Forex rebates on every trade - win or lose!

Other than that, as far as next week is concerned, not sure what effect Columbus Day will have on Monday, with the bond and foreign exchange markets closed. We do have our own PPI early on, after all.

Before you ask, Harlosh ... ;)

The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI). By tracking price pressures in the pipeline, investors can anticipate inflationary consequences in coming months.

While the CPI is the price index with the most impact in setting interest rates, the PPI provides significant information earlier in the production process. As a starting point, interest rates have an "inflation premium" and components for risk factors. A lender will want the money paid back from a loan to at least have the same purchasing power as when loaned. The interest rate at a minimum equals the inflation rate to maintain purchasing power and this generally is based on the CPI. Changes in inflation lead to changes in interest rates and, in turn, in equity prices.

The PPI comes in three versions: finished goods; intermediate supplies, materials & components; and crude materials that need further processing. The finished goods PPI is most often cited in the media. This index covers final products bought from producers by businesses to sell to consumers or to use for capital equipment.

The PPI is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or they taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.

Producer prices are more volatile than consumer prices. The CPI includes services components - which are more stable than goods - and the PPI does not. Wages are a bigger share of the costs at the retail level than at the producer level. Commodity prices react more quickly to supply and demand. Volatility is higher earlier in the production chain. Food and energy prices are major sources of volatility, hence, the greater focus on the "core PPI" which excludes these two components.

The bond market rallies when the PPI decreases or posts only small increases, but bond prices fall when the PPI posts larger-than-expected gains. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.


Aside from that, who knows what the threat of an imminent North Korean nuclear test might have on the markets.

Wouldn't mind nuking our resident slugs though.
Been slimed a few times today :S

Thanks all again for the recent informative posts.

Right then Hils, you've goaded me into giving my opinion which may well be wrong but I'll give it a stab anyway.

I came across this article over the weekend which suggests that the UK Nov hike may well be the peak if it comes at all.

However, recent UK data does indicate a nailed on Nov hike as confirmed by this in the Sunday Times.

It seems that the current dip in energy prices will consequently ease UK inflationary pressure which in turn will dampen the prospect of further rate increases.

On the US front, recent statistics show a slowing down in its economy. If this continues then we may even see a rate decrease or at the very least no more rate hikes. But all these recent stats ought to lead to a weaker US$ so I'm a bit confused to why we're seeing so much short term bullishness.

Personally, I dont think we'll see $2 but could well get to mid 1.90s by Xmas.

Hope the above makes sense as I'm still having to read around a lot to find out how economic factors etc impact upon forex movements.

Thanks for all the info Choccie.

Choccie,

I didn't for one second take your comments as criticism in any way, so there's no need to worry. Regarding MACD not being reactive though, surely it can only be reactive as it's calculated as a measure of convergence or divergence between 2 ma's which are themselves reactive???? I'd say it's probably the most responsive indicator, but still reactive nonetheless.

As for the business of pre-empting the market, let me tell you an interesting story. My neighbour is a retired banker (not the type who sits behind a desk in a branch of Barclays) and he trades cable to supplement his meagre 6 figure pension. A couple of years ago we were talking about the Pound. It was a Sunday and cable was at the time going up, and on the Friday had pushed forward around 2 cents. He asked me how I was going to play it on Monday, to which I replied that I intended to long it as it was clearly going up and I would be looking for follow through. "Oh", he said, "I'll be getting in early to short it. Sentiment will turn quickly from up here". I let the conversation drop as I felt that only somebody with rocks in their head would short it at that time.

You can probably guess what happened. It turned down Monday morning and fell about 6 cents on the week.

It just goes to show.

:o)

Well done with the articles, Bak. I consider interest rates in the 4.5% to 5.5% range to be neutral. Having held them so low for so long, I think that the Fed will look to hold them neutral for 6 months or a year (maybe with the odd tweak up or down) in the same manner as the MPC has done this last year. That way they have time to guage whether or not their policy has worked. I think it's then inevitable for rates to rise out of that neutral range with the UK leading the way.

The problem I have with lower energy prices supposedly curbing inflation is that the Government have previously massaged inflation figures by trying to keep energy out of the equation and making the figures (and themselves) look better than they really are.

Keep the opinions coming please.

Morning all, good to see lots of interesting posts. Wasnt about friday(turned into a long wkend). On the 5 minute charts, got quite a few candles closing within the previous candle. As I write its breaking to the up, headed for the top of the range till ppi out?

It conveniently lands back at the base of the Asian range in time for the inflation data.

Just pulled this from squawk box

09:03 GBP/USD: Drop To 1.8660 Following Soft Producer Price Data] London,
October 9. A sharp fall in UK input prices during September and the biggest
monthly drop in two-years. The key negative influence on prices being the fall
in oil and energy costs, which themselves recorded three-year lows.
The data will dent some expectations in the market for a November rate hike and
added to fears of a softer take on quarter three growth might bring down the
odds of a rate move this side of the turn. Next week"s inflation report is now
key and will have more clout with rate expectations.
GBP/USD fell from 1.8690 to 1.8660 following the data but sources suggest that
market conditions are extremely thin and that not much in the way of volume is
passing through cable at present. Minor support now runs in at 1.8660 with the
market looking heavy at 1.8690-00. Peter.Stoneham@thomson.com

Well I'm still fancying the short side after taking some pips from a short earlier this morning. The PPI news would seem to suggest similar.

Target 8624?

My hourlies are still pointing towards further falls, H, but it seems to be turning up on my 5-minute having found some support just above 1.8650. I see obstacles to overcome however, firstly at 1.8687 being the base of the Asian range which has already been tested as resistance this morning and secondly at around 1.8710 being the top of the Asian range.

Something's got to give.

Very dull today but it's been making slightly lower highs and lows on my 5mins chart in the last few hours.

Ready for a break downwards?

Target almost hit. Indicators oversold. Is it time to go long I wonder?

Still pointing down on the indicators but support level hit? So will look for a hint to go long tomorrow. (Have been away at a Conference today so no trading, but I know even more about Contact Lenses!)

SC - sitting on the daily fib 50% retracement. RSI on the 1-4hr charts have all moved up above 30 and the 1hr has broken 50. Triple bottom? and a triple top 300 points above! Tempting

Morning all - long from 8655.

Morning. Nice entry Harlosh.

On the sidelines again today :-(

Morning H. Long from 680.

edit, and morning everyone else. Me and my manners ;-)

Well it didn't like the 8710 area SC - not looking so good now.

Agreed, might have to bale.....

Out -30

Out flat but I confess I never saw that coming. :-(