHcqkSJD8yWCDcXpp30Zf5aZgorZ6Vc735VbDvEZOTJzIwF/s1600/Dairy+cattle+in+New+Zealand.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQTGaCrpWH8SIPYSXEK70WhdpxiN_HwE_UJmCXbwx5HWV0_a1-sSSqBJIWkRGFOvULv85YDa_ZgVY7mqvkJoutq5Gkf9GM5lHcqkSJD8yWCDcXpp30Zf5aZgorZ6Vc735VbDvEZOTJzIwF/s1600/Dairy+cattle+in+New+Zealand.jpg" /></a></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="color: #0d0d0d; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">The
Reserve Bank of New Zealand, the country’s central bank, has published an article
entitled ‘<a href="http://www.rbnz.govt.nz/research_and_publications/reserve_bank_bulletin/2015/2015dec78-8.pdf">An
updated assessment of dairy sector vulnerabilities’</a>.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="color: #0d0d0d; font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">The
article investigates the severity of cash flow pressures currently facing dairy
farmers in NZ, and assesses the potential financial stability implications if
the payout (for which read prices for Dry Powdered Milk) remains low for an
extended period. The article estimates that around half of dairy farmers are
now facing a second consecutive season of cash losses, placing the sector under
considerable financial pressure. The authors find that the majority of farms
would remain viable in a sustained low payout environment, although some </span><span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">highly-indebted farms would face considerable
difficulties. Losses for the banking system are estimated to be manageable even
under a severe stress scenario.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">All of this is of very
high importance for the central bank in its assessment of whether or not it
should raise interest rates. It would like to do this to head off a property
bubble in the cities, most noticeably Auckland, but will not want to further
increase the hardship for its many dairy farmers.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">Meanwhile, losses for
the Kiwi (NZDUSD) seem to have stabilised, with the pair seeing a rising wedge
pattern on the weekly chart that extends back to the middle of the third
quarter of 2015.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">Bankers are also worried in Texas<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">This time it is not the
US central bank, the Federal Reserve, that is raising the alarm, but rather Wells
Fargo bank, the largest US commercial bank by market capitalisation, according
to the Financial Times. It has announced that many of its clients in the energy
sector, most notably in Texas, are facing significant problems because of the
low price of oil.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span lang="EN-NZ" style="font-family: "Arial",sans-serif; font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-NZ;">This situation is not
likely to be improved any time soon as Saudi Arabia, in particular, is known to
be willing to pump oil for as long as it takes to increase such pressure, and
this announcement must be telling the Saudis that their cunning plan is working,
at least to some extent.</span></div>
<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; font-size: 12pt; line-height: 107%;">The low price of oil
will also be on the minds of the members of the FOMC as they meet today and
tomorrow. It is not likely to make any difference to the expected increase in
US core rates tomorrow, but it could and probably will impact greatly on the
speed and size of future rate rises.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-52100132236686399032015-12-13T23:02:00.000-08:002015-12-13T23:05:08.506-08:00All eyes are on the U.S. Fed this week | The argument for a continuously strengthening dollar<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK5xkXl6fNJACrESO4Ti14_B1s_ZdB78JbRAHUju0LQvLHUxYxKOOoRqwkSWwBbgLZygMv4neVDh28nSVlNns11GlL21CsvhbP65OvP1wvYvggXB9RSgVsKvxaBaDwobI8IbFjVVyq42kT/s1600/Janet+yellen.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiK5xkXl6fNJACrESO4Ti14_B1s_ZdB78JbRAHUju0LQvLHUxYxKOOoRqwkSWwBbgLZygMv4neVDh28nSVlNns11GlL21CsvhbP65OvP1wvYvggXB9RSgVsKvxaBaDwobI8IbFjVVyq42kT/s1600/Janet+yellen.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The Forex
and other markets have been well-prepared for the initiation of a new interest
rate cycle of rises in the U.S. The first of these is widely expected to be
announced at the end of the December Federal Open Market Committee meeting, which
concludes on this coming Wednesday, the 18<sup>th</sup>. This rise will crystallise
the divergence between U.S. monetary policy and that of the next most important
global currency bloc, the Eurozone. This divergence began with the so-called
tapering of U.S. Quantitative Easing, which was finally accomplished in October
of 2014. The Eurozone, while also employing the low interest rate tool of
economic enhancement, is only now getting into its stride in terms of Q.E.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">This
divergence can be seen as the driver of continuing weakness in the Euro as
against the US dollar. However, the Fed has also been at pains to emphasise
that once the rate tightening cycle starts, it will only be implemented very
slowly and in small increments. There is also nothing to say that it might not
even be put into reverse from time to time. Such a climate can only provide a
brake to Single Currency depreciation against the U.S. dollar.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">The argument for a continuously strengthening
dollar<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">But now a
closely argued piece in the Australian “Business Spectator”, by Victoria
Theiberger, entitled “<a href="http://www.businessspectator.com.au/article/2015/12/11/financial-markets/feds-tightening-path-may-jolt-sanguine-investors">The
Fed’s tightening path may jolt sanguine investors”</a> (it is behind a paywall
but readers might think it worthwhile to pony up the small amount required)
maintains that the rate rise regime in the U.S. is going to strengthen during
the coming year rather than weaken. This is based on the belief that the
rotation of voting members of the FOMC will bring far more hawkish members into
a position where they can directly influence events; that U.S employment growth
is robust and improving to a degree that might be underappreciated at present;
and that low interest rates are actually now a drag on the economy rather than
a stimulus. Thieberger rationalises this last thesis by stating that the
near-zero rates have sharply increased the cost of retirement, meaning that the
very many retirees in the US have had to save harder and for longer in order to
achieve the same income when they finish their working careers. Some economists,
such as Drew Matus of UBS, believe, for this reason, that “… the first few rate
hikes may cause an acceleration in economic activity rather than acting as a restraint”.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">If this
turns out to be the case, the Fed will grasp the opportunity to get interest
rates back quickly to what had been regarded as “normal”, prior to the establishment
of what many are seeing as the “new normal” of near-zero rates (When you hear
that term becoming mainstream, you can be pretty sure that the market is
getting ready to create yet another surprise for the unwary).</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-15207368547775504992015-12-10T23:21:00.002-08:002015-12-10T23:23:10.070-08:00No change at Bank of England but sterling hit anyway | U.S. Retail Sales today<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMffdK7NcHjLCNdHtP-sMXfG4SZhTEwW8Ba0RN6ONHilYFlor8BB__-oDlfT_7sFFsopnzyyv5TwPi6egVIb8kjsyvRoDnc9Qn_xSRyA6zhXhMoyqw3g5nSKb_eqKMiawwouj6rCGgz4VF/s1600/GBPUSD+10+minutes.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMffdK7NcHjLCNdHtP-sMXfG4SZhTEwW8Ba0RN6ONHilYFlor8BB__-oDlfT_7sFFsopnzyyv5TwPi6egVIb8kjsyvRoDnc9Qn_xSRyA6zhXhMoyqw3g5nSKb_eqKMiawwouj6rCGgz4VF/s1600/GBPUSD+10+minutes.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Yesterday’s Bank
of England monetary policy statement carried no real surprises. There was no
change to either the interest rate or the asset purchase facility. Reading the
minutes of the Monetary Policy Committee (MPC) meeting one could be forgiven for thinking that
there is a sense of exhaustion on the part of the members as they wait for some
kind of solid evidence that the economy has reached a stage where monetary
policy can be normalised – that is to say that interest rates can start to rise
from their current unnaturally low levels.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The big
bugbear is still inflation, or the lack of it. The minutes acknowledge that unemployment
levels are quite good, but the effects of this on the economy are more than
offset by the fact that there is no pressure for wage rises. This is a worry as
the fact that so many are working will do nothing to raise inflation.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Sterling
took a hit on the release of the statement and minutes, although it later
recovered somewhat. Perhaps the part of the minutes which concentrated on what
would happen when and if rates do start to rise was a factor in the drop. From
the release:<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">“All members
agree that, given the likely persistence of the headwinds weighing on the
economy, when Bank Rate does begin to rise, it is expected to do so more
gradually and to a lower level than in recent cycles”.</span><o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">U.S. Retail Sales are out today<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The latest
report on retail sales in the US will be released later today. As always, this
will be closely watched, but even more so on this occasion as there was some
concern about the level of sales on the so-called “Black Friday” (November 27<sup>th</sup>),
the ‘official’ start of the Christmas shopping season, when retailers are
supposed to break out of the red and into the black on their profit and loss
accounts for the year.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">We will see
later today if this was likely to be the case.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-3960399148988992052015-12-09T23:44:00.003-08:002015-12-09T23:44:47.905-08:00Euro-dollar continues to defy gravity – where to from here? | Bank of England day today<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbOjsKuJ66iJG0UwMpA6adRiVfMHe_jUpmb8oB0ylij9ZWRxSJoLn8muU1r8eke_6Mse4_0p9FmStcM2_NlyI_QkO0NyNWTOTzWMaBKJmETpP8B5qEPtYfKMeArCC77-FR0bj-IsHuczeZ/s1600/EURUSD+daily.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbOjsKuJ66iJG0UwMpA6adRiVfMHe_jUpmb8oB0ylij9ZWRxSJoLn8muU1r8eke_6Mse4_0p9FmStcM2_NlyI_QkO0NyNWTOTzWMaBKJmETpP8B5qEPtYfKMeArCC77-FR0bj-IsHuczeZ/s1600/EURUSD+daily.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The Single
Currency against the US dollar (EURUSD) had another big rising day yesterday.
This is against the backdrop of nearly all commentators’ views that the
medium-to-long term tendency in this pair is to the downside. Many market
participants were ready for a continuation of the upward surge that had been
started by the actions of the ECB last week, when it announced much smaller
than expected measures to extend Quantitative Easing (QE), but were
nevertheless surprised when the pair headed through the big figure, and
seriously psychological barrier, of 1.10.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Now we are
looking at a possible range between 1.05, which is a strong support level, and
the combination of the 200 Day Simple Moving Average (SMA) and the other big
figure resistance of 1.11. This has acted as support in the past (see chart) and
it is normal for a previous support to become resistance.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Bank of England day today<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The Bank of
England Monetary Policy Committee is on stage later today when it will announce
its interest rate decision, any changes to its asset purchase facility, publish
its latest monetary policy statement and release the minutes of its meeting.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">No changes
are expected on any front, except perhaps in the language that might be used in
the statement when compared with previous ones. These have been giving the
impression that rate rises had been put off into the distant future. Recent
falls in energy prices will reinforce that tendency. The only opposing force is
the belief in the markets and elsewhere that the US Federal Reserve is on the
cusp of tightening - the Bank of England will not want to wait too long before
following suit.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-67134198555273993322015-12-08T23:42:00.000-08:002015-12-08T23:42:24.180-08:00Kiwi hovers while awaiting interest rate decision | Short-sellers smell US shale oil producer blood<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSjjlsYc7EY9L0uE9chyEU9K8OhFYHW4PjoXFK7JvMFlpj8zT_xJvOWJ9h3_a4VI65HFI7BeRr02GQg9UWbOlj_Ob9NryP0ap8GwtsjFYfcbCNDf0fKi5CCEoZpVL3681iD6zT-eH51eev/s1600/NZDUSD+four+hour.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSjjlsYc7EY9L0uE9chyEU9K8OhFYHW4PjoXFK7JvMFlpj8zT_xJvOWJ9h3_a4VI65HFI7BeRr02GQg9UWbOlj_Ob9NryP0ap8GwtsjFYfcbCNDf0fKi5CCEoZpVL3681iD6zT-eH51eev/s1600/NZDUSD+four+hour.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The New
Zealand dollar against the U.S. dollar (NZDUSD), otherwise known as the Kiwi,
is hovering above a key technical indicator, the 200 period exponential moving
average (EMA) on the four hour chart (see above). This is as the market awaits
the latest monetary policy report and interest rate decision from the Reserve
Bank of New Zealand (RBNZ) later in the global day, or early morning tomorrow
in GMT terms.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In the financial
stability report issued on November 11<sup>th</sup>, the governor of the RBNZ,
Graeme Wheeler, identified three factors that were influencing monetary policy
decisions at his institution. These were global financial stability, for which
read the situation in China, on which nation New Zealand is dependent for its
exports of dairy products; the pressures on the same dairy sector, and in particular
the hardship being faced by over-indebted dairy farmers; and the runaway
housing market in the major cities, Auckland in particular.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">These
represent competing forces in terms of interest rate drivers. On the one hand
the government would like to reduce rates to lower the value of the currency as
an aid to exports, and to reduce the pressure on indebted farmers, but on the
other hand are greatly fearful of a housing bubble, which is a motivator for
keeping rates high.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">After three
reductions in the Official Cash Rate (OCR) so far this year, the decision to
make a further one on this occasion rests on a knife-edge.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Short-sellers smell US shale oil producer
blood<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;"><a href="http://commentary.omicronforex.com/2015/12/commodities-crash-places-pressure-on.html">Yesterday
we alluded to the efforts</a> being made by Middle-east oil producers, and
Saudi Arabia in particular, to kill off if possible the threat to their
domination of the oil market being posed by shale oil producers in the U.S.
They are doing this by relying on their cash reserves to allow them to further lower
prices by keeping production up. This, they hope, will place shale oil
producers in a loss-making position, leading to their demise.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Now an
article in the “The Australian” (“<a href="http://www.theaustralian.com.au/business/opinion/robert-gottliebsen/shorters-line-up-with-opec-to-kill-off-us-shale-oil/news-story/d8530f401b0d79d44811335de577cc50">Shorters
line up with OPEC to kill off US shale oil</a>”), by Robert Gottliebsen, has it
that short sellers have joined the fray. According to the article, hedge funds
have now created an extremely large overhang of short positions in oil futures
in what it characterises as “ … one of the biggest shorting raids in history”.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Not content
with selling oil futures, the hedge funds are also said to be selling oil company
and other mineral producer shares. Could all of this be setting up a major
contrarian opportunity when and if the shorters are forced, for whatever
reason, to cover their positions?</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-57220989329153554522015-12-07T23:14:00.000-08:002015-12-07T23:18:37.368-08:00Commodities crash places further pressure on central banks | Eurozone GDP today<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcM-kwkBmsqI4M4Q5PZlBHbs9sqQKTgFVmGnwQhQEEYEJ3rFg0Lt_VRobdcLlZnt9OldQq-QNr7WqkkvLAwaYinvi6CPBn-yOACQj4kXhQOBsd4sdA5XrXrr-_Ofbh6K88CWMs3PryCzCR/s1600/Brent+crude+daily.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjcM-kwkBmsqI4M4Q5PZlBHbs9sqQKTgFVmGnwQhQEEYEJ3rFg0Lt_VRobdcLlZnt9OldQq-QNr7WqkkvLAwaYinvi6CPBn-yOACQj4kXhQOBsd4sdA5XrXrr-_Ofbh6K88CWMs3PryCzCR/s1600/Brent+crude+daily.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In a further
blow to the inflation-growing aspirations of central banks around the globe,
the price of commodities continues to fall precipitately. Oil, in particular,
had another very bad day yesterday on the back of news out of the Middle East that
OPEC members had failed to agree on production cuts that might tend to place a
floor under the price.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Saudi Arabia
seems to be determined in its drive to place as much pressure as possible on shale
producers in the U.S, by using its economic muscle to attempt to make it
uneconomic for what they see as relative newcomers to the market place. This is
causing so much aggravation among its members that we are now seeing headlines
to the effect that the OPEC cartel has effectively ceased to exist as a potent
force.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Meantime
that old stalwart of the Australian economy, Iron Ore, is following oil into
the lower reaches of the price charts. Energy is such a large part of the
production cost of the raw material for steel that this is almost inevitable.
It does, however, place higher cost miners, those outside of the group that is
made up of the three majors: BHP Billiton and Rio Tinto of Australia, and Vale
of Brazil, under the kind of pressure that threatens their very existence. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Eurozone GDP today<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">All
concerned parties will be keeping a close eye on Eurozone Gross Domestic
Product figures, which come out this morning at 09:00 GMT. Last month, figures
for the third quarter showed growth across all the countries that use the Euro
to be only 0.3%, down from 0.4% on the previous period and also lower than expected.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Any news on
this front later this morning that does not show new growth will only serve to
place further downward pressure on the Single Currency.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-72184797412622147162015-12-06T22:48:00.003-08:002015-12-06T22:52:52.967-08:00Euro-dollar bias is still down | U.S. Non-Farm Payrolls put the last brick in place for rate rises<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZZUgIccEnrSlz0GdrG03aRfNpOOB38t10i6q725SSbyMa_HFMq9oitypyCYTJxIRGpLcti9J_0bUdU8jnxm8yaF5h_egXPOA3jgW1WygcjcnQNvr7Dj0kUWT7rLBSo0aYWlQ-mz0fwx2N/s1600/EURUSD+10+mins.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZZUgIccEnrSlz0GdrG03aRfNpOOB38t10i6q725SSbyMa_HFMq9oitypyCYTJxIRGpLcti9J_0bUdU8jnxm8yaF5h_egXPOA3jgW1WygcjcnQNvr7Dj0kUWT7rLBSo0aYWlQ-mz0fwx2N/s1600/EURUSD+10+mins.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">For all that
there was a surge in the EURUSD on the eventual turnout of the ECB monetary
policy statement and press conference last week, when the president, Mario
Draghi “failed to produce the big bazooka” that the market had promised itself,
and given that a large part of said market was seriously wrong-footed and was
forced to buy the Single Currency at almost any price in order to close out massive
short positions, the tendency for this pair is still to the downside. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The gap down
at the start of this week’s Asian session, at 10:00 GMT last evening (see
chart), is a technical indicator of this. The gap will no doubt be filled
(price will go back up to the top of the gap) at some stage today, but the medium-to-long
term move is still down, and parity is still in prospect.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Last week,
though, was a perfect example of the desirability of having a market neutral
trading system, such as the one based on the Mandelbrot algorithmic trading routine
is, where one can be indifferent as to the direction that the market will take
on any given day.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">U.S. Non-Farm Payrolls put the last
brick in place for rate rises<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The last
brick in the wall of persuasion for the Federal Reserve to start raising
interest rates at its December meeting (18<sup>th</sup>) has been slotted into
place with the plus-200k (211,000) result in last Friday’s Non-Farm Payrolls
report. There will no doubt be more excitement when it is announced, even
though it has been so well telegraphed, but that is the Forex market.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Attention
now will inevitably turn to the possible frequency and size of interest rate
increases in the U.S., and to speculation about how long it will take the Bank
of England to follow its counterpart on the other side of the Atlantic.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-80088809065773283382015-12-03T23:20:00.000-08:002015-12-03T23:48:21.297-08:00Strong gains in Euro after high drama on ECB monetary policy day | FT tweet farce, and Draghi fails to deliver<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwtFhiJx6YxyMIkrhBkf4sY1_Ub_l5OjqfNJWzDxL_XLPyj12rKfzST91hnHxgby-zmu5DRLfJM3P9ocqiNQaDLc4kbMgUL0Tdc7BSouBEfonrkZY0dRFzrTcvG-ooXYsmvGzhMOWA5YJS/s1600/EURUSD+10+minutes.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwtFhiJx6YxyMIkrhBkf4sY1_Ub_l5OjqfNJWzDxL_XLPyj12rKfzST91hnHxgby-zmu5DRLfJM3P9ocqiNQaDLc4kbMgUL0Tdc7BSouBEfonrkZY0dRFzrTcvG-ooXYsmvGzhMOWA5YJS/s1600/EURUSD+10+minutes.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The
Euro-dollar gained more than four “big figures” yesterday, in a dramatic and
severe reversal for all those who were betting on continued weakness in the
Single Currency, after a farcical leak by none other than the Financial Times
newspaper was followed by an ECB monetary policy statement that failed to meet
expectations on almost all fronts.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Firstly, the
leak: The FT chose to tweet, about ten minutes before the ECB interest rate announcement was
due, that there would be no reduction at all to the deposit rate. This was
based on the ubiquitous “officials close to the matter who spoke on conditions
of anonymity”. Presumable the same ones who have been talking to Reuters and
Bloomberg in recent times, and in the process setting off all sorts of alarms
and excursions in the Forex markets. Frankfurt apparently leaks like a sieve
(just like Brussels).<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">This tweet
immediately started a bout of short covering, as some large players who had
been depending on a cut of anything between 0.3% and 0.5% in the overnight rate
realised that their positions would be loss making if there was no cut at all.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Draghi fails to deliver<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Then Mario
Draghi announced a cut in the deposit rate, but only of 0.1%. While this proved
the FT wrong, it was also far too little to satisfy the market. Then, when it
was announced that there was to be no extension in the take-up rate of bonds
for QE (the market expected an additional €20 billion at least, on top of the €60
billion per month already being implemented) the rout was complete and the
short covering began in earnest. The ECB president did announce a time
extension for QE, that municipal bonds would join the sovereign bonds already
being taken up, and that expiring bond payments would be recycled, but this was
far too little to satisfy expectations.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Truly a
nightmare for that large cohort of Foreign Exchange traders who had bet a
lot on a different outcome for this monetary policy meeting.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-30589257684093666632015-12-02T23:27:00.003-08:002015-12-02T23:27:45.630-08:00Fun and games in the Euro-dollar yesterday | Mandelbrot stays safe<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglWwAU0CYi-coaohvZliA46zpgse7VcBKVssApI9RCuduifRk7wOfX8JK5YLduZU0zjurjoZTx0pSoZujywtM0SOlUnM7hZwZqCi_Si2H9ykWw4XQxAGubdA-uo3yUp1qLnBSq6oFrkQml/s1600/EURUSD+10+minutes.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEglWwAU0CYi-coaohvZliA46zpgse7VcBKVssApI9RCuduifRk7wOfX8JK5YLduZU0zjurjoZTx0pSoZujywtM0SOlUnM7hZwZqCi_Si2H9ykWw4XQxAGubdA-uo3yUp1qLnBSq6oFrkQml/s1600/EURUSD+10+minutes.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Yesterday
was indeed a topsy-turvy day for the Single Currency (Euro against the U.S.
dollar), or the EURUSD currency pair.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">This
instrument has suffered significant falls in the past few weeks on the back of
strong (and growing) divergence between the monetary policies of the Eurozone
and the U. S. The number of Forex bets that it will continue to go lower is large,
and this has created a situation where market participants are on edge, on the
fear of a sudden reversal, for whatever reason. Yesterday was also the day
before the latest ECB monetary policy statement and press conference (statement
will be at 13:30 GMT today, with press conference to follow), when nerves are
also likely to be somewhat frayed.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The fun and
games yesterday started with the flash Harmonised Index of Consumer Prices (HICP)
for the Eurozone as a whole, which showed that inflation was, once again, lower
than had been expected. This is a negative for the Euro and the market reacted
accordingly (see chart). <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Then we had
the U.S. ADP jobs report, which came in better than hoped for, giving rise to
some short-term multi-directional volatility, with a following bias towards a further
strengthening dollar.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Janet Yellen’s
speech at the Economics Club in Washington simply reinforced the view that
interest rate rises are coming this month, and the dollar continued to firm on
that.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In the
middle of the afternoon, New York time, however, a Bloomberg headline which said
“ECB said to present largely unchanged macroeconomic forecasts” got the market
to thinking that Mario Draghi may not, after all, announce further QE and / or
deposit rate decreases at the meeting today. This led to a total reversal of
the tendency for the previous part of the day, and a somewhat dramatic turnaround
in the fortunes of the EURUSD pair.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Mandelbrot stays safe<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The
OmiCronFX Mandelbrot algorithmic routine is designed, on the back of exhaustive
research which it also facilitates, to dodge as much as possible the effects of
the abnormal volatility described above. This worked very well yesterday. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Discretion,
it is often said, is the better part of valour.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Knowing when
to be discreet is the important thing.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-63985312356600738142015-12-01T23:11:00.000-08:002015-12-01T23:11:26.408-08:00Three heavy days of economic events | ECB is the wild card in these interesting times<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxmy7ptc-nVt_URUFDFmLocuc_j3BRRIvW9RXvrZ9L_HqN3_Dxzzfn4Ikmd3DmlZbzBbdkaNv3p-kuaDtX6WzQUO3EmFcvNNiFWjKOLJv8WWehgsxiiEnohqIHvNH3VfwFDCNBnNu8rRQr/s1600/Yellen+and+Draghi.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxmy7ptc-nVt_URUFDFmLocuc_j3BRRIvW9RXvrZ9L_HqN3_Dxzzfn4Ikmd3DmlZbzBbdkaNv3p-kuaDtX6WzQUO3EmFcvNNiFWjKOLJv8WWehgsxiiEnohqIHvNH3VfwFDCNBnNu8rRQr/s1600/Yellen+and+Draghi.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Starting
today, the next three days will see a flurry of economic activity on both sides
of the Atlantic that is almost certain to impact all major currencies in the
weeks following. The big ones are the appearance of Janet Yellen, Chair of the
Federal Reserve, before the joint economic committee of the U. S. Senate
tomorrow (Dec 3<sup>rd</sup>), the ECB monetary policy statement and press
conference, also tomorrow, and the U. S. Non-Farm Payrolls report on Friday. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">These will
be intermingled and presaged by a number of seemingly more mundane releases and
speeches, but ones that will be minutely examined for clues as to what will
happen next both in the ECB and the Federal Reserve. They include the flash
report on Harmonised Index of Consumer prices (HICP) for the Eurozone today,
Wednesday, and the ADP jobs report, also today, which is normally seen as a leading
indicator of what the Non-Farm Payrolls report will bring at the end of the
week. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Also today,
Janet Yellen gives a speech to the Economic Club of Washington. This is not
expected to deal with interest rate rises, but rather to possibly concentrate
on the future path of further rises once the cycle of U. S. increases starts.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">ECB is the wild card in these
interesting times<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">While the
start of U. S. rate rises is now a racing certainty at the next FOMC policy
statement on Dec 16<sup>th</sup>, what the ECB will do tomorrow is more indefinite.
Mr. Draghi, as is often the case, finds himself in a position where he must use
rhetoric rather than concrete action to attempt to raise inflation (and lower
the Euro). This is because of the very strong opposition coming from Germany
for measures such as additional Quantitative Easing (QE). Right now the
president has convinced the markets that he will ease further but if he does
not, there is such a pent-up pressure in bets on Single Currency weakness that
the outcome for the EURUSD pair could well be a very significant surge to the
upside, driven by short-covering.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Interesting
times.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-15311686180414731632015-11-30T23:13:00.005-08:002015-11-30T23:13:47.356-08:00Reuters moves the market | Mandelbrot catches the trade<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaVwy9szSAIILMizetl4Kh61sWNfjprjyk0iJGTrAo4CQPkuV-S-iOpUzRVF48dk9yxMfVlQXIUWD7-j-zHRoGO-VhvQ66GcoiGEeq3FCUtbgObJBX11kfqDWO0EX3UTVxl2lLOcb3bATi/s1600/Reuters+screen+Wed+Nov+25th.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaVwy9szSAIILMizetl4Kh61sWNfjprjyk0iJGTrAo4CQPkuV-S-iOpUzRVF48dk9yxMfVlQXIUWD7-j-zHRoGO-VhvQ66GcoiGEeq3FCUtbgObJBX11kfqDWO0EX3UTVxl2lLOcb3bATi/s1600/Reuters+screen+Wed+Nov+25th.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">On Wednesday
last, 25<sup>th</sup> November, an article appeared on the Reuters web site to
the effect that certain un-named European Central Bank officials had leaked the
information that the governing council was considering innovative ways of
accelerating its Quantitative Easing measures, for example by adding to the
classes of bonds it can buy to implement the measure, and/or by lowering the
bank deposit rate further into negative territory, with a banded structure that
would mean even lower deposit rates for those institutions that wanted to park
larger amounts of cash overnight.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">Any addition
to Eurozone QE, and in particular any further lowering of the deposit rate, are
calculated to be big negatives for the value of the Single Currency.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWtwoAkgkmN62eDTAElQJATCxSQJd4susutJ27YgAG_AeImnCuPBaxQM69Q8txcgipyUJC0OWGLfz9Nq8-oTTg6pE0atYKxLf0rbyZCjRMkuL-Sh_Y70CJRM6fD3perci9hKiERCbNQbU0/s1600/EURUSD+10+mins.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWtwoAkgkmN62eDTAElQJATCxSQJd4susutJ27YgAG_AeImnCuPBaxQM69Q8txcgipyUJC0OWGLfz9Nq8-oTTg6pE0atYKxLf0rbyZCjRMkuL-Sh_Y70CJRM6fD3perci9hKiERCbNQbU0/s1600/EURUSD+10+mins.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The chart
above shows the almost instantaneous reaction of the Forex market to this news.
The release had a time line of 09:04 GMT, and within the same ten-minute bar
the EURUSD pair had started to fall. This continued for some hours before levelling
out, well into the New York session that day.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Mandelbrot catches the trade</span></b></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">On a day
like the 25</span><sup style="line-height: 107%;">th</sup><span style="font-size: 12pt; line-height: 107%;">, the Mandelbrot Forex algo routine is set to run from
the start of the London open. We cannot predict which news reports will excite
the markets, but Mandelbrot can, and does, react very quickly indeed to the
movements that are initiated by those institutions that are in a position to
cause meaningful exchange rate rises or falls.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In the case
of the move on the back of the Reuters report, Mandelbrot only had to allow the
exchange rate to fall decisively through the 200 period Exponential Moving
Average (EMA), in case that was going to act as a support level, before it put
on a trade.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">The outcome
as is shown in the chart above. </span></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-83213341204587606932015-11-29T23:35:00.003-08:002015-11-29T23:35:45.653-08:00Holiday week saw good U.S. economic results | Heat builds for rate rise in new month<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-Zny1pXmCDn9Yo2ZrDkA-n83feeZ-YFtyFSkIEYpZbmrd2sBZJ3eoyJnFzoZokkscmdqCYtyIvcklM_Z2L73gTnIFU7yfeutwSxQYAyBV8Z-PQwOqFr_-FDJhJJTGxcPWErQvUUjqZlq_/s1600/Aircraft.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-Zny1pXmCDn9Yo2ZrDkA-n83feeZ-YFtyFSkIEYpZbmrd2sBZJ3eoyJnFzoZokkscmdqCYtyIvcklM_Z2L73gTnIFU7yfeutwSxQYAyBV8Z-PQwOqFr_-FDJhJJTGxcPWErQvUUjqZlq_/s1600/Aircraft.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In a holiday
shortened week last week due to Thanksgiving in the U.S., a number of reports
came in with better than expected results, even if their timing was skewed from
the normal release days as a result of the holiday (we have come to expect
certain potential Forex market movers, such as the Reuters / Univ of Michigan
Consumer Sentiment index which normally comes on a Friday but was on Wednesday
last week) to appear on their appointed days.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Durable
Goods, purchases that are expected to have a longer life, got a boost last
week, coming in much better than expected for October. They jumped 3.0% after
falling 0.8% in the previous period. The outcome was as a result of a dramatic
increase in the supply of non-defence aircraft and parts. They jumped by no
less than 81.0%, after falling 32.3% previously. Non-defence capital goods, which
reflect consumer spending, were up by 0.4%, which is also a good indicator for
the state of the economy.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Separately, New
Home Sales were also up strongly in October. New homes are more important for
the economy than existing homes, so the good news for the Federal Reserve continues
here also.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Heat builds for rate rise in new
month</span></b></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">All of the
above feeds into the by now widely held belief by market participants that
there will indeed be a rise in interest rates in the U.S. at the next monetary policy
meeting of the Federal Reserve, which is due to take place on December 15</span><sup style="line-height: 107%;">th</sup><span style="font-size: 12pt; line-height: 107%;">
and 16</span><sup style="line-height: 107%;">th</sup><span style="font-size: 12pt; line-height: 107%;">. So strong is this expectation now that it is not outside
the bounds of possibility that the U.S. currency could be entering overbought
territory, and we could be setting up for a classic “Buy the rumour, sell the
news” type of scenario.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-70489907145215183362015-11-26T22:22:00.001-08:002015-11-26T22:22:17.115-08:00Gold bugs get battered | U.S. GDP revised upward – market reaction indicates rate rise is priced in<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAb1kkf97cW7eh3c3MeytMXd8TsC2MCv19kpQp3AryA3vpkgp5fC3OGP2RFHtUBmYTHRIwil6XPJsWn4nVMlKJmnXuEUZuMxGjVpTTW7inrMGYWXqSsViNgzNLh6pacHgonnWvXSt-akdx/s1600/XAUUSD+Monthly.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiAb1kkf97cW7eh3c3MeytMXd8TsC2MCv19kpQp3AryA3vpkgp5fC3OGP2RFHtUBmYTHRIwil6XPJsWn4nVMlKJmnXuEUZuMxGjVpTTW7inrMGYWXqSsViNgzNLh6pacHgonnWvXSt-akdx/s1600/XAUUSD+Monthly.png" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Gold is
reaching for an important long term support line at the level of US$1044.00 per
Troy Oz. This support was established way back at the very start of 2010. It
resides just above the psychologically important price of $1000.00.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The fall in
the price of gold has been constant since it became apparent that U.S. Federal
Reserve easing measures were over and that this heralded the onset of rate rises,
on the cusp of which we now seem to be.
Those hedge funds that invested in gold at the start of Quantitative
Easing in the U. S. (remember that?), in the conviction that QE was going to
lead to rampant inflation, have long since left the scene. They are more likely
now to be reminding each other that gold does not, and never will, pay interest
to those who invest in it, never mind dividends or yield. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">There are
still some who hold that a demand for physical gold will provide a return based
on capital appreciation, but they have to be very patient indeed, and they must
ignore the fact that the volume of physical gold that changes hands is only a small
fraction of that which is the subject of options and futures agreements. Who
now believes that these are all backed by gold bullion holdings?<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">U.S. GDP revised upward – market
reaction indicates rate rise could be priced in<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Tuesday saw
a revision upward in the U.S. GDP figures for the third quarter. Normally, a
report like this would light a fire under the U. S. dollar, but the market
initially went in the opposite direction on the news, and then settled down
into a frustrating see-saw type of movement.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">This might
be taken as a sign that the much anticipated rate rise that we are supposed to
see in December is already priced in.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-1199485513381521752015-11-26T00:28:00.002-08:002015-11-26T00:28:40.574-08:00Mr. Draghi can move the market | Will he do so again next week?<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1hj35K8yeVJTlDxlNI0sXDTdyHKd29vYC_2wN-94n-tdCHSj_Sw2-8Va2-NV15jMAxel2gddWgghU4FnNjZ2KNriFtXzuIx08sr9SG1mfNxofQGCAa5odN-H9NK8DvmRRLfJ38ds4h85D/s1600/EURUSD+daily.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1hj35K8yeVJTlDxlNI0sXDTdyHKd29vYC_2wN-94n-tdCHSj_Sw2-8Va2-NV15jMAxel2gddWgghU4FnNjZ2KNriFtXzuIx08sr9SG1mfNxofQGCAa5odN-H9NK8DvmRRLfJ38ds4h85D/s1600/EURUSD+daily.png" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Now that the
Euro is heading, seemingly inexorably, for the big figure of 1.05 U. S. dollars,
it is appropriate to reflect on what has given rise to this recent very
significant move down.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">It can be
traced back with precision to the words uttered by Mario Draghi during his
press conference after the last ECB monetary policy statement, on Oct 22nd. He
said at the time, and we quote “The degree of monetary policy accommodation
will need to be re-examined at our December monetary policy meeting”</span>.
This caused an immediate move down in the Single Currency which we opined at
the time <a href="http://commentary.omicronforex.com/2015/10/euro-sells-off-aggressively-during-ecb.html">might
turn out to be ‘structural’</a>. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">And this has
proved to be the case. A structural change in the movement of a currency pair
occurs when it either suddenly reverses its trend or breaks out of its range,
if it had been range-bound. The daily chart above shows that it had, prior to
Oct. 22nd, been in a range that was bounded by its 200 Day Exponential Moving
Average (EMA) on the upside and the big figure of 1.11 on the bottom. Since that day it has resolutely been in a
downtrend. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Will he do so again next week?<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Will Mr.
Draghi do something similar at his next monetary policy press conference, which
takes place next week, on December 3rd?<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">There are
strong reasons for believing that the ECB will attempt to further stimulate
inflation in the Eurozone at its next monetary policy meeting, by accelerating QE
or by further lowering rates, or indeed both. But there will be opposition,
most notably from the German central bank, whose economy is doing very nicely,
thank you, and who will not want any further stimulus, both on principle and as
there is no need for it in that particular Eurozone member state.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">As far as
the EURUSD is concerned, all of this might, just might, be priced in. If it is
not, then parity between the Euro and the U.S. dollar is bound to become a real
possibility.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-67573866897831835572015-11-24T22:45:00.003-08:002015-11-24T22:45:59.341-08:00Forex volatility is falling in this holiday week | Mandelbrot stays out of the market for Thanksgiving<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwvzvMdR9cv33eIRUuSaY1bu6yHtEl07p4uBb7QnHl-SRhsrHTUOpLAAMfrcqpWW6_0gomuMnSIQvqr5HPwMTfxRUYAKMRNBlGPtUpbwx5g-i7Bj0VjPUy4nt-8AkpVIkzJnRotmbV6Bwq/s1600/EURUSD+with+ATR.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwvzvMdR9cv33eIRUuSaY1bu6yHtEl07p4uBb7QnHl-SRhsrHTUOpLAAMfrcqpWW6_0gomuMnSIQvqr5HPwMTfxRUYAKMRNBlGPtUpbwx5g-i7Bj0VjPUy4nt-8AkpVIkzJnRotmbV6Bwq/s1600/EURUSD+with+ATR.png" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Tomorrow our
American friends will celebrate Thanksgiving, and we would like to take this
opportunity to send them, and everyone else, the very best wishes for the
holiday. As far as the Forex market is concerned, there is now a distinct sense
of a vacation atmosphere. This began at the end of last week and can be
expected to continue for the duration of this one, and even into the start of
next week, which sees the European Central Bank (ECB) monetary policy statement
on Thursday, with the all-important U. S. Non-Farm Payrolls report on Friday.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Both of
these will be highly anticipated and closely watched on this occasion.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Mandelbrot stays out of the market
for Thanksgiving<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">We have been
out of the market this week. As mentioned above, the holiday atmosphere might
be expected to result in the type of thin, choppy trading that is not conducive
to profits. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">But we do
not have to rely on gut instinct - we can also measure the state of affairs by
analysing a trading indicator, the Average True Range, or ATR, which is a means
of measuring volatility.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">An indicator
like this can be looked at in terms of rising or falling trends, in exactly the
same way as the exchange rate chart. As can be seen above, the ATR on the
hourly chart of EURUSD indicates a series of lower highs and lower lows, dating
from the last two days of last week, which is the classic definition of a
falling trend. So Mandelbrot keeps its powder dry.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-1250448395664008822015-11-23T23:23:00.003-08:002015-11-23T23:23:54.248-08:00U. S. Federal Reserve false alarm on closed meeting | U.S. GDP today<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaGN5tNx5-uDXN2OE1xHpX_lpmUjaPh07Uh5pvk2NjnkCyGCAJKDLsUl6y10DxjFhlsOZ-KHSuc9glwQ31ycRb8P7F11Bdn1cM7scTJUYNHugL-2RAdpqJ8z5A1Lh0CKZu488ydav684I3/s1600/Fed+HQ.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaGN5tNx5-uDXN2OE1xHpX_lpmUjaPh07Uh5pvk2NjnkCyGCAJKDLsUl6y10DxjFhlsOZ-KHSuc9glwQ31ycRb8P7F11Bdn1cM7scTJUYNHugL-2RAdpqJ8z5A1Lh0CKZu488ydav684I3/s1600/Fed+HQ.png" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The U.S.
Federal Reserve held an unscheduled, closed meeting in Washington yesterday.
This caused a frisson of excitement among some market participants, who are
extremely sensitive to anything at all that comes out of the U.S. central bank,
or the mouths of its board and other members.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">In the
event, the meeting seems to have been about U.S. bank deposit rates, which dictate
interest payment on the monies that banks leave on deposit with the Fed on an
overnight rate basis. Nothing came from the meeting that caused any movement in
those currency pairs that have the Greenback as a component. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">U.S. GDP today<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">A monthly report
that can have the effect of creating volatility is that on U.S. Gross Domestic
Product. This comes out today at 13:30 GMT. It is one of the main reports that
the Fed has in mind when it states that the decisions to be made with regard to
interest rates in the U.S. are “data dependent”.</span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;"><br /></span></div>
<div class="MsoNormal">
<span style="font-size: 12pt; line-height: 107%;">The Forex
market seems to be anxiously waiting for developments to unfold with regard to
interest rates in the U.S. This is also a holiday week stateside, with
Thanksgiving on this coming Thursday. For this reason we have a holiday
shortened week and smaller volumes of trade, all of which can lead to
unpredictable behaviour.</span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0tag:blogger.com,1999:blog-6944720422752762460.post-49938061921715651472015-11-22T23:32:00.000-08:002015-11-22T23:32:30.957-08:00Commodities slide and the dead cat bounce | Will impact all monetary policy decisions<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjD-UC4xGPCZjqapYiYWl45ZYf3r7YWunJp0sQt5Xeg4IEuY6JkDTXseKO_VzADbUGtWS3imDEYCHDLRzuDTscT5tV_Wyt5ZMGt7rZ4E3iwatVkx7K1-CiKmsVYbkTZBc0CL80n2hXg4yzr/s1600/Crude+Oil+monthly.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjD-UC4xGPCZjqapYiYWl45ZYf3r7YWunJp0sQt5Xeg4IEuY6JkDTXseKO_VzADbUGtWS3imDEYCHDLRzuDTscT5tV_Wyt5ZMGt7rZ4E3iwatVkx7K1-CiKmsVYbkTZBc0CL80n2hXg4yzr/s1600/Crude+Oil+monthly.jpg" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwbkS68Wbz3p-lR89WmRW50GacPxmMKS_PrtxbWq65CKfKOyFMeXHucVP1iPmQFZdz1WX3Ya1oWyJ2EUEgGZkQp9d_ar2wMdSUsJBQIlZqwoabDTKyztbgAEZn6EZD_TTrxraves1lX8i_/s1600/Iron+ore+monthly.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwbkS68Wbz3p-lR89WmRW50GacPxmMKS_PrtxbWq65CKfKOyFMeXHucVP1iPmQFZdz1WX3Ya1oWyJ2EUEgGZkQp9d_ar2wMdSUsJBQIlZqwoabDTKyztbgAEZn6EZD_TTrxraves1lX8i_/s1600/Iron+ore+monthly.jpg" /></a></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The recent
stories of both crude oil and Iron Ore, perhaps the most important commodities
from the point of view of global commerce, are encapsulated in the charts above.
As can be seen, both have been inexorably falling back to the levels that
marked the Global Financial Crisis, after moving upward in its immediate
aftermath in the expectation that normality was to be re-established as a
result, presumably, of the actions of various central banks around the world.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">A dead cat
bounce is a reference to a hopeless small rise after a fall – just as if a dead
cat was dropped from a high building it would bounce off the pavement, but that
would not be sign that it had come back to life.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">Now <a href="http://www.dailyforex.com/forex-fundamental-analysis/2015/10/uk-wants-eu-steel-summit/50097">it
has been reported</a> that the U.K., once a powerhouse of heavy industry and
steel making, has called for an E.U. summit to discuss the threat to European
steel making from the production and marketing practices of China, where state
subsidies and lower Health & Safety and environmental protection
legislation have allowed for the dumping of very cheap steel onto the world
market. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">And in
October the IMF saw fit to produce a paper that examined <a href="https://www.imf.org/external/pubs/ft/scr/2015/cr15286.pdf">the effects of
long-term oil price stagnation on the economy of Saudi Arabia.</a><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<b><span style="font-size: 12.0pt; line-height: 107%;">Will impact all monetary policy
decisions<o:p></o:p></span></b></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">For the
Federal Reserve and the Bank of England, the two factors that most influence
core interest rate decisions are employment, or the lack of it, and inflation
(or deflation). In the case of the ECB, the only mandate it has is what it
calls price stability, for which read inflation / deflation. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: 12.0pt; line-height: 107%;">The current
low and falling inflation regime in global terms is directly related to the
price of oil and other hard commodities. As long as the tendency and outlook
for the prices of these as outlined above continues, it cannot be seen as
likely that, even if the Fed marks a start to a rising interest rate cycle at
its December meeting, ongoing rises into the future will continue in any
meaningful way, with consequent implications for the value of the U.S. dollar.<o:p></o:p></span></div>
<br />
<div class="MsoNormal">
<br /></div>
StackSixhttp://www.blogger.com/profile/01114431722238031960noreply@blogger.com0