Forex rebates on every trade - win or lose!

Hils, thanks for your thoughts. I'll wait for a better risk/reward.

Bak,

When it broke that rising line at the end of last month, I remember thinking to myself that it looked a bit bearish, but I've struggled to adapt my mindset ever since. I was surprised when it sold off last week but, looking at that chart, I shouldn't have been. I'm cross with myself - mainly for refusing to accept what I could see in the chart.

It'll rally, but imo you'll be better off looking for a firmer signal because the world, his wife and their pet poodle are going to be looking to sell into the rallies now.

And to rub salt into the wound, I know somebody who was selling it by the shedload last week. Guess who that was.

:o)

Sterling's cheap these days, innit?

Thanks once again Hils.

My main problem is that I'm thinking too short term which is a recipe for disaster in the long run.

Gonna have to look at the longer term charts and start drawing lines all over the place.

Forex - Dollar inches higher as dust settles on North Korean nuke test
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LONDON (AFX) - The dollar continued to inch higher as the dust began to settle on North Korea's nuclear test over the weekend.

'While investors continue to shrug off risk events like the demise of hedge funds and announcements of nuclear testing, carry trades will stay supported and the higher yielding dollar will remain resilient,' said Mansoor Mohi-uddin at UBS.

Notably, the dollar closed in on the 120 yen level, a key barrier which many believe will worry investors about the yen's weakness. On the other hand, the euro, though a touch lower against the dollar, is above the important 150 yen level.

The widespread weakness of the yen may spark comments from politicians on both sides of the Atlantic. Some sections of the market believe Japanese authorities may be forced to talk up the yen and that Thursday's Bank of Japan meeting will be a timely opportunity.

The dollar's strength today comes on expectations that the US will avoid a recession and that any slowdown will be gradual.

Investors have the economic data to back this up. At the end of last week, the US labour market report was deemed strong despite a soft headline job creation number because of large upward revisions to data over the previous months.

'The 810,000 upward revision of US employment data suggests for many market participants that the economic rebound over recent years has not been that different from previous cycles - hence they view economic downside risks as overblown,' analysts at BNP Paribas said.

They believe that markets may be a little too optimistic and that asset prices in the US may falter along with the property market, weighing heavily on the overall economy.

For the moment, however, the dollar will likely stay in demand as the week's data calendar unfolds. US data this week is unlikely to alter perceptions of a soft landing, BNP analysts added.

The pound was steady as the market ignored a slight deterioration in the UK's trade position with the rest of the world, focusing instead on the British Retail Consortium's snapshot of the retail sector.

According to the BRC, like-for-like sales, which strips out the effects of changes in floor space, rose by an annual rate of 2.4 pct, against expectations of 2.5 pct. The rate was also at 2.5 pct in August.

'Although anecdotal reports suggest that clothing retailers have suffered heavily at the hands of the mild weather, the surveys therefore indicated that other sectors have made up for this,' said Vicky Redwood at Capital Economics.

'The BRC mentions a strong pick-up in food sales, in particular, while household goods sales are also reported to have done pretty well,' she added.

For now at least, spending growth appears to have retained a fairly impressive degree of momentum, given the numerous pressures bearing down on finances such as higher energy bills and council taxes, she added.

Most analysts predict the Bank of England will increase interest rates in November, to 5.00 pct from 4.75 pct.



RPT Trichet says further ECB tightening warranted if recovery continues UPDATE
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(Repeating to move down previous third paragraph to fourth)

BRUSSELS (AFX) - European Central Bank president Jean-Claude Trichet reiterated the ECB will need to raise interest rates further if the euro zone economy continues to recover in line with its expectations.

'If the [ECB] governing council's assumptions and baseline scenario are confirmed, it will remain warranted to further withdraw monetary accommodation,' Trichet said in a statement to the European Parliament economic and monetary affairs committee.

'The governing council will therefore continue to monitor very closely all developments so as to ensure price stability over the medium and longer term,' he said.

Trichet said that despite the recent rate hikes the ECB's monetary policy 'remains accommodative'.

The ECB governing council last raised its key interest rate to 3.25 pct from 3.00 pct at its meeting in Paris on October 5.

The ECB's staff forecasts, published on August 31, point to euro zone growth of 2.5 pct this year and 2.1 pct next year.

Today's comments closely match Trichet's introductory statement to the October 5 news conference. He again omitted the word 'progressive' from his remarks about a further withdrawal of monetary accommodation, which economists say may signal that the ECB is planning to raise rates only once more.

In today's statement, Trichet also said recently published indicators confirm the euro zone economic recovery has become more broadly based and is mainly supported by domestic demand.

'All in all, the recovery appears to be somewhat stronger than on the basis of earlier data,' he said.

'The incoming information on activity in the third quarter further supports the assessment that economic activity will continue to grow robustly, while possibly moderating somewhat,' he said.

He added that the conditions remain in place for the euro area economy to grow at solid rates in the remainder of 2006 and in 2007, with some volatility in the quarterly growth rates likely to emerge around the turn of the year.

He said headline inflation rates are likely to increase again towards the end of the year and in early 2007.

'Overall, the headline inflation rate will remain elevated at levels above 2 pct on average in 2006 and is likely to remain so in 2007, as it was also reflected in the ECB staff projections of September.'

He said inflation risks remain 'clearly on the upside'.

Trichet also said money and credit growth 'remains rapid'.

'Given the implied upside risks to price stability over the medium to longer term, monetary developments require careful monitoring, particularly against the background of improved economic conditions and strong property market developments in many parts of the euro area,' he added.

newsdesk@afxnews.com

Trichet says wage inflation risk has not yet materialised, some rises 'abnormal'
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BRUSSELS (AFX) - European Central Bank president Jean-Claude Trichet said there is a risk of inflationary wage growth in the euro zone, although the risk has not yet materialised.

But in some euro zone countries wage growth could be regarded as 'abnormal', he said.

'On wages...I don't say that...we have in the euro area as a whole an abnormal evolution, but in some economies that are part of the euro area we have abnormal evolutions,' he told the European Parliament economic and monetary affairs committee.

Trichet said there is a risk that faster economic growth could fuel more rapid wage growth.

'Given the favourable momentum of real GDP growth observed over the past few quarters and the positive signs from labour markets, stronger than currently expected wage developments pose substantial upward risks to price stability,' he said.

He therefore called on all parties to avoid inflationary wage deals and said this call also applied to company bosses' pay.

'Regarding all the employees of a company, we do not make any distinction between one group or another. We call for everyone to be reasonable, without any discrimination, and that includes the management,' he said.

He also said that euro zone countries can suffer economically if unit labour costs rise too much.

'Persistent losses in cost and price competitiveness -- if those are not offset by corresponding improvements in non-price competitiveness -- are sooner or later paid in terms of output losses, rising unemployment and increasing current account deficits,' he said.

In the euro zone countries where unit labour costs have risen persistently, this trend mainly reflects a slowdown in labour productivity growth and a failure to keep wage growth in line with productivity developments, he said.

'Clearly, this suggests that the process of wage determination in some euro area countries should allow for sufficient differentiation in order to give greater regard to the situation in individual firms, industries, sectors or regions and take account of labour market conditions,' he said.

steve.whitehouse@afxnews.com


BoE's King says UK CPI rate less likely to top 3 pct due to lower oil prices
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WINCHESTER, England (AFX) - The Bank of England's governor Mervyn King conceded this evening that the recent slide in oil prices has made it less likely that the target rate of inflation will spike above 3.0 pct but warned that the anticipated fall in September's CPI rate may not last long especially if wage pressures mount.

In a speech here, King said the 25 pct reduction in oil prices since their peak in early August, will ease the pressure on petrol prices and fuel bills, including gas and electricity.

'The direct impact was seen in the producer price data published yesterday, and will be seen in CPI inflation over the coming months -- making it less likely that I will have to write an explanatory letter to the Chancellor than was the case two months ago -- although the anticipated fall in inflation for September may not persist for long,' he said.

Under the legislation that established the Bank of England's independence in 1997, the governor is compelled to write a letter to the Chancellor if inflation rises or falls by more than 1 percentage point from its target. In this case the target set for CPI inflation is 2 pct.

CPI inflation has been above the target for nine of the last 13 months. It hit 2.5 pct in August, which further fuelled talk that the rate-setting Monetary Policy Committee will lift its key repo rate another quarter point to 5.0 pct in November. King stressed once again that his speech should not be read for any clues of what will actually take place at the November meeting.

In its last Inflation Report in August, the BoE said CPI inflation would likely rise up towards 3.0 pct over the coming months in the wake of higher university fees and elevated energy costs. Today's comments from King suggest that the near-term inflation profile is lower than in August.

In a wide-ranging speech, King noted a number of issues that have the potential to make that 'anticipated' fall in September's CPI short-lived.

He seemed particularly concerned by recent money supply and credit news, which had pre-occupied David Walton, a member of the MPC before his death in June.

'The growth rate of broad money and credit in the economy is now higher than at any point since 1990,' he said.

'Monetary policy - a credible commitment to the inflation target and a broadly stable growth of total money spending...is always, the key to low and stable inflation,' he added.

King said rising money does not necessarily lead to higher inflation if the economy's supply potential increases in tandem.

Here, he said the MPC has to make the 'difficult' judgement as to how much the rise in the labour supply, and potential output, from migration from the the new member EU countries and later retirement among those of a pensionable age, 'will allow a faster expansion of total money demand without upward pressure on inflation'.

Given the uncertainties about the supply potential of the economy, he said the MPC will need to keep its 'eye on the ball' and monitor closely the evolution of wage and cost pressures.

'The new factor is that, although wage pressures have so far been subdued, it is still not clear that earnings have been sufficiently restrained to accommodate the past rises in energy prices and the fall over the past year in the prices of our exports relative to our imports without a squeeze on profits,' he said.

'Ultimately, both developments must result in lower real incomes,' he added.

King also raised the spectre of higher prices at the factory gate as manufacturers use the recent fall in oil prices to rebuild margins.

He cited a recent survey from BoE agents, which found that half of those (largely manufacturing) firms which had experienced some erosion of margins were now intending to raise prices.



pan.pylas@afxnews.com

While we're playing pass the hairshirt ...
bugger, rats and bubonic rats :S
Stopped out for not a lot of damage - and it even occurred to me to leave a reverse order in. But ohh no ... stupid girl :)
I said I was in 2 minds about redrawing the other week, and then I even pointed out last Friday how all the longer term indicators were down up to and including the daily.
Hadn't even planned to trade today after I was stopped out early yesterday.
Looks like election fever's taken hold of the $ then, now that we've seen the effect of the nuke fall-out?

Hils - 1.82 upwards isn't out of the question either.

FWIW, I don't think that another rate hike this year by our pals in the MPC is at all likely. Sure, it could happen, but I just don't buy the conventional wisdom.

Also, the world just shrugged off the Dear Leader's damp Plutonium squib. Perhaps the markets have acquired a modicum of maturity and resilience to fringe case lunatics and their tantrums.

So one help me...Why has the world changed so much over the last 2 weeks...

Presumably now UK interest rate rises less likely ..all of a sudden.

and why is everyone now buying the USD surely they are at the top of the current cycle...

Someone please explain...

I really don't know, D. I remain convinced that the UK will see higher interest rates which will peak at around 8% or so 2 or 3 years out, but the explanation for the recent rise in the Dollar might simply be that 1.91 is a bridge too far at this current moment in time. When you look at where cable's been over recent years and remember that just over 20 years ago everyone was forecasting Dollar parity with the pound, this recent action then becomes just a short chapter within a very long novel. It's still rising on the monthly charts and $2 isn't out of the question at some stage in the future - it's just that it's become a bit less likely imo over the next few months.

I'm sure that some bright spark will fit a piece of news to the chart retrospectively and use that as an explanation for the current action.

Your friend with the shed been round for coffee today yet, Hils? ;)

I've given up the coffee, Choccie. It dilutes the alcohol too much.

:o)

Hil: So when is Armageddon due now?

Let me know what dates you've got free, MM. Choccie and I will see what we can arrange.

:-))

Morning - long from 75 this morning - target 8679 but that might be optimistic.

Well done on spotting that break downwards Hilary and for filling yer boots when the rest of us were calling it long. :-)

Statutory Instrument 1991 No.3
The Apple Orchard Grubbing Up Regulations 1991

The King sent his cider maker, Paul le Harper, to Portadown with a handful of equipment to make sure his army wouldn't go without their favoured tipple.

H,

My unfortunate point was that whilst I identified the move down, I refused to accept it and failed to act on it myself, even after Choccie had spelled it out and somebody else I knew and respect was shorting the living daylights out of it.

Boyse, Have you had too much cider ;-)