EUR/USD rose today for the first time in the last four days. All three important macroeconomic reports that were released today in the United States showed that the world’s biggest economy is still quite far from leaving the global financial crisis behind. EUR/USD is trading near 1.2606 now.
ADP employment report for February showed a decrease by 679k jobs in that month, following 522k drop in January. The forecast was at 630k.
ISM services index declined slightly from 42.9% to 41.6% in February — still a bit above the average estimate of 41%.
Crude oil inventories fell in U.S. again last week — this time by 0.7 million barrels, but nevertheless they are still above the upper limit of the average range for this time of year.
EUR/USD fell yesterday after the reports on the growing personal income and spending showed that the U.S. consumers may help the country’s economy to recover faster from the crisis. The declining construction spending failed to move the dollar down against the euro yesterday. The currency pair ended its trading at 1.2560 after opening at 1.2618.
Personal income rose by 0.4% in January after contracting by 0.2% in December; the median forecast for its change was at -0.2%. Personal spending rose by 0.6% in January after falling by 1% in December; it was expected to grow by 0.4%.
Construction spending fell by 3.3% in January compared to the December’s level, following 1.4% drop a month before and 1.5% decline forecast.
ISM manufacturing index report showed that PMI rose from 35.6% to 35.8% in February, while the market participants expected a small decline to 34%.
I’ve decided to update the Forex broker list on my site and ended up changing the whole system. With more than 110 brokers on the list, with the majority of them being MT4 and with support of CFD trading, the old category pages were loading for too long. Now the category lists are just the filtered versions of the classic Forex broker table (which is also sortable, of course). The exact descriptions, details and reviews for the specific brokers are located on the dedicated pages (examples: FXOpen, Interactive Brokers). So, the lists are now much easier to navigate and after you find the broker that you were searching for, you you get all the available information about it on a single page. Along with this structural change I’ve also added the «Country of origin» field for all brokers, so now you’ll see where your money are coming to and whom you are dealing with (at least technically).
The euro and other major currencies were growing for the whole day against the U.S. dollar today. EUR/USD almost rose to its Tuesday’s open level — the day when it fell by the most since February 4th. Currently EUR/USD is trading near 1.2684.
PPI increased by 0.8% in United States in January. It was expected to rise by only 0.2% after falling down by 1.9% in December. It looks like the liquidity measures are already pressing on the prices in U.S. and the dollar inflation may keep investors away from buying the USD further.
Initial jobless claims remained unchanged last week from the value recorded a week before, which was revised from 623k to 627k.
Leading indicators index rose by 0.4% in January after increasing by 0.3% in December. According the forecasts it should have remained unchanged.
Philadelphia Fed index declined rapidly in February — from -24.3 to -41.3 — the lowest level since October 1990. It was expected to fall to -25.
Crude oil inventories decreased for the first time in several month last week — they fell by 0.2 million barrels.
EUR/USD remained almost unchanged today on the Forex market after a huge drop yesterday. The market was affected by some important macroeconomic news from the United States today and the currency pair reacted with some moderate spikes in both direction. Now it’s trading near 1.2568.
Building permits in January fell to the annualized and seasonally adjusted level of 521k — down from 547k reported for December and slightly below 525k estimate. Housing starts declined from 560k (revised up from 550k) to 466k in January — that’s significantly below the average forecast of 530k.
U.S. imports prices decreased by 1.1% in January following the decline in the 5 previous month, while the exports prices increased for the first time in the last 6 months — by 0.5% in January.
Industrial production fell by 1.8% in January after declining by 2.4% in December (revised from 2% drop). It was expected to fall by 1.5%. Capacity utilization decreased from 73.3% (revised down from 73.6%) to 72% in January — below the estimate of 72.4%.
EUR/USD declined significantly today (fastest since February 4) as the the mixed macroeconomic statistics from U.S. urged investors to sell the euro and the move for the U.S. dollar. EUR/USD is currently trading at 1.2598 after opening at 1.2795 today.
Empire State Manufacturing Survey report showed a decline of the general business conditions index from -22.2 to a new record low of -34.7. The market participants expected only a small drop to -24.
Net long-term securities transactions were at $34.8 billion in December compared to -$25.6 reading in November.
The gold seems to be becoming the favorite investment around as the traders are afraid of the crisis and the fiat currencies seem to be in a great danger when all those anti-crisis measures will induct a massive wave of inflation, reducing the money’s buying power. In such an environment gold looks like a good investment to save one’s assets and to multiply them if you trade with a considerable leverage. Forex traders may also decide to capitalize the expected upward gold trend as many Forex brokers provide the gold vs. dollar or gold vs. euro pairs.
There is one problem with investing in the gold now — it’s already way overbought. For almost ten years — from 1995 to 2005 the gold has been trading between $250 and $420 per troy ounce. The gold began its rally in 2005 and peaked above $1,030 in March 2008. Now it’s trading not far from that level — near $940 per troy ounce. Gold’s «bubble rally» accompanied the similar rallies in carry trade (GBP/JPY, EUR/JPY, AUD/JPY currency pairs, etc.) and in oil. Both the carry trade and the oil rallies ended with the bubble bursts as the financial crisis reached its apogee in September 2008. The gold bubble lived through that period falling to is local minimum of $680 in October and that minimum was far above the recent average trading range for this commodity. You can compare a carry trade unwinding with the drawdown in the gold prices during the crisis time from these charts:
Gold Chart
AUD/JPY Chart
The gold is praised by many as the real investment in the world full of the paper money and the bills that go default or the shares of the companies that may just vanish. Gold is seen as some kind of a standard of value compared to other assets. Average Joe might even hope to use the gold as the method of payment during the harshest times when the fiat currencies won’t be considered as anything worthy. In reality gold has almost no real value. Of course, it’s nice and makes a good jewelry but its value has nothing to do with its current price. The current price was raised by the investors, traders and the short-time speculators. Investors opt to gold as the safe haven investment, traders buy it because they can get an almost risk-free ROI during the time of the near-zero interest rates; the short-time speculators just find a good opportunity in riding the wave and gaining from the daily or weekly pull-backs on the gold market.
But the bubble will continue to grow until one day it bursts. So, when will it happen? It will happen only when two conditions become true. First, the financial markets should offer something else for the investors to get in — the higher interest rates by the major central banks is a good indicator that the investors now have better ways to multiply their funds than sitting on the piles of gold. Second, stability should rule the finances — not many investors will go investing into South African or Russian papers (which still offer more than 10% ROI) if there is a high probability to lose their money. Gold offers safety and the new investments should be also considerably safer. When the traders will have something new to invest in and the safety of their funds will become satisfying they will start to move out of the gold gradually. When the short-time speculators realize that the gold is falling they will start to bet on the short side, pushing the gold down faster, which will trigger the major stop-losses of many long-term investors forcing them out of this asset. As the oil fell from near $150 to $40, the gold will probably fall from $1,000-$1,200 to about $400 in a period of a month or two.
It can’t be known exactly when the right time for the burst comes. For now gold is still a good buy — central banks maintain the near-zero interest rates, the risks are high and the risk-aversion is the general trend. The gold should flourish at least for the next several months, bellying the bubble even further. I’d watch closely for the U.S. interest rate and if it comes close to 3-4% (and they will eventually have to increase the rates because of the budget deficit-induced inflation) that means the major part of the gold investors will start to slowly move out of it. But for now, selling the gold probably won’t be a good trade.
Gallant FX is U.S. Forex broker, which is registered with the National Futures Association and operates on-line since 2006. Although for the first two years they were just an introducing broker for the other companies, since 2008 Gallant FX offers their own Forex trading services. They offer MetaTrader 4 platform and provide a free Forex VPS service for their customers, allowing them to host MT4 expert advisors on the special virtual private servers, where they can run uninterrupted and securely. Because Gallant FX is based in U.S. and is primarily aimed on the U.S. customers they don’t offer CFD trading (which is illegal in U.S. anyway). This broker allows mini-Forex accounts starting from $500; the leverage can vary up to 1:400 and the spreads are quite average — for example, 2 pips on EUR/USD. The only real problem with this broker is that they don’t accept payments or withdrawal requests through any electronic payment system and offer only wire transfer and checks.
EUR/USD is currently showing a third daily decline and the second-largest daily drop since February 4 on the Forex market today as some macroeconomic reports in U.S. showed that the world’s largest economy isn’t that bad yet. EUR/USD is now trading near 1.2810.
Initial jobless claims were down from 631k (revised from 626k) to 623k last week, while economic strategists predicted 610k claims.
Retail sales were up by 1% in January in U.S. after falling by 2.7% in December. They were expected to fall by 0.3% last month.
Business inventories were down by 1.3% last December after falling by 0.7% in November — this result is worse than the forecast decline by 0.6%.
EUR/USD fell today despite the not-so-good fundamental reports from the U.S. that were released today. The trade balance deficit wasn’t as good as the traders have expected, while the Treasury budget deficit grew significantly. And only oil reserves growth was a really positive signal for the dollar bulls. EUR/USD is now trading near 1.2881.
U.S. trade balance deficit was at $39.9 billion in December — down from $41.6 billion in November but below the quite optimistic estimate of $35.5 billion.
Crude oil inventories continued their gaining spree and increased by 4.7 billion barrels last week.
Treasury budget deficit in January was at $83.8 billion — up from $17.8 billion surplus in January of 2008. The forecast deficit for the previous month was at $78 billion.
Taurus Global Markets is the latest Forex broker addition to the list on my site. It’s a rather new MetaTrader broker that is present on-line since 2007. Like many other MetaTrader brokers it’s not regulated by any serious financial authorities and is registered in the offshore zone — Bahamas in this case. The lack of regulation can be seen as a serious disadvantages by some traders but others prefer such brokers because of some other (rather obvious) advantages of the offshore companies. Like many other such brokers Taurus Global Markets (or simply TGM) offers also CFD (Contracts For Difference) trading. Another advantage of this broker is that it’s Muslim-friendly and offers accounts with no overnight interest by request. The disadvantages of TGM are the high minimum account size, which is $5,000 that can be transfered only using the wire transfer and the minimum trading volume of one standard lot (so, no mini-trading is allowed).
NTWO is a MetaTrader Forex and CFD broker with the offices in U.S. and United Arab Emirates (according to their website), but they are not registered with NFA or CFTC. Their site is active on-line since 2005. NTWO offers standard trading accounts from $2,000 and 1 lot minimum positions with the leverage varying from 1:25 to 1:200. The spread on EUR/USD is 3 pips. Apart from the common demo accounts with the virtual money, NTWO offers quite the unique training accounts — with $500 minimum and mini-lots, which is a part of their training course program. They state that such an account will help the Forex beginners to learn the real trading with the controlled risk and under the professional supervision.
WSD (or WSD Global Markets) is the on-line Forex broker based in New Zealand. WSD offers Forex, CFD, futures, options and oil trading services on-line since 2006. It features the MetaTrader 4 trading platform for all types of trading. To start trading with this broker you’ll have to open an account with at least $1,000 and send the signed documents via the postal mail during the process. The only way to transfer the funds and then to withdraw them is the wire transfer. The mini-lot trading is available and the only available leverage is the standard 1:100. The spreads offered by WSD aren’t very competitive — for example, EUR/USD has 4 pips spread and GBP/USD — 5 pips.
EUR/USD currency pair posted an unexpected growth today as the U.S. economy reported an even faster decline in the nonfarm jobs and the unemployment rate exceeded the pessimistic forecasts. EUR/USD is now trading near 1.2941.
Nonfarm payrolls fell by 598k in January after falling by 577k in December (revised down from the decline by 524k). The decline in the nonfarm payrolls was expected to be near 540k. The unemployment rate rose from 7.2% to 7.6% in January; the analysts forecast the rate at 7.5%.
Consumer credit dropped by $6.6 billion in December after falling by as much as $11 billion through the month of November (revised downwardly from $7.9 drop). The median forecast for the current report’s decline in the consumer credit was at $3.5 billion.
Despite the large drops in the employment and the factory orders in the United States, the U.S. dollar stood still against the euro today. Although, there were medium intraday spikes in both directions, the EUR/USD is currently trading close to its opening level — near 1.2856.
Initial jobless claims were at 626k last week — up from 591k a week earlier and above the consensus forecast of 580k.
Nonfarm business productivity rose by 3.2% in the fourth quarter of 2008 or 2.8% in a year-to-year comparison. The growth follows 1.4% advance of the nonfarm business productivity in 2007.
Factory orders were down by 3.9% in December, following 4.6% drop in November. They still declined faster than the traders have expected (3.2%).
EUR/USD fell today as some bad and some good news regarding the state of the economy were released in the United States. EUR/USD is currently trading near 1.2888 after reaching as low as 1.2812 earlier today.
ADP Employment report showed that the private nonfarm employment declined by 522k job places in January, following a decline by 659k in December (revised upwardly from 693k decline). The market analysts expected a drop by 515k in January.
ISM services index was reported at 42.9% in January — up from 40.1% in December and above the median forecast of 39%.
Crude oil inventories continue to climb up in the United States and gained 7.2 million barrels last week.
