$ For The Week Of 10/16-With Some Trade Tips
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Thread: $ For The Week Of 10/16-With Some Trade Tips

  1. #1
    The bulls remained so this week. We saw them support their rankings contrary to a widening trade equilibrium and a so-so Beige Book since they obviously were listening very carefully to four Fed Govs say they were not familiar with the overall state of inflation. Then came the strong retail sales report; we saw that the EUR signature the 2480 region and GBP hit 8530, before some intermediary profit taking. Total the powerful sales report was originally worth around 70 pips at the EURO and around 80 pips to the GBP. We also saw the exact same thing happen on the market off the retail report we saw last week from the NFP, a mis-read from the market followed by a right reading and following reaction.

    The FF calender does not give the entire picture of what occurred with all the retail sales report. While I love the effort to post an excellent calender with outcomes, a further reading is necessary.

    Http://bloomberg.com/apps/news?pid=2...c6Usrefer=home

    The biggest decline in gas-station receipts driven entire retail sales down 0.4 percent in September, the Commerce Department said in Washington. Excluding service channels, purchases climbed 0.6 percent, three times the gain in August. The University of Michigan's consumer sentiment index jumped to 92.3 in October from 85.4 the prior month.

    Next week using all the PPI and CPI numbers being released, we've got the potential to see some wild reactions, however what's the market likely to react to the numbers? It doesn't require an advanced economic level to figure out that higher prices at the producer and consumer rates will lead to further gains in the $, but what do you think may happen if the PPI or CPI come out revealing either a slowing in the rate of growth, a level response or possibly a decrease in prices? I'm not sure the answer is really obvious.

    While the Fed's number one concern is that the rate of inflation, there are 2 factors that affect it-price increases and growth increases. Take a look at what lower gas prices have done-produced a big jump in retail sales, a rise in growth. Note that the market has remained $ bullish at the face of DECREASING energy prices, due to the GROWTH in sales at the retail level.

    So let us say we see some kind of decrease in the PPI and CPI. Might that not have impliions at the rate of total growth and may perhaps not the market interpet this as $ too? A slowing in the rate of growth or decrease in prices could have the effect of additional curricular consumer and business confidence and spending. Consumers certainly are paying more now that energy prices have gone down.

    Also important next week will be further announcements from the Fed, as well as the TIC information, but I feel the most important report of the week could very well be the NAHB housing index, since Bernanke is depending on the continued slowing in the housing market to control the rate of increase in the economy.

    Now for a trading tip. If you have a look at what occurred following the NFP and Retail Sales reports, we saw the market react wrong initially then correct itself after further analysis of the numbers. How can we profit in a market like this? Well, the simple fact of the matter is that if you were listening to plain older Bloomberg TV or radio, then you would have had sufficient time to hear the numbers and listen to their own analysis of what it all meant, with lots of time to get in the market and make a nice profit. The Euro was still around 2540 2 minutes following the numbers have been released before finally dropping all the way down to 2480 roughly. Bloomberg had this item fully analyzed in. I'm not saying this is going to work every time, but when you're not utilizing this valuable free resource, you're not investing to your full advantage, particularly when multiple reports have been released at the exact same time.

  2. #2
    Im an IT guy, so what I will say could be complitly incorrect and not based on any economical value, but I feel that in Foreign Exchange, prices are not transferred from economical foundamentals as it ought to be.

    I think you will find far more complied issues behind prices, kind of'agreement' between countries, economical systems, oriented to keep some economical accounts matching the requirements of countries depending on periods.

    I gave up to follow along with much foundaments, since I dont see any economical real logic in what occurs with prices, even though they are always good to tell the market things like this, just to warrant a move:

    - the $ is stronger since the data are not so bad as expected...
    - the price of oil incresead in US since two norwish platform have been closed. . .inflation might rise again...
    - one memebr of fed believes an interest hike could be good for americn market
    - US opinion 92....
    - bla bla bla
    - bla bla bla
    -....

    Lets be sensible...
    we are just dogs.
    This is absolute bullshit. .

    Ps: Just the point of view of a bad IT guy, but maybe I can see things better, being out of this machine. .

  3. #3
    Could be-and I am sure you will find behind the scenes variables that drive prices , but to me you sound just like a fued forex trader.

    Of course nothing works 100% of the time-but if you had known beforehand that the BLS was going to considerably increase the number of jobs it had counted at the market, or knew that retail sales would have shown a big increase, well just those two facts were worth over 175 pips. That happened and regardless of who or what is behind the scenes, the market's reaction to the numbers was precisely what you'd have anticipated given the info.

    Now who knows-maybe that the gov't is purposely putting out the numbers in a specific way in order to affect the markets. However, in order for that to work, the market must react predictably to the numbers it's putting out and most times, it will.

    A lot of these fundamentals are pretty simple to figure out. I will give you an example. Housing sales have been down and as a result housing prices are down somewhat. The Fed stopped raising rates and mortgage rates have dropped a bit. As I look over the Sunday papers I see plenty of advertising by banks and mortgage firms seeking to make loans. Jobs are seemingly plentiful and wages are up (perhaps due to a shortage of skilled employees ). Considering that the facts that people are working, their wages are climbing, borrowing costs, energy and housing are more economical. . .is it possible that housing may wind out and begin to increase again? I believe so, since no matter what, people desire their own houses. Alan Greenspan thinks so. It's a fundamental fact.

    There might be a conspiracy working here, but it's not that tough to see it and work with it. My fundamental belief is that the Government and the Fed wants to observe that the US properous and successful. In order for that to happen over the long term, growth needs to be sustainable i.e. not overly fast. When it's going too fast, they'll slow it down and vice versa, or at least do the best they could with the resources that they have available to push it into the right direction. To put it differently, the conspiracy is to make things work out good, not bad. The rest of the world, except for the muslim extremists, basically need the same thing no matter how much they hate George Bush because as the US prospers, so do they.

  4. #4
    Hello,

    No, generally Im not frustraded. Ofcourse Im occasionally I think.

    I dont exchange foundamentals really much, I prefer to ch the'opinion' and follow it. If I think or not in what is occurring is not significant, significant is making pips.

    You see, you do exactly like what they want you to think: you come to me telling me that retail revenue was better than anticipated, etc etc.. .so you can justify a move.

    I see it in this manner: US is always a strong economy, no discussion about this. But economy has always, and will always be produced from down and upward cycles cycles.
    Inside this moment US just started down the down trend cycle, after reached the very top of this cycle couple of months ago. Interest rates are too too large, and I think cant be hike again, because this would hurt more the problem (housing included).

    In what prospective you place, europe is raising rates, US is holding and likely will even decrease rates. US economy is poorer or'less powerful' then before.
    British economy looks great.
    In my perspective, now's the time when US $ shoud ber weaker, not stronger.
    A retail selling data is not enought to justify a trend similar to this.

    I tell you how it looks for me: Now the $, I dont understand for which political motives, needs to be more powerful. So every great data (quite few...) for US is viewed as a fantastic reason to get the $ strong, and every bad data (most ) is just ignored. .

    If tomorrow they need the US $ to become weak to export will be the contrary


    Should you remeber, just 6 or 8 months ago everyone (also here on FF) was saying that the $ was finished, and particularly towards the pound, which most people were saying would reach 1,97!! Plus they were convinced!
    Nowadays people say it will go to 1,80. . ??
    what ??
    Nothing altered from there, just a NOT warranted trend.
    Nd what more funny that now people find a reason for the pound to return to 1,80!!!

  5. #5
    If on monday the bullish trend for $ will finish and will begin a bearish trend, then folks will come and say: now the $ is weak since bla bla bla. Euro will be 1,31 and pound 1,94.
    Its apparent, retail sales are weaker then expected, home starts are restricted etc..

    There will be always a reason to warrant a trend when is already on run, but things are not weighted like they need to.

    Just my point of view

  6. #6
    NewstraderFX, please note that apart of my comments, That are just to Place on'Uncertainty' if things in FX have a logic or not, I Believe you've Got a much better analysis Capability then me, so lot of Admiration for you mate

  7. #7
    Trucco-thanks for the props and merely to let you know-I always welcome a discussion so keep your comments coming and this goes for anyone else too.

    Back to market reactions off the fundamentals. Apart from the NFP and Retail Sales reports, why would traders be bullish right now? Well, we've seen some quite plain speak from the Fed Govs within the previous several weeks. They all are still uncomfortable with inflation rates and also that's in the face of decreasing energy prices. Bernanke is beginning to be quite well understood by the market and his announcements have been plain. He is depending on a continued slowing in the housing market, specifically new home construction, to keep the economy growing at a sustainable rate. The fast rate of growth found in the first half of this year was unacceptable to them. Alan Greenspan believes that housing may have bottomed out and while he's a private citizen, he's still a fairly smart guy.

    I plan on taking a very close look at the stocks and analyist reports of those businesses that build new homes. I see the bond markets, especially the 2 yr rate and fed fund rate. The NAHB report will be quite carefully watched this week.

    If you are into conspiracies, I'll give you one that that I'm really suspicious of; last weeks NZ retail sales report. Their government has stated over and over that they need to see devaluation from the Kiwi. Exports are extremely important to their economy and obviously a lowering of this Kiwi assists exports. Every economist I could discover, including The Bank of NZ, anticipated a very good number there. Truthfully, I got burned on that report; I took a long position in the NZD/USD pair prior to that release based on everything I read before. I invested a lot of time studying internet versions of NZ newpapers and saw plenty of advertisements for all kinds of things, including luxury housing, vaion homes etc.. Afterward, they released a report that each and every economist said would go another way. Curious to say the least.

    Depending on where the $ might move in the immediate short term, it's quite possible to see some profit taking. There still are lots of traders who shorted the EURO and GBP only after the NFP within their positions. A 40-50 pip swing another way might very well be viewed later today and during the London session, but when that happens we will see where the resistance is.

  8. #8
    I feel like everybody is accepting that the retail sales number was really good when looking closer. I disagree, I think it was easy and awful plain.

    My argument for why the retail sales number was really bad is twofold...

    1. They should spend those savings everywhere if consumers spend on gas. but that didnt happen. The absolute sales degree is what drives the market, and on that front the number looked very weak for me.

    2. Economists knew exactly how much gas prices dropped in September. So why did they all miss the mark on their forecast?

    I have to argue that the retail sales number was worse than expected, plain and simple. And the same is true for the NFP report. Its the recent data that counts, Although we had a revision that is large. Both reports sucked.

    Now, you know I am a dollar bull at this time, so no need to convince me of that. The reason I am a dollar bull at the first place is that the dollar was responding positively to negative news for the past two weeks. That is one. Most are claiming that the news was really good when taking a closer look, but it seems everybody only needs to take a closer look when the market doesnt act like it should. When the market doesnt act like it needs to, my view is that you proceed with the market because some thing is going on that noone understands (heard this from Mark Fisher).

    Newstrader, you have some excellent analysis, im only posting this since you stated you welcome debate

  9. #9
    Thanks for the props Merlin and I definately welcome your remarks here.

    As for the NFP-not just was it about the August revission, the market responded strongly to announcements against the BLS indiing they have dropped the keys to correctly estimating the amount of jobs created in the market. The upward revission by over 800,000 for the 3/05-3/06 year and the upward revission to come forward of April, is what is driving the bulls currently IMHO. I believe that the market totally threw out that the Sept. amount completely and expect another large upward revission there too.

    I have to disagree with your assesment of the retail sales numbers. The first negative number was predicated on reciepts from gas stations; of course the reciepts werre down, because the price of gasoline has dropped dramatically. See below:

    U.S. Economy: Fuel-Price Drop Spurs Consumer Spending (Update4)
    From Shobhana Chandra and Joe Richter
    Oct. 13 (Bloomberg) -- Reduce gasoline prices encouraged Americans to spend more on clothing, furniture and construction materials, and propelled consumer confidence to the maximum level in more than a year.

    The largest decline ever in gas-station receipts driven overall retail sales down 0.4% in September, the Commerce Department said in Washington. Excluding service stations, purchases climbed 0.6 percent, three times the gain in August. The University of Michigan's consumer sentiment index jumped to 92.3 in October from 85.4 the prior month.

    The market sold dollars on the first amount, then bought dramatically on the further reading.

    Your view?

  10. #10
    Quote Originally Posted by ;
    I feel as though everybody is accepting that the retail sales amount was really good when looking closer. I disagree, I think it was awful plain and easy.

    My argument for why the retail sales amount was really bad is twofold...

    1. If customers spend less on gasoline, they should spend those savings elsewhere. but that didnt happen. The absolute sales level is what drives the market, and on that front the amount looked very weak to me.

    2. Economists knew precisely how much gasoline prices dropped in September. So why did all of them miss the mark in their forecast?

    I have to argue that the retail sales amount was worse than expected, plain and simple. And the exact same goes for the NFP report. Although we had a big revision, its latest data that counts. Both reports sucked.

    Now, you know I am a dollar bull right now, so no need to convince me of that. The reason I am a dollar bull at the first place is that the dollar was reacting positively to negative news for the previous two weeks. That's one of the best signs I love to see. Most are claiming that the news was really good when taking a closer look, but it seems everyone just wants to have a closer look when the market doesnt act like it should. After the market doesnt act like it needs to, my view is that you proceed with the market because some thing is happening that noone knows (learned this from Mark Fisher).

    Newstrader, you have some superb analysis, im just posting this because you said you welcome debate
    Good post Merlin. I had been getting ready to write and say hey wait a minute, I thought you're a dollar bull, I kept reading and you confessed it. You are exactly perfect. Usd/jpy kept trying to move up over and over and over when it had been under 118. Regardless of what it kept looking for higher. Now it has.

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