Forex rebates on every trade - win or lose!

hodgins, pattern......

Not going for the bucket tonight, MachoGeezer, but I'll be outta here later
stop firmly in place... maybe :S

My friend has a cat called Malcolm..

choccy
Is he 'ard like me - with half an ear and other war wounds from protecting my manor ;)

That's it, mg - with an M on his forehead, he only has to see his reflection somewhere to remember his name...although he grew up thinking he was a mutt :)

U.S. DOLLAR MARKET ANALYSIS
Saturday, January 22, 2005 14:18 GMT
Weekly Commentary
By Investica
http://www.investica.co.uk


Long-term dollar vulnerability
The dollar remained generally firm over the week and the US currency strengthened to a high of 1.2925 before a retreat back to 1.3050 in New York on Friday. There are still conflicting forces on the dollar and the data this week offered some near-term advantage to the US currency as structural fears have eased. There will still be major doubts over longer-term trends.

The prime focus as far as data is concerned was the Treasury capital flows data. There were inflows of US$81.0bn for November compared with a revised US$48.3bn in October. The headline data eased immediate fears that the US would face difficulties in securing sufficient capital inflows to offset the current account deficit. There will be some doubts over the quality of the inflows and there will also be concern that the weak Wall Street performance in 2005 will discourage capital inflows as well as pushing capital out of the US. Nevertheless, there will be reduced short-term fears over deficit financing. There will also be optimism over repatriation flows generated by the administrations 2005 tax break. The overall impact may be relatively low, but speculation over inflows will help to curb aggressive dollar selling.

The Philadelphia Fed index weakened to 13.2 in January from 25.4 the previous month and there was also a decline in the New York manufacturing index. The interest rate trends have remained significant and there has been a barrage of Fed comments over the past week. Fed Governor Poole, for example, warned that the Fed would be prepared to make more aggressive action to keep inflation under control. The December inflation figures were slightly weaker than expected with a 0.1% decline while the underlying rate rose 0.2%. The Fed will be concerned over potential wage inflation and will certainly monitor the situation closely, but the most likely outcome is that the central bank will continue with measured tightening and 0.25% rate increases. There were hints to this effect by Greenspan in a magazine interview and it is Greenspan"s view that counts.

G7 exchange rate policy will remain an important market focus. European officials are likely to push for Asian appreciation at the early-February meetings, but there is no evidence yet that Asia is prepared to take action. Further resistance to Asian gains would increase the risk of fresh upward pressure on the Euro given that markets still expect dollar trade-weighted depreciation. There is still the longer-term potential for Asian appreciation which would ease strengthening pressure on the Euro. There will be underlying buying of Euros by global central banks which will offer good Euro support against the dollar.

Check out your laptop, mg ;)

Why is it that contrary to the best economic theory, despite a stock market collapse that wiped out values the equivalent of 90 percent of GDP, despite growing current account and budget deficits, despite the massive body blow of September 11th, despite a momentary decline of its exchange rate, despite (an admittedly mild) recession, and despite two major wars, the U.S. dollar today is more of a world reserve currency than it was before these events happened?

And why is it that the dollar attracts even greater surpluses of foreign capital that outrun trade deficits by about $ 100 billion per year?

The short answer is that the U.S. economy differs from all other economies in a crucial respect. The growth driver of the U.S. economy is a unique combination of entrepreneurship and high technology; the growth driver of every other economy is export demand.
Europe, Japan, China, and the Asia-Pacific region are all export-driven economies whose growth depends on U.S. markets. The U.S. economy depends for its growth on internal, entrepreneurial high-tech ferment. So long as this ferment keeps providing rates of return on capital higher than those in the rest of the world, international demand for U.S. investment assets will continue to be higher than U.S. demand for foreign goods and services.

And American capital account surpluses will continue to cause American current account deficits.

More important, however, is the question: Is there a prospect for exchange rate stability anytime in the future? Where is the international system of currency exchanges heading, given this growing difference between the U.S. economy and the rest of the world. . .?

The Next Twelve Months

According to consensus estimates, a year from now the U.S. economy will likely be expanding at its sustainable 4 percent GDP growth rate or higher, Japan at about 2 percent, and the Eurozone at 0 percent. The official forecasts of the central banking authorities of the three areas more or less concur.

The foreign exchange markets, however, have not priced these consensus forecasts into the exchange rates for a simple reason: there is widespread disagreement about the future course of inflation/deflation rates in the U.S. dollar area.

Simply put, the bond market in the United States believes that the Federal Reserve's commitment to keeping short rates low for a long time will produce inflation down the road. . . .

What Fed watchers missed during Alan Greenspan's testimony to Congress last July was a crucial exchange between the Fed chairman and Democratic Senator Charles Schumer of New York, [who] asked if the Fed were not concerned that, by keeping short rates low when the economy undergoes robust expansion, it might not trigger higher inflation down the road.

Greenspan's reply was rather stunning. Without equivocation, without hedging, and without his trademark convoluted syntax, he flat-out asserted that both he and the Federal Open Market Committee have unanimously concluded that the world economy has entered a new era of downward price pressures and declining inflation rates and has left behind the age of inflationary concerns.

This is why the Fed does not fear that low short rates in the emerging expansion will result in inflationary pressures. And it explains why the Fed has separated its assessments of future inflation from its assessments of future GDP growth.

Had he been pressured to elaborate, Greenspan might have pointed out that for at least the next five years, China, Japan and their satellite exporting economies of Asia will have no choice but to keep their currencies cheap. . . .

Under this arrangement, China, Japan, and the Asia-Pacific can be viewed as parts of the world "dollar zone," with some local leeway for adjustment.

Rather than a world of three currency zones, we have at present a de facto . . . world of two currency zones: the larger and faster-growing dollar zoneencompassing North America, Japan, China, and the Asia-Pacificand the smaller, zero-growth euro zone.
A Little History

From the dawn of history until August 15, 1971, mankind used commodity currencies or commodity-based currencies, with the most predominant commodity being gold. The Roman Empire maintained a gold-coin exchange system for about 1,500 years from its inception to its demise.

The system continued in the years of fragmentation that ensued, until it was fully replaced by the "gold standard" system of the British-led Industrial Revolution, whereby banknotes replaced gold coins on the strength of the gold reserves in the vault of the issuing banks.

That system was essentially managed by the Bank of England and by Lombard Street, where most of the world's savings and available liquidity resided. It lasted until the First World War, whereupon it was replaced by the "gold exchange standard," which differed from its predecessor in that it was the central banks' gold reserves that regulated the supply of banknotes, and not those of private-sector banks. . . .

After the Second World War, the Bretton Woods system restored the gold exchange standard. The exchange rates that were initially set between the U.S. dollar and the European and Japanese currencies were understood to be temporary and subject to revision when the war-ravaged economies of Europe and Japan were restored to full capacity. . . .

When, however, Japan, Germany, and the other European countries had fully recovered, they refused to renegotiate their exchange rates with the United States. The deliberateand by agreement temporaryovervaluation of the dollar at the end of the Second World War proved politically impossible to remedy, and soon gave rise to American trade deficits and the draining of U.S. gold reserves.

At some point, the Nixon administration presented a set of alternative solutions to the European allies: either all countries together would devalue their currencies with respect to gold (i.e., set a new higher official price for gold) or European countries would begin to share in the costs of the military defense of Europe (which had been getting a free ride throughout the Cold War). . . .

The only solution acceptable to France, England, and later also the Socialist West German Chancellor Willy Brandt, was for the U.S. dollar alone to be devalued against gold. Implicit in the demand was that even talk about devaluing the dollar would trigger a run on American gold reserves. France was, in essence, organizing a run on the dollar in the expectation that gold would replace it as the world reserve.

To rub salt on the wounds, on August 4, 1971, France demanded that some $190 million of American gold be used to repay the last installment of France's debt to the International Monetary Fund. It was eleven days later that Nixon announced the decoupling of the dollar from gold, ending the age of the gold exchange standard.


For the first time in its history, mankind began to organize its transactions on the basis of fiat money alone. We called it the "floating exchange rate" system. A better name would have been the "fiat-money exchange standard" system. . . .

The first decade, 1971-1981, was an unmitigated disaster. Governments throughout the world, with the United States at the lead, celebrated their liberation from the discipline of the gold exchange standard by printing money with abandon. This triggered worldwide inflation and
stagnation. . . .

The second decade, 1981-1991, was a struggle to tame inflation, with the United States again at the lead. . . . In the United States and the United Kingdom under Ronald Reagan and Margaret Thatcher, fiscal and regulatory policies in the form of tax cuts and entrepreneurial incentives became the stimulus tools of choice in place of the discredited tools of monetary stimulation. In Europe, runaway fiscal and monetary looseness (except for Germany) produced widespread stagnation.

The third decade, 1991-2001, provided the evidence that the value of any fiat-money currency, to a large extent, depends not on its trade balance but on its relative rate of return on capital, and the capital account balance that this produces. Superior U.S. rates of return established and reinforced a "strong dollar" policy.

The decade also produced the so-called "Washington consensus," which merely codified the Reagan-Thatcher lessons of the 1980snamely, that inflation, protectionism, and nationalizations of economies stunt growth. . . .

Entering the fourth decade of this provisional arrangement, the dollar seems to enjoy additional advantages, stemming from the fact that the Eurozone, Japan, and China are all locked into export-driven economic policies that make them dependent on the well-being of U.S. markets and on competitively cheaper currencies.

Moreover, their (and especially the euro's) dependence on export surpluses does not allow third parties to accumulate their currencies in a way that would allow them ever to be used as international reserves in any meaningful quantities and levels of liquidity.


The crucial question is this: How long can the United States sustain its current account deficits?

The answer is political. If the world were on some kind of gold or other commodity-money standard, the U.S. current account deficits would have long ago wrecked the dollar. But the world is not on a gold standard, it is on a de facto dollar standard. . . .

Accordingly, there are three possible alternative outcomes regarding the U.S. current account deficit:
First Alternative: As long as the United States maintains a competitively superior rate of return on capital, foreign banks' demand for dollar reserves will continue and U.S. current account deficits will be sustainable.
Second Alternative: If the U.S. rate of return on capital declines to European or Japanese levels, the U.S. current account deficit will not be sustainable and the existing world monetary arrangement will have a calamitous end.
Third Alternative: If European and Japanese rates of return on capital are raised to or near U.S. levels and robust economic expansion takes place there, then the U.S. current account deficits will begin to decline in rapid order and will no longer pose a problem.

Criton Zoakos (Leto Research, Leesburg, VA, USA)

was about to say choclat ..theres no way u wrote that,,:)

Would you like a precis? :)

In short

The US economy is unique in that it is NOT export-driven to achieve and sustain growth; it is entrepreneur and technology driven.
There are two real currencies in the world today the dollar (US, China, Japan and the far East) and the Euro (Europe).
The relative rates of return on capital between these two zones drives where money gets invested and therefore the relative strengths of the two currencies.

Obviously, the ROR in the dollar zone is far above that of the Euro zone today.
Implied is that short term movements between the dollar and the Euro are temporary until the RORs get aligned.
Also implied is that since the growth rate in the Euro zones is roughly zero, there is a long way to go before they can provide the ROR of the dollar zone.
Further, the reliance of the Euro zone on exports to drive growth hinders their ability to make the fundamental changes needed to get their RORs up.
The dollar zone is driving prices down making it even harder for the Euro zone to catch up.
The Euro zone can lever the Eastern European countries, possibly, to help with their overall ROR.
Trade deficits are not particularly important anymore the history of the commodity-based currency vs the way currencies are valued today tells the tale.

Red letter date in world history - August 15, 1971. The first time in world history that currency values were NOT tied to a commodity (like gold), but were allowed to float.

1971-1981: print money like crazy; inflation/stagnation
1981-1991: tame inflation; tax cuts and entrepreneurial incentive drive growth
1991-2001: proves that the value of a currency is related to its relative ROR, not to its trade balance

This seems like a pretty good satellite view of world economics. It also says that anything the US does to alter its entrepreneurial/technological growth mechanism is bad, and it lays out a very interesting case for a future with low inflation yet sustainable growth resulting from the change to floating currency.

will it hurt

It did, jeffie, my fffingers are fffrozen.

edit

precis chocco,is that a northern..pleasure........:)

DAILY FORECAST FOR EURUSD Monday, January 24, 2005 22:24 GMT Daily Report By Ian Copsey, FX-Strategy http://www.fx-strategy.com   FXstreet/FX-Strategy Forex Workshops 2004 Due to popular demand FXstreet/FX-Strategy is now offering currency traders the opportunity to train first-hand with Doug Schaff, developer of FX-Strategy"s trading systems. More Information   General Outlook: Price: 1.3043 Resistance: 1.3068 ... 1.3106 ... 1.3135 ... 1.3170 Support....: 1.3024 ... 1.2993 ... 1.2976 ... 1.2950 Bias: Mixed - waiting for breaks Bullish: The break of 1.3042 has alerted us to the possibility of a slightly more bullish short term stance. We see support at 1.2993-1.3006 and while this holds the downside a break back above resistance between 1.3044-71 would provide a more bullish tone with a minimum move to 1.3135 and we suspect to 1.3150-70 which we feel should hold. Only a break of this higher level would provoke gains to follow-through back to the 1.3291 peak at least. Bearish: The break above 1.3042 is a bit damaging to the bearish view and before returning to looking for further losses we would prefer a break of the 1.1993-1.3006 support. Should this break occur then we would look for follow-through to 1.2946-55 at least and probably an attack on the 1.2921 low. Further support and major support is around 1.2800-46.   Elliott Wave Comments: 24th January 2005 We need to approach the picture here with thought. In the 8-hour chart there are two scenarios labeled to retain the thoughts given last week. However, we do need to consider a third. Firstly it is still unclear whether the 1.3291 peak was Wave (b) or Wave (iii) lower or whether it was actually Wave (iv). If 1.3291 was Wave (b) then we consider the low at 1.2921 as the end of Wave (iii) though the ideal target should have been 1.2846-64. The fact that the losses so far ended at 1.2921 could mean that the alternative with 1.3291 being Wave (iv) is more likely and as such we are seeing (or have completed) Wave (v) lower. The traditional target for Wave (v) could either be a 61.8% projection which rests at 1.2894 or a 76.4% projection which ends at 1.2800. Now with this in mind we have to decide whether the 1.2921 low actually satisfied the 61.8% target but fell short by 30 points or whether it represented Wave -a- of Wave (v). The latter would imply that could rally as high as 1.3150-70 to complete Wave -b- and then expect a Wave -c- to then target the 1.2800 area. This would imply that any break above 1.3150-70 would imply the end of Wave (v) was seen at 1.2921 and thus a recovery to 1.3291 (50% retracement) or 1.3385 (691.8% retracement and pivot resistance) can be seen before further losses. If anything, the daily cycles would tend to suggest this latter view.

And we are off

Sold EUR/USD 1.3043, stop at 63

night

EUR/USD - Euro Dollar
Short term (Intraday)
1,3051. EUR USD broke 1,3020 resistance. EUR USD is in an downtrend directed by 4H exponential moving averages. EUR USD is in a consolidation after the last bearish movement. The volatility is low. Oscillators are neutral. The price should continue to consolidate. We won't take a position.
Medium term (Daily)
EUR USD is in an uptrend supported by daily exponential moving averages. The volatility is low. Bollinger bands are drawing the trend. RSI goes out overbought state and give a negative signal. The price should consolidate.
Long terme (Weekly)
EUR USD is in an uptrend supported by weekly exponential moving averages. The volatility rises. Bollinger bands are deviated. MACD is in a bullish configuration. The uptrend should resume with more vigor..
Resistances
1,3060 - 1,3100
Supports
1,3020 - 1,2980 - 1,2930

GBP/USD - British Pound Dollar
Short term (Intraday)
1,8765. GBP USD is in a range between 1,8550 and 1,8800. GBP USD moves without trend and swings around exponential moving averages (EMA 50 and 100). The price is just bellow 1,8800 resistance. The volatility is low. Bollinger bands are flat. Oscillators are neutral. The price should continue to move in Bollinger bands. The price should find a support above 1,8620. We could take a short position at 1,8775. We will put the stop loss above 1,8810 (-35 pips). The targets are 1,8620 (+155 pips) 1,8470 (+305 pips). This is a dangerous trade, take care and put your stop loss.
Medium term (Daily)
GBP USD broke the triangle pattern's resistance. The pattern's objective is 2,0000. GBP USD is in an uptrend supported by daily exponential moving averages. The volatility rises. Bollinger bands are deviated. MACD is in a bullish configuration. The uptrend should continue on 2,0000 resistance.
Long term (Weekly)
GBP USD is in a triangle pattern. GBP USD is in an uptrend supported by weekly exponential moving averages. The volatility is low. Bollinger bands are flat. Oscillators are neutral. The uptrend should continue to gather momentum.
Resistances
1,8740 - 1,8780
Supports
1,8710 - 1,8660 - 1,8550

USD/JPY - Dollar Yen
Short term (Intraday)
102,88. USD JPY moves without trend and swings around exponential moving averages (EMA 50 and 100). USD JPY is in a consolidation after the last bearish movement. The volatility decreases. Bollinger bands are tightened. Oscillators are neutral. The price should find a support above 102,00. We won't take a position.
Medium term (Daily)
USD JPY is in an downtrend directed by daily exponential moving averages. The volatility is high. Bollinger bands are drawing the trend. MACD is in a bearish configuration. The downtrend should continue to gather momentum.
Long term (Weekly)
USD JPY is in an downtrend directed by Weekly exponential moving averages. The volatility rises. Bollinger bands are deviated. MACD is in a bearish configuration. The downtrend should resume with more vigor..
Resistances
103,00 - 103,20
Supports
102,60 - 102,00