EUR/GBP Daily Chart — October 6, 2009

(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

10/06/2009 – EUR/GBP – As shown on the EUR/GBP daily chart, after making a minor bearish correction in the current steep uptrend, the euro has begun to resume its dominating position over the British pound. Price is currently approaching the 0.9300 high (almost a 6-month high) that was reached early last week with a clear shooting star candle. After that high was reached, the minor bearish correction that followed bottomed out at a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the low on 9/11/2009 to the noted high on 9/28/2009). In the event of a substantial breakout above the 0.9300 uptrend high, price could potentially shoot for further key resistance in the important 0.9500 price region. Current downside support within the context of the strong prevailing uptrend continues to reside in the key 0.9075 price region.

Dollar tumbles after Australia raises rate

NEW YORK — The dollar tumbled Tuesday, hitting a 14-month low against the Australian currency and circling year lows against the euro, after an interest rate increase from the Australian central bank signaled other countries might increase their rates.

A report in a British newspaper — and subsequent denials from officials — that Arab states, along with China, Russia, Japan and France, were in talks to move away from using the dollar for oil trading also hurt the greenback, analysts said.

The Australian dollar rose as high as 89.11 U.S. cents in morning trading, its highest point since August 2008, from 87.94 U.S. cents late Monday in New York.

Meanwhile, the 16-nation euro rose to $1.4732 in New York morning trading, up from the $1.4661 late Monday. The Britishpound slipped to $1.5927 from $1.5947, and the dollar fell to 88.65 Japanese yen from 89.51 yen.

The Reserve Bank of Australia unexpectedly raised interest rates to 3.25 percent from a 49-year low of 3 percent Tuesday. It is the first major economy to increase the cost of borrowing.

Raising interest rates can boost a currency, as the higher yields make it more attractive to investors. The Federal Reserve has kept the U.S. federal funds rate, on the other hand, at a record low near zero.

UBS analyst Geoffrey Yu said Australia's move raises expectations for other central banks to raise interest rates.

He cautioned, however, that Australia "may prove to be an isolated case." It was the only one of the Group of 10 major economies to avoid a "technical recession," or two straight quarters of declines in gross domestic product.

South Korea, Sweden, Norway and New Zealand will likely raise rates early in the first quarter of 2010, "a prospect that would only exacerbate the outlook for the dollar," said Ashraf Laidi, chief market strategist at CMC Markets, in a research note. "A wave of rapid (dollar) selling is inevitable once the (European Central Bank) and (Bank of Japan) start to give 'real' signals (beyond mere rhetoric) for higher interest rates, especially if these are not matched by the Fed."

Fed officials have given conflicting signals lately as to when, and how quickly, they intend to raise interest rates. The ECB meets on Thursday to set rates.

Analysts also said the dollar's weakness Tuesday was partly due to an article in Britain's Independent newspaper that Arab states, along with China, Russia, Japan and France, are in talks to end using the dollar for oil trading and moving instead to a basket of currencies including the yen and Chinese yuan, the euro and gold.

These reports follow statements earlier this year from Chinese officials that pushed for an alternative system of reserve assets sponsored by the International Monetary Fund.

Denials from officials in several countries Tuesday following the report did not help buck up the dollar as equities gained in Europe, Asia and early New York trading.

The dollar, a "safe" bet, tends to trade inversely with equities.

The greenback also fell to 1.0261 Swiss francs from 1.0313 francs late Monday, and dropped to 1.0613 Canadian dollars from 1.0697.

___

Associated Press Writers Doug Birch in Moscow, Diana Elias in Kuwait and Pan Pylas in London contributed to this report.

Forex Trading Accounts and Forex Education

by Bart Icles

At this point of your forex education, you must already be familiar with how foreign exchange trading works ? it is the buying and selling of different currencies. This significantly liquid marketplace attracts many new investors each day, and these individual investors can readily compete with large banks and hedge funds. The success of any forex investor relies on several different factors, one of which is setting up the appropriate forex account. There are basically three types of trading accounts in the forex market: standard, mini, and managed. Each of these trading accounts has its own advantages and disadvantages. Choosing which trading account to open is typically determined by the investor’s tolerance for risk, the size of initial investment, and the amount of time an investor has for participating in forex trading on a day to day basis.

The most common type of forex trading account is referred to as the standard trading account. The name of this kind of trading account is taken from the fact that investors who open this type of account have access to standard lots of currency. You might have learned from your forex education that a standard lot is worth $100,000, and this is pretty much observed by everyone who participates in forex trading. However, having access to a standard lot does not mean giving out $100,000 of capital before you can start trading. It simply means you must have $1,000 in your margin account so you can start trading one standard lot.

Mini trading accounts are simply trading accounts that allow traders to make transactions with the use of mini lots. Most mini lots are equivalent to one-tenth of a standard trading account, which is around $10,000 dollars. Most brokers that offer standard trading accounts typically offer mini trading accounts as well. This is one way of attracting new investors who are still hesitant to trade full lots due to the amount of investment needed.

Another type of forex trading account is called managed trading account. In managed trading accounts, the capital is owned by the investor but decisions whether to buy or sell are made by account managers. These account managers handle the trading account for the forex investors, very much like how stock brokers handle managed stock accounts.

It helps to give time to your forex education so you can learn more about these accounts. Knowing the different advantages and disadvantages of these three different accounts will help you determine which kind of forex trading account to setup so your needs and objectives can be best met.

About the Author:

When you learn to trade forex it starts with a desire to learn and a drive to become a great trader. Forex learning takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Want To Get Into Forex Trading?

by Kris Deaney

FX is a very exciting thing and it is fascinating to see how the home Forex trading world has changed over the last few years. There really are many people now making a living from their home.

However, having said that, anyone looking to trade in the Forex marketplace needs to have a strong trading strategy and a very good broker.

There are several reasons why a good broker is vital to trading success. The first comes down to the spread. This is the difference between the bid and the ask price. The larger the spread is, the more it costs to trade.

Although the difference may seem quite small, if you are trading regularly, it quickly adds up. This is why it’s really important to choose a broker with tight spreads.

The next factor that needs to considered is that of liquidity. It means how reliably you will be able to trade at the prices your broker quotes you.

The greater the level of the liquidity, the easier it will be to buy and sell at the exact prices that you want, or actually get quoted. Sometimes brokers will re-quote because they haven’t been able to execute the trade at the price they initially quoted, it’s also called slippage.

Any broker that you trade with also needs to provide a professional tool suite. Anything less is just not acceptable. This means that there will be pro charting tools to make use of, as well as educational facilities and the chance to get the latest economics news that is released, as well as up to the second numbers or indicators.

I also encourage all traders to look carefully at the usability of the trading platform that each broker provides as well. It should have a high level of intuitiveness, and the site should be easy to navigate around. Also, if the platform itself is web based, this is an advantage, because it means you can log into the system from anywhere in the world.

About the Author:

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Making It In The Old Time Bucket Shops

by Conrad Tenzer

Of course I had my ups and downs, but was a winner on balance. However, the Cosmopolitan people were not satisfied with the awful handicap they had tacked on me, which should have been enough to beat anybody. They tried to double-cross me. They didn’t get me. I escaped because of one of my hunches.

The Cosmopolitan, as I said, was my last resort. It was the richest bucket shop in New England, and as a rule they put no limit on a trade. I think I was the heaviest individual trader they had that is, of the steady, every-day customers. They had a fine office and the largest and completest quotation board I have ever seen anywhere.

You know, I don’t do things blindly. I don’t like to. I never did. Even as a kid I had to know why I should do certain things. But this time I had no definite reason to give to myself, and yet I was so uncomfortable that I couldn’t stand it. I called to a fellow I knew, Dave Wyman, and said to him : “Dave, you take my place here. I want you to do something for me. Wait a little before you call out the next price of Sugar, will you?”

You know how they traded in bucket shops. You gave your money to a clerk and told him what you wished to buy or sell. He looked at the tape or the quotation board and took the price from there the last one, of course.

In the instance I speak of he sent thirty-five men to act as customers. They went to the main office and to the bigger branches. On a certain day at a fixed hour the agents all bought as much of a certain stock as the managers would let them.

He wrote that price and the time on your ticket, O.K.’d it and gave it back to you, and then you went to the cashier and got whatever cash it called for. Of course, when the market went against you and the price went beyond the limit set by your margin, your trade automatically closed itself and your ticket became one more scrap of paper.

According to my dope Sugar should have broken 103 by now. The engine wasn’t hitting right. I had the feeling that there was a trap in the neighborhood. At all events, the telegraph instrument was now going like mad and I noticed that Tom Burnham, the clerk, had left my tickets unmarked where I laid them, and was listening to the clicking as if he were waiting for something.

So I yelled at him: “Hey, Tom, what in hell are you waiting for? Mark the price on these tickets 103! Get a gait on!”

Well, on the day the thing happened that I am going to tell you, I was short thirty-five hundred shares of Sugar. I had seven big pink tickets for five hundred shares each. The Cosmopolitan used big slips with a blank space on them where they could write down additional margin. Of course, the -bucket shops never ask for more margin. The thinner the shoestring the better for them, for their profit lies in your being wiped.

In the smaller shops if you wanted to margin your trade still further they’d make out a new ticket, so they could charge you the buying commission and only give you a run of 3/4 of a point on each point’s decline, for they figured the selling commission also exactly as if it were a new trade.

About the Author:

About the Author: Carlyle Paul is a writer that is nationally syndicated Learn Forex Expert Advisor Review. Take one more step to learn Forex Trading now.

NZ dollar little changed

The New Zealand dollar spent a quiet session trading in a narrow range but dealers said economic reports this week have put a floor under the currency.

By 5pm the NZ dollar was buying US72.12c from US72.33c at 8am and US72.12c at 5pm yesterday.

Mike Jones, currency strategist at BNZ, said the NZ dollar was treading water after the strong National Bank of New Zealand business outlook survey yesterday, which registered strength particularly in the construction sector.

The report would probably leave the Reserve Bank of New Zealand seeing upside risk to its growth expectation for the third quarter of 2009, Bernard Doyle of Goldman Sachs JBWere said.

The Australian dollar rose to a 14-month high today after being boosted yesterday by better than expected retail sales data, which suggested interest rates will rise sooner than previously thought.

As a consequence the NZ dollar eased to A81.84c from A81.99c at 5pm yesterday.

Investors also focused on the release of China's official purchasing managers' index (PMI) and US non-farm payroll data later this week. The PMI rose to 54.3 from 54.0 in August.

The US dollar was on the defensive today on the back of a weaker than expected US midwest activity index.

The NZ dollar was at 0.4932 euro, unchanged from yesterday and at 64.90 yen from 64.73.

Despite debate about the sustainability of sterling weakness, the NZ dollar rose to 45.18p from 45.00p yesterday.

The trade weighted index was 65.58 at 5pm from 65.57 at the same time yesterday.

FOREX-Dollar on defensive, Aussie off 14-mth high

The U.S. currency lost nearly 7 percent against the yen in the previous quarter just ended on Wednesday as investors dumped the dollar on a fall in U.S. Treasury yields. But against the closing level at the end of 2008, dollar/yen was down only 1 percent.

The euro EUR= inched down 0.1 percent to $1.4621 after it gained more than 4 percent in July-September.

Against the Japanese currency, the euro edged up 0.1 percent to 131.49 yen EURJPY=R.

Traders said Japanese retail investors are expected to stay buyers of foreign currencies in the fourth quarter, though momentum could slow if Tokyo's Nikkei share average .N225 slides further below the key psychological 10,000 level.

The Nikkei was down 1.4 percent at around 9,987 in afternoon trade.

The Australian dollar hit a 14-month high of $0.8860 but quickly erased its gains to slide to $0.8802, down 0.4 percent on the day, as some players booked profits.

The Aussie has seen a brisk rise, buoyed by higher commodity prices and expectations that domestic interest rates will rise faster than other developed economies.

The Swiss franc, meanwhile, remained on the backfoot against the euro EURCHF=, having dropped the previous day on speculation the Swiss National Bank may have intervened to weaken its currency.

The market showed muted reaction after the Bank of Japan's closely watched quarterly tankan survey showed on Thursday Japanese business morale improved further as the economy picks up from its worst slump in decades, though it was still negative.

The headline index for big manufacturers' sentiment improved to minus 33 in September from minus 48 three month ago after having hit a record low of minus 58 in the March survey. [JPBCLG=ECI]

The big data piece in the United States is the ISM index and at 52.9 currently the index is at is highest since June 2007 and is forecast to rise to 54.0. The data is due at 1400 GMT.

Weekly jobless claims are also due along with some income and spending data for August. (Additional reporting by Anirban Nag in Sydney, Kaori Kaneko in Tokyo; Editing by Joseph Radford)

EURUSD: Gives Back Upside Gains

EURUSD: EUR continues to face downside pressure nearer term following a reversal of its Wednesday gains in early trading today. This now leaves the pair vulnerable to the downside targeting its Sept 29/14'09 lows at 1.4525/14 where a decisive violation will drive the pair further lower towards the 1.4446 level, its Aug 05'09 high. A cap is expected at this level if tested as that level remains significant in the pair's medium term uptrend. Further down, a solid support should be provided by its MT rising trendline currently at 1.4313. Its daily stochastics remains supportive of this view. On the upside, a close back above its Wednesday high at 1.4672 will have to occur to reverse its current weakness and open up further upside gains towards the 1.4711 level, its Sept 28'09 with a sustained break and hold above there putting under pressure its YTD high standing at 1.4844. On the whole, with its Wednesday gains being wiped out, a resumption of its corrective declines started at the 1.4844 level looks to be triggered.

Mohammed Isah
Market Analyst
www.fxtechstrategy.com

This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report

US Pending Home Sales +6.4 % in August

from +3.2 % in July, market expectations were for a small rise of 1.0 %. Better than expected although the rate at which these sales are closing is slow partly due to the length in closing “short sales”

USD/CHF finds support at 1.0395, back to 1.0420

The USD/CHF's rejection from 3-week high at 1.0452 ahead the American session has find support at 1.0395, pair has bounced at this level to trade above 1.0420. Currently the pair is trading around 1.0420/30, 0.70% above today's opening price action at 1.0356.

Yesterday USD/CHF jumped more than 170 pips in an hour in the late European session from 1.0280 to post 3-week high at 1.0450 on the back of SNB intervention. After that, pair traded lower on consolidation and fell to 1.0335.


Valeria Bednarik, FXstreet.com collaborator, comments: “Pair has reached again the strong 1.0450 resistance area, from where a downside corrective movement began; hourly indicators suggest more downside to come, yet 20 SMA regaining bullish strength should hold the downside around 1.0380. Bigger time frames support further rises, yet confirmations above 1.0450 are needed to see pair gaining strength.”

US Pending Home Sales +6.4 % in August

from +3.2 % in July, market expectations were for a small rise of 1.0 %. Better than expected although the rate at which these sales are closing is slow partly due to the length in closing “short sales”