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FOMC: Preview of Policy Meeting

Overview

On Wednesday night at 20:15 CET the Federal Open Market Committee (FOMC) will announce its policy rate decision. In line with the general expectations in the market and among analysts, we expect the FOMC to keep the fed funds rate unchanged at 5.25%. Focus will therefore centre on the wording of the statement. Generally, we expect little rebuilding in the statement, with the FOMC retaining its "soft tightening bias".

Activity

With activity indicators posing positive as well as negative surprises in the inter-meeting period the overall growth picture remains largely unchanged compared to the last meeting. However, on balance one can argue that the forward-looking picture has improved, as some of the concerns on corporate spending and the US manufacturing sector have, with the recent data flow, been easing. This view stands in opposition to the continued disappointing home sales data and the fact that high US gasoline prices are set to dampen consumer spending significantly in Q2. We forecast GDP growth to recover to 2.0-2.5% in Q2 and to improve further heading into H2. The baseline Fed view of moderate expansion (ie, just below or close to trend) during the coming quarters is likely to remain intact. While the recent improvement in the ISM indicators could provide room for some cautious optimism in the statement, the assessment of the housing market will most likely remain dull.



Inflation

Underlying determinants of wage and price inflation suggest that high inflationary pressures remain in place. However the readings on core inflation, unit labour costs and wages have recently been slightly more comfortable from a FOMC perspective. Even so, there is still limited evidence that inflationary pressures are easing for real. We expect core inflation to move sideways during 2007 close to the current levels. That said, annual core inflation could be flirting with the upper end of the comfort zone in the coming months. The slightly more comfortable inflation picture facing the FOMC embeds the risk for a minor softening in the inflation assessment. On the other hand, the fundamentals leave very little room for a general easing in the inflation rhetoric. Hence, inflation will remain the primary concern of the FOMC.

Fed guidance


The recent key figures suggest that the balance of risk has become a little more comfortable for the FOMC during the inter-meeting period: forward-looking growth indicators on balance have become more promising and inflation indicators have been easing slightly. Given this, the FOMC is likely to remain relatively comfortable with the current policy stance. From this perspective, the forward looking part of the language will most likely remain unchanged, with the current "soft tightening bias" remaining in place.

Outlook

The combination of continued risks surrounding the growth picture and core inflation remaining "too high", will keep the Fed on hold for a considerable period of time, which is in line with our 12-month forecast of 5.25%. In the longer term, we continue to view a Fed hike as more likely than a cut, assuming that our forecast for the economy to return to trend growth during H2 and into 2008 plays out.



Financial implications

Equity markets: Quite frankly, if we knew the direction of the Fed's next rate move, we would still be unsure of the equity market response. It all depends on the mix of data at hand when FOMC decides on the move. In our view, the data is still too unclear for Fed to move rates at all. Still, the equity market sees a rate cut as the most likely next move from Fed, initiated to stabilise the current slow down for the US economy. In our view, it would most likely be a negative environment for equities if Fed was forced to cut interest rates due to economic weakness. The strong equity market performance since Fed went ‘on hold' in August 2006 suggests that Fed's current stance is the most comfortable scenario for equities. As we believe that Fed will continue its current policy, the equity market will most likely focus on other factors such as M&A and earnings.

Morten Kongshoug, Equity Strategist, +45 45 12 80 57, \n [email protected] This email address is being protected from spam bots, you need Javascript enabled to view it

FOMC key statements

Meeting statement of the March 20-21 meeting:

"The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.

Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected.

Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

Key statements from the Minutes of the March 20-21 meeting (released April 11):

"In their discussion of the economic situation and outlook, meeting participants agreed that, while recent economic data had been mixed, the economy was likely to expand at a moderate pace in coming quarters. Although the housing sector adjustment continued, accumulating data suggested that the demand for homes was leveling out ... However, additional evidence of sluggish business investment and recent developments in the subprime mortgage market suggested that the downside risks relative to the expectation of moderate growth had increased in the weeks since the January FOMC meeting."

"At the same time, the prevailing level of inflation remained uncomfortably high, and the latest information cast some doubt on whether core inflation was on the expected downward path. Most participants continued to expect that core inflation would slow gradually, but the recent readings on inflation and productivity growth, along with higher energy prices, had increased the odds that inflation would fail to moderate as expected; that risk remained the Committee's predominant concern. "

"Nonetheless, the combination of generally weaker-than-expected economic indicators and uncomfortably high readings on inflation suggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize."

"The Committee agreed that further policy firming might prove necessary to foster lower inflation, but in light of the increased uncertainty about the outlook for both growth and inflation, the Committee also agreed that the statement should no longer cite only the possibility of further firming. Instead, the statement should indicate that future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

Key statements from Bernanke's testimony to the JEC (March 28):

"At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency. We will continue to monitor this situation closely."

"Overall, the economy appears likely to continue to expand at a moderate pace over coming quarters. As the inventory of unsold new homes is worked off, the drag from residential investment should wane. Consumer spending appears solid, and business investment seems likely to post moderate gains. "

"Although core inflation seems likely to moderate gradually over time, the risks to this forecast are to the upside. In particular, upward pressure on inflation could materialize if final demand were to exceed the underlying productive capacity of the economy for a sustained period."

"To date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation."

Selected statements from FOMC members since March 21:

Mishkin (voter, neutral) - March 23: "Looking to the medium term, I am less optimistic about the prospects for core PCE inflation to move much below 2 percent in the absence of a determined effort by monetary policy."

Geithner (voter, neutral) - March 23: "These concerns have been heightened in some quarters by the problems currently being experienced in the subprime mortgage sector. It will take some time before the full implications are understood and the full impact can be assessed. As of now, though, there are few signs that the disruptions in this one sector of the credit markets will have a lasting impact on credit markets as a whole."

Moskow (voter, hawk) - March 28: "...my assessment is that the risk of inflation remaining too high is greater than the risk of growth falling too low. Of course, whether policy will need to be adjusted and the degree of any adjustment will depend on the data we see in the months to come and how that data influences our forecast of the economy."

Poole (voter, hawk) - April 3: "Inflation is a major concern and if inflation were to head up in a convincing way from the current level, I could be in favor of a rate increase at some point"

Moskow (voter, hawk) - April 11: "So far this year inflation has been somewhat elevated, highlighting the risk that inflation could stay stubbornly high." ""For the balance of 2007, economic growth likely will average modestly below potential. But I expect that growth will be picking up gradually over the coming quarters and return to near potential by 2008."

Mishkin (voter, neutral) - April 20: "I continue to believe that the current stance of monetary policy is likely to foster sustainable economic expansion and a gradual ebbing in core inflation"

Yellen (non-voter, dove) - Aril 26: "The current stance of policy is likely to foster sustainable growth with a gradual ebbing of inflation over time. However, the inflation risks are skewed to the upside". "I still expect to see a moderate pace (of activity) in the second half of the year. At the same time, much of the news pertaining to the first quarter has been disappointing, and has raised the downside risk for growth"








Danske Bank

[شريف دعبس]

Dollar Rallies into Federal Reserve FOMC Policy Announcement

• Dollar Rallies into Federal Reserve FOMC Policy Announcement
• Euro: Prospect of an ECB Rate Hike Could Limit Losses in the EUR/USD
• British Pound Could Bounce on BRC Retail Sales and Nationwide Consumer Confidence

Dollar Rallies into Federal Reserve FOMC Policy Announcement

With the Federal Reserve monetary policy meeting scheduled for tomorrow, currency traders are either buying up dollars against the Euro and British pound or squaring up shorts ahead of the rate decision. Even though we think that growth indicators warrant a more neutral FOMC statement, inflation pressures will prevent Team Bernanke from making any drastic changes to the language. Our special FOMC outlook on DailyFX.com contains a full look into how economic data has changed since the last meeting as well as the key phrases to look for in the statement. The Federal Reserve has not changed interest rates since June 2006 and the futures curve is not pricing in a rate cut until the end of the year. The tug of war between inflation and growth at a time when average gasoline prices are at a record high gives the Fed little room to alter the FOMC statement. Keeping interest rates steady and the statement unchanged will be taken positively by the foreign exchange market, which could lead to a resumption of the uptrend in USD/JPY. We expect the dollar to see more pronounced strength against the Yen than the Euro in reaction to any dollar positive news due to the benefit of carry. Do not forget that the European Central Bank has a meeting on Thursday. They are still on track to raise interest rates in June which means that Euro traders may be hesitant of initiating significant Euro shorts ahead of the meeting. Japan on the other hand continues to sit on their hands. In the event of a surprisingly neutral or dovish statement, we could see the EUR/USD race back towards its all-time highs. Being short USD/JPY may cost too much in daily interest for traders to sell the pair aggressively. Therefore a disappointment by the Fed and the prospects of higher rates in the Eurozone and in the UK could lead to strong rallies in both the Euro and the British pound. The only pieces of US data released today were wholesale inventories and sales. Inventories fell short of expectations, but sales were exceptionally robust.


Euro: Prospect of an ECB Rate Hike Could Limit Losses in the EUR/USD

The Euro tanked today as industrial production failed to live up to the strong factory orders reported yesterday. Annualized growth remained unchanged at 7.7 percent, which compares to the market's 8.2 percent forecast. The sell-off in the Euro began as soon as the European market opened, which means that London traders did the bulk of the selling. It is important to realize that the EUR/USD is only a little more than a 100 pips off its high which illustrates the market's hesitancy to take the Euro much lower before the Federal Reserve and European Central bank meetings. Traders fully expect the ECB President to signal that rates will be increased in June. When he wants to signal a rate hike at the next meeting, he usually reintroduces the word 'vigilant' into his vocabulary. With no US data due for release tomorrow besides the FOMC rate decision and the Eurozone calendar only containing German trade data, the EUR/USD could consolidate.

British Pound Could Bounce on BRC Retail Sales and Nationwide Consumer Confidence

The British pound weakened today with no UK economic releases to alleviate the pain. However, tonight is a different story as the market awaits a handful of announcements ahead of the Bank of England rate decision later this week. Expected later tonight, both BRC retail sales and Nationwide consumer confidence figures are estimated to revive the recently downtrodden sterling. Although there are no expectations for the retail sales report, sentiment is high that the survey will repeat the 6.2 percent rise seen last month. Consumer confidence is also expected to advance. Both reports will set the underlying currency up well heading into Thursday's rate decision. The question now remains, will speculators be handed another surprise this time around? The Bank of England, a central bank known for catching the market off guard, is expected to raise rates by 25 bp. There is a minority favoring a 50bp rate hike and another group favoring unchanged rates. Either way, with volatility as low as it has been the decision may have more impact than some traders are anticipating.

Yen Crosses Rebound as Dow Reverses Intraday Losses

The Japanese Yen is stronger across the board against every major currency except for the Australian dollar. With the Dow Jones Industrial Average down as much as 75 points intraday, the yen crosses struggled to stay afloat. Even though the US stock market index reversed course to end the trading session unchanged, the Yen crosses only managed to see shallow rallies. We have finally seen the US dollar take charge and dictate market price action once again. The strength of the US dollar against currencies like the Euro, Swiss Franc and British pound played a major role in preventing EUR/JPY, CHF/JPY and GBP/JPY from ending in positive territory, like the Dow. Japanese leading indicators are due for release tonight. The recent weakness of the Yen should have helped to boost overall economic activity.

Australian Dollar Surges after Strong Retail Sales Report

The Australian and New Zealand dollars are sharply higher against thanks to a much stronger than expected Australian retail sales number. Consumer spending posted the third straight increase as the strength of the Australian dollar puts a fire sale on imported goods. Even though building permits were much weaker, the market is putting far more weight on the retail sales number. The Australian government also announced that they will cut taxes before the election this year, which may trigger nice surge in growth. Australian house prices are due for release tonight. The market is expecting a firm number. New Zealand unfortunately is not seeing the same positive indications for growth. In fact, the IMF warned overnight that GDP growth could actually remain below potential for the next 3 years. The kiwi is up today only because the Aussie is up. Meanwhile the Canadian dollar gave back a part of yesterday's gains after a softer housing starts report. The building permits number released yesterday was for the month of March while today's housing starts is for the month of April. This suggests that robust growth in Canada may finally be coming to an end.





DailyFX

[شريف دعبس]

اليورو - دولار
يستهدف 1.4
و لكن
هل يصحح ام يباشر الصعود من دون تصحيح قوى
اخبار البنوك المركزيه هذا الاسبوع هو الذى يحدد

الفيدرالى الامريكى يبين مخاطر التضخم و تباطوء النمو بيان الفيدرلى هو الذى يحدد ايهما اكثر خطوره على الاقتصاد الامريكى
طبعا اذا كان التضخم هو الاخطر اذا لا لخفض نسب الفائده
اما اذا كان تباطؤ النمو هو الاخطر اذا خفض نسبه الفائده على المدى القريب

اما الاوربى ننتظر الكلمه السحريه من السيد تريشه اليقظه (vigilant)
و لو قالها اليور الى اعلى 1.4

واما الانجليزى فمتوقع رفع نسبه الفائده الى 5.5%

فنيا الشرح فى التشارتات
هو البحث عن افضل منطقه للشراء الى 1.4

تحياتى للجميع
سليل عائله دعبس

[شريف دعبس]

تابع التشارتات
و الموضوع الاساسى للمتابعه


https://forum.arabictrader.com/showthread.php?t=29001&page=6

[شريف دعبس]

Fed leaves rates unchanged at 5.25 pct for seventh consecutive meeting

Wed, May 9 2007, 18:30 GMT
http://www.afxnews.com

WASHINGTON (Thomson Financial) - The Federal Reserve today decided not to change its key federal funds rate unchanged for the seventh consecutive meeting, leaving it at 5.25 pct, where it has been since June.

Federal Reserve Board Chairman Ben Bernanke and his colleagues on the policymaking Federal Open Market Committee said recent signs of the economy are mixed and the housing sector adjustment is ongoing.

"The committee's predominant policy concern remains the risk that inflation will fail to moderate as expected," the one-page statement said, though they do expect inflation to wane in the coming months.

The Fed changed its statement about the economy slightly, saying "growth slowed in the first part of this year and the adjustment in the housing sector is ongoing."

"Nevertheless, the economy seems likely to continue to expand at a moderate pace," the Fed said.

The next scheduled meeting is not until June 27-28, though the Fed is not prohibited from making surprise announcements.

The vote was unanimous, as Bernanke and nine of his colleagues on the 10-member panel said they would monitor both slowing economic growth and rising inflation and make a decision about any future moves.

[email protected]

cbd/wash


COPYRIGHT


Copyright AFX News Limited 2007. All rights reserved.

The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

[شريف دعبس]

اهم نقطتين فى نظرى كلمتى

mixed & expect inflation to wane
يبانات مختلطه و توقع بتضأل التضخم

[شريف دعبس]

FX Strategy: Buy EUR/USD

We recommend buying EUR/USD spot at 1.3551, target 1.38 and with a stop at 1.3425.
We see risks to EUR/USD biased on the upside in the coming months. Though the US economy may spring a positive surprise following the rise in ISM, a more obvious risk lies with a gasoline-inflicted drag on consumption in Q2. In contrast, the euro area could continue to surprise on the upside. The latest rise in orders is testimony to solid economic momentum. Growth is well-balanced with an increasing contribution coming from investment and consumption. We expect the ECB to raise rates in June and in September, and there is a risk that rates will be raised further in this cycle.
To date, USD weakness has been entirely consistent with cyclical trends and the persistent underperformance of the US economy indicates that it is too soon to go against the tide. Furthermore, we expect the global backdrop to remain conducive for risk-taking in general, causing capital flows out of the US to remain high. Finally, signs of rising US protectionism could add a more structural risk premium to the dollar in the coming months.
The main risk to this recommendation lies with a positive surprise in the US. Speculative positioning is already short, just as markets continue to price rate cuts. A string of more positive economic reports could change that picture, resulting in a stronger dollar. Further, increased risk aversion - in the form of, say, a political and financial crisis in Turkey, may benefit USD assets.

Technically, the correction taking EUR/USD from a high of 1.3680 to 1.3520 is now likely to be complete. The next target is for a test of the previous high. A break here will target 1.3866, and - eventually - 1.4460. To keep the long-term upturn in place, we need to stay above 1.30. However, a break below 1.34 will postpone a further rise.


Danske Bank

[شريف دعبس]

Trichet: ECB To Use "Strong Vigilance

Thu, May 10 2007, 12:40 GMT
http://www.djnewswires.com/eu


Trichet: ECB To Use "Strong Vigilance"

FRANKFURT (Dow Jones)--European Central Bank President Jean-Claude Trichet Thursday said "strong vigilance is of the essence" in monitoring price risks.

In the past, Trichet has used the word vigilance to flag an imminent increase of the ECB's key interest rate.

His remarks will underpin market expectations that the bank is set to raise its key interest rate to 4.0% at the June 6 policy meeting.

The ECB has so far raised rates seven times since the start of its policy tightening cycle in December 2005.

(MORE TO FOLLOW) Dow Jones Newswires

May 10, 2007 08:40 ET (12:40 GMT)


Copyright 2007 Dow Jones & Company, Inc.

[شريف دعبس]

اليورو - دولار
يستهدف 1.4
و لكن
هل يصحح ام يباشر الصعود من دون تصحيح قوى
اخبار البنوك المركزيه هذا الاسبوع هو الذى يحدد

الفيدرالى الامريكى يبين مخاطر التضخم و تباطوء النمو بيان الفيدرلى هو الذى يحدد ايهما اكثر خطوره على الاقتصاد الامريكى
طبعا اذا كان التضخم هو الاخطر اذا لا لخفض نسب الفائده
اما اذا كان تباطؤ النمو هو الاخطر اذا خفض نسبه الفائده على المدى القريب

اما الاوربى ننتظر الكلمه السحريه من السيد تريشه اليقظه (vigilant)
و لو قالها اليور الى اعلى 1.4

واما الانجليزى فمتوقع رفع نسبه الفائده الى 5.5%

فنيا الشرح فى التشارتات
هو البحث عن افضل منطقه للشراء الى 1.4

تحياتى للجميع
سليل عائله دعبس

تابع التشارتات
و الموضوع الاساسى للمتابعه


https://forum.arabictrader.com/showthread.php?t=29001&page=6

وصل اليورو الى 1.3462 وننتظره عند 1.3450 و لكن الاسبوع القادم بعد خبر مبيعات التجزئه الامريكى اليوم

[شريف دعبس]

Wakeup Call: Will US PPI And Retail Support The USD

Fed expressed inflation concerns on Wednesday - today the PPI will reveal if the inflation concerns are justified. Dow dropped around 150 points as investors closed longs also hurting carry trades

Overnight News Bullets

• German Wholesale Price Index MoM/YoY (Apr) out at 0.8%/2.9% vs. 0.5%/2.6% expected.
• FR Industrial Production MoM/YoY (Mar) out at 0.3%/1.2% vs. 0.2%/1.1% expected. Manufacturing Production out at -0.1%/1.8% vs. 0.4%/2.2% expected.
• FR Trade Balance (Mar) out at -1.6B vs. -2.7B expected.
• UK HBOS House Prices MoM/YoY (Apr) out at 1.1%/10.9% vs. 0.8%/10.6% expected.
• JN Eco Watchers Survey: Current at 49.7 vs. 50.4 expected, Outlook at 51.9 vs. 51.3 prior.
• SW CPI - Headline Rate MoM/YoY out at 0.5%/1.9% vs. 0.4%/1.8% expected. CPI - Underlying Inflation MoM/YoY out at 0.5%/1.2% vs. 0.4%/1.1% expected.
• SW AMS Unemployment Rate (Apr) out at 3.7% as expected.
• NO CPI MoM/YoY (Apr) out at 0.0%/0.3% vs. 0.5% expected. CPI - Underlying MoM/YoY at 0.1%/1.4% vs. 0.4%/1.6% expected.
• NO PPI MoM/YoY (Apr) out at 1.7%/-5.4% vs. 1.8%/-2.2% prior.
• UK Industrial Production MoM/YoY (Mar) out at 0.3%/-0.2% vs. 0.4%/0.0% expected. Manufacturing Production MoM/YoY (Mar) out at 0.6%/0.9% vs. 0.5%/0.9% expected.
• UK Trade Balance (Mar) out at -£7048 vs .£6700 expected.
• E-Z OECD Leading Indicators (Mar) out at 109.7 vs. 109.6 prior.
• UK RATES AT 5.50% AS EXPECTED. Prior at 5.25%.
• ECB RATES AT 3.75% AS EXPECTED.
• CA Int'l Merchandise Trade (Mar) out at C$4.6B vs, C$5.5B expected.
• CA New Housing Price Index MoM (Mar) out at 0.3% vs. 0.5% expected.
• US Trade Balance (Mar) out at -$63.9B vs. -$60.0B expected.
• US Import Prices MoM(Apr) out at 1.3% vs. 1.0% expected.
• US Initial/Cont. Jobless Claims out at 297K/2555K vs. 315K/2513K expected.
• US Monthly Budget Statement (Apr) out at $177.7B vs. $145.0B expected.

Markets

• FX: USD well bid through the session. Carry unwinding as risk willingness decreases
• Fixed Income: 10yrs higher on inflation, bunds range bound. JGB's strong
• Stocks: Bearish sessions in both EU an the US, S&P closed below 1500. Nikkei down 1.0 pct
• Commodities: Precious metals beaten again on USD strength. Crude edging higher, still fragile
  

[ahmedkafas]

كدة ما هو المتداول العربي
؟؟؟؟؟؟؟؟؟؟؟؟؟
فين الترجمه مشكورين

[شريف دعبس]

How a Drop in Natural Gas May Lead to a Rally in Yen

The Hidden Dangers of High Returns

News this week that a 32 year old Canadian energy trader by the name of Brian Hunter recently lost approximately $5 Billion dollars in a period of only one week in the natural gas market caused an uproar on Wall Street.

Investors in Amaranth Advisors - the Connecticut based multi billion dollar hedge fund for which Mr. Hunter continues to trade, saw the value of their investment decline by 35% after being up as much as 20% this year -- an overall drawdown of 50% all in a remarkably short period of time Some institutional clients such as the San Diego County Employees Retirement Association were badly hurt. SDCERA which oversees more than $7 billion on behalf of retirees and employees of the county, invested $175 million in Amaranth last year, according to hedge fund industry publication Alpha magazine. But with Amaranth down about 35% so far in 2006, SDCERA may have lost more than $50 million on its investment this year alone.

While Amaranth's fate underscores the volatile nature of the hedge fund business (in a great example of understatement, SEC Chairman Christopher Cox stated., “Big losses at Amaranth Advisors LLC demonstrate that investing in hedge funds can be risky”) it may also contain wider ramifications, impacting other seemingly unrelated markets such as foreign exchange.

Amongst financial instruments the natural gas market is not very large. Average daily volume is approximately 10,000 contracts with notional value of little more than $50,000 per contract translating into about $500 Million of daily turnover. Open interest at present is nearly 79,000 contracts with total notional value of just $4 Billion. At first glance this data only confirms the extreme concentration of Mr. Hunter's positions and highlights the massive amount of risk implied in his bets. However, the illiquidity of the natural gas market and the sheer size of Mr. Hunter's losses also demonstrates Amaranth's central problem - how to unwind these positions in an orderly fashion?

Forced Liquidation - A nightmare for some and opportunity for others

In a letter to his investors, Mr. Nicholas Maounis, Amaranth's founder stated, "We are in discussions with our prime brokers and ... are working to protect our investors while meeting the obligations of our creditors," While his words attempt to reassure his clients, in reality Mr. Maounis is trapped. The Amaranth fund now finds itself in the worst possible situation for any trader to be - it must meet its margin obligations or face forced and wholesale liquidation of its positions. Forced liquidation is a nightmare for those traders caught on the wrong side of the market because it demands immediate disbursement of positions regardless of price.

On the flip side however, forced liquidation offers the closest possibility of a risk free trade for other traders in the marketplace. These traders understand that the financial instrument in question will face unrelenting one way pressure until all margin obligations are met. In fact not only will savvy market players try to take advantage of the order flow created by the margin call, but they will often attempt to exacerbate the situation by selling ahead of the vulnerable trader in order to precipitate even greater selling. Witness the problems of Long Term Capital Management which found itself in a very similar situation in 1997 but in the fixed income rather than the energy market. The fund fell victim not only to its own bad trades but to the ever deteriorating prices of its positions as bond spreads continued to widen despite the seeming positive fundamental backdrop as competitors continually pushed prices lower creating even bigger losses for LTCM.

Seeking Liquidity in FX

Because of these predatory tactics, hedge funds, especially large, diversified ones such as Amaranth look to other markets to raise necessary capital to meet margin calls. With nearly $2 trillion dollars in average daily turnover the currency market is the most liquid financial market in the world. As such it offers hedge funds trapped in losing, illiquid positions in other markets an easy and efficient way to quickly raise funds and satisfy immediate credit claims. Although it is not completely clear if Amaranth trades FX directly - the fund utilizes a variety of strategies without disclosing the exact nature of which instruments it employs - its recent troubles are unlikely to be an isolated event in financial markets. With more than 8,000 hedge funds trading every conceivable financial product in the world often on an extremely leveraged basis, blows ups such as Amaranth's will likely become more a rule rather than an exception. As a result these wounded players will continue to head for the currency market in attempt reliquefy quickly.

FX - which trades are vulnerable to margin call liquidation from other markets?

Typically, when multi-strategy hedge funds head to the currency markets to raise funds they will liquidate their most profitable positions first. Over the past six months this has inevitable meant carry trades. For example since its short term bottom on May 17th, USD/JPY with its 500 basis point positive interest rate spread, has appreciated more than 8% rising from 109 to 118. GBP/CHF - another large carry trade pair with a 300 basis point positive spread - has risen more than 1000 points or better than 4% over the past 3 months. Finally GBP/JPY which has climbed more than 1800 points since May of 2006 has also been one of the biggest gainers of the year. With so much capital gains as well as carry interest profits booked in these pairs they have become the easiest targets for profit taking by hedge funds in trouble. Little wonder then that in the past week all of these pairs appeared to have hit resistance with USD/JPY trading down from 118.30 to 117.00, GBP/CHF unable to pierce the 236.00 level and GBP/JPY making a lower double top at 221.00 after reaching a yearly high of 223.72 at the end of August.




While Amaranth's troubles may yet abate, it is important to understand that typically forced liquidations are not one day affairs. LTCM tried to stem the tide of red ink for months before finally succumbing to a takeover of their positions by a consortium of Wall Street banks. Therefore, traders looking at opportunities in the FX market will be well advised to follow the Amaranth saga closely. With Connecticut Attorney General Richard Blumenthal vowing to investigate the losses and with Amaranth now raising its loss estimate to $6 Billion from $5 Billion its need to liquefy will likely continue and its actions may impact the trade flow not only in the energy markets but in the currency markets as well.

FXCM

[شريف دعبس]

تابع اليورو

اليورو و شمعه البيرسينج
وهى شمعه انعاكسيه مرتده من دعم قوى فى ترند صاعد قوى
تحياتى للجميع

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Technical Analysis Daily: EUR/USD, USD/CAD

EUR/USD 1.3541

The Euro made a big fall to 1.3463

The Euro made a big fall to 1.3463, with an unsuccessful effort to break the support at 1.3474. The reaction at this level was a little climb of the currency pair. Its quotes at the moment are near 50% of the RSI. Targets of this climb are the downtrend line across the tops 1.3688 from April 2007 and 1.3625 from May 2007, passing currently through the levels 1.3575, followed by 1.3595, and 1.3670. In its downward trend the support levels of the EUR/USD are the levels 1.3494, 1.3473, and 1.3373.

EUR/USD Trading range: 1.3560 - 1.3460, Trend: Downward, Sell at 1.3548 SL 1.3580 TP 1.3472.










USD/CAD 1.1121

Canadian Dollar bounced from the bottom line

The Canadian Dollar broke its short term price frame, and climbed to the top level of its long term quotes frame. This led RSI to leave its oversold zone. Currently the USD/CAD is near the line passing through the tops 1.1785 from March 2007 and 1.1595 from April 2007. At these levels the support is completed also by 20 ÌÀ Bollinger Bands. Break of this 2 month quotes frame will make the currency pair target 1.1205, 1.1293, and 1.1332. Renewal of the downward trend till test the bottom of the broken price frame. Current supports are 1.1037 and 1.0978.

USD/CAD No particular trading recommendations made.









iFOREX.bg Forecasts and Trading Signals

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يورو - استرالى

الموضوع الاساسى

https://forum.arabictrader.com/showt...t=29001&page=9

الزوج محير

اسباب الهبوط
تكون راس و كتفين على الديلى
و اسباب الشراء
الديفرجنز الشراء على كل من الديلى و الاربع ساعات
+ احتمال تكون شمعه همر انعكاسيه على الديلى
اذا الدخول بيع بكسر الترند ومن ثم خط العنق
او شراء بكسر الترند الهابط المتوفق مع موفينج 21

تحياتى