Daily Forex Technical Report − Dollar and Yen to Resume Rally Cautiously, Focus on Services Data

Action Insight Daily Report

Dollar and Yen to Resume Rally Cautiously, Focus on Services Data

While dollar and yen retreats mildly from this week's high as stocks recovered, the pullback is so far mild and doesn't change the near term bullish outlook. Focus will turn to services data from Eurozone, UK and US today as well as some preview reports for Friday's Non-Farm Payroll. The data are expected to continue to show deterioration in the global economy and may probably trigger some more risk aversion trades to give dollar and yen a boost. Though, the impact could be mild and short lived as traders will likely hold their serious bet until key events risks of ECB and BoE rate decisions on Thursday as well as Non-Farm Payroll on Friday.

UK's Nationwide Consumer Confidence Index fell to 50 (consensus: 50, October: 56), the lowest level since the survey began in May 2004. Increase in unemployment and concerns about recession were the main reasons for the decline. Later today, UK will report services PMI in November which should fall to 41.2 from 42.4 in October. Finalized services PMI will be released in the Eurozone and is expected came in at 43. October retail sales in eurozone should have come down further to -0.4% from 0.2% in September due to greater deterioration in private consumption.

From US, November ISM non-manufacturing Index is likely to sink from 44 to 42.5, hitting a record low in 11 years. Price paid component will likely continue the fall from Jun's peak of 84.5 and drop further from Oct's 53.4. Employment component will likely deteriorate further from Oct's 41.5, showing deeper contraction.

A bunch of employment data will be out in US session today. The ADP national employment report will probably show- 200k private sector jobs lost in November, after a 157k decline in October. The ADP payroll data tracks employment in goods-producing sector more correctly than in service-producing sector, whose growth has often been overestimated. Therefore, one should focus more on the goods-producing sector for predicting Friday's non-farm payroll report. Q3 productivity growth is expected to be revised down to 0.9% QoQ from 1.1% in the preliminary report while labor costs should remain unchanged at 3.6%. Challenger planed job cuts will also be released.

To be released at 1900GMT, Fed's Beige Book will be based on conditions from the second week of October through November 24. During the period, economy have worsened substantially and this latest report is expected to be more bearish than the previous one which already indicated every region of the US was in recession and consumer spending, manufacturing and service sectors were contracting.

Released in Asia, Australia's 3Q GDP increased 0.1% from Q2, lower than 0.2% as market expected, showing the economy is in its weakest growth in 8 years. On annualized basis, growth was 1.9% (2Q: 2.9). Moreover, the2Q quarterly data was revised up to 0.4% from 0.3%. In seasonally adjusted terms, the main contributing factors to the increase in expenditure on GDP were engineering construction investment (+0.4%) and public gross fixed capital formation (+0.2%), while the biggest negative factors were imports (-0.4), ownership transfer costs (-0.2%) and new building (-0.1%).

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Technical Analysis Can Help You Trade Better In Forex Trading:

As a beginner there are two types of trading strategies you can adopt. The strategies are fundamental analysis and technical analysis. Technical analysis is a great tool to trade in the market and achieve success but I have always almost heard that people say that they had tough luck with charting tools and technical analysis software.

The truth is that you should know how to use the software effectively and then you can achieve success with the technical analysis. There are errors that people make which makes them think that technical analysis is not helping them.

The basic error traders make is that assuming that technical analysis will help them reach answers to what is the price is going to be. That is not going to happen, the technical analysis will always tell from the price trends and the historical trading patterns that yes at this level there will support and there may be levels where you can buy or sell. Never assume that there is going to be a price prediction. Use accurately the technical analysis and you will be making an informed decision about the prices. Also, make sure that you use breakout to your advantage and trade accordingly to make money.

Technical analysis software help you guide easily through these issues but then as with computers you need human intelligence to decipher the data presented. So if the technical analysis software tells you a thing then make sure that you apply your intelligent guess on top of it. That way you will be reasonably sure that you will profit from the technical analysis.

As always the best strategy is to keep it simple when comes to using indicators. Stick to basic indicators and you will be on track. Use 5 or 6 or ten indicators and you will be confused as to what is happening to the charts at any given point in time.

Forex charting is simple tool to help you benefit but do not bend it to suit your decisions and never try to evaluate your past strategies from the forex charting. This is known as curve fitting and it will do more harm than good. There are guide available for giving you help on how to read the charts and also how to use them as excel based plug ins.

is Broker-Bashing one Gigantic Witch Hunt?:

Choose your forex broker accordingly: If you use forex broker competition with a dealing desk then you are more likely (in theory) to experience slippage than if you use an ECN style broker. It is likely that a human will actually be matching and filling orders on a dealing desk which leaves you open to an added delay, especially at busy times. forex broker competition doesn't have this limitation and that fraction of a second saved can make a huge difference. In conclusion, if you are actively trading at busy times then forex broker is probably most suited to your needs. On the other hand if you trade infrequently or you have a small account and cannot afford the commission fees that forex brokers charge then a broker with a dealing desk may be adequate.

My forex Broker is Trading Against Me

This is an extremely common complaint that has lead to the conspiracy theory that most forex brokers competition actually want you to lose your money because they are on the other side of your trades. Let us step away from this theory for the moment and consider the fact that there is ALWAYS someone on the other side of your trades. For you to go short someone else must go long and vice versa so someone somewhere always wants you to lose! Now, some forex brokers competition claim that they match client orders at the dealing desk while others use their dealing desk to offset their clients' trades with their own overall position in the market, which is known as hedging. If forex broker competitive is perfectly hedged then they simply collect the spread that you pay them (which is greater than the spread they pay in the interbank market) and that is their profit. The conspiracy theory has come from the notion that most traders lose and so it would be more beneficial for forex brokers to trade in the opposite direction to their clients rather than go in the same direction and hedge themselves. Experiences of delayed orders, slippage and stop hunting have added fuel to this fire because they can be easily explained as forex brokers competitive stealing your money rather than potentially legitimate problems incurred at busy trading times.

Conclusion

In this article we have attempted to point out to you alternatives to forex broker malpractice theories and a few ways in which you can minimise their effects. If you are a firm believer that your forex broker competition is trading against you and wants you to lose then you are developing a potentially self-destructive frame of mind. This belief may prevent you from identifying problems closer to home such as trading psychology and strategy inadequacies. But the fact remains that if you are unhappy with your forex broker or you are experiencing excessive slippage, multiple re-quotes, poor customer service, possible stop hunting, platform freezing and held orders then you should change forex brokers competitive. At the end of the day the reasons for poor service are of secondary importance behind the effect it has on your trading. It may be that your forex broker is honest but technologically inept or it may be that you are the victim of a bucket shop but try to keep your complaints within the context of market dynamics. If none of the coping strategies listed above make any positive difference then it is definitely time to find a new broker.

ForexGen | Dollar Falls on Discouraging US Economic Data

Dollar falls on discouraging US economic data as German consumer confidence shows improvement
The dollar fell against the major currencies Tuesday as new data showed that American consumers curbed their spending at a rate unseen in 28 years, while a survey showed German consumer confidence improving slightly despite the wider economic gloom.

The 15-nation euro bought $1.3022 in late New York trading, up from the $1.2877 it bought late Monday. The pound jumped to $1.5440 from $1.5115, while the dollar fell to 95.65 Japanese yen from 96.85 yen.

Both the Dow Jones industrial average and Standard & Poor's 500 index rallied for a third straight session Tuesday as investors were encouraged by government plans to help unfreeze credit markets. The U.S. Treasury Department and the Federal Reserve said they planned to provide $800 billion to aid consumer lending companies and to make mortgage loans cheaper and more available.

The dollar has tended this fall to move in the opposite direction from stocks. As equities plunged, the dollar has gained on the euro and the pound.

An updated reading on the economy's performance released by the Commerce Department showed the gross domestic product shrank at a 0.5 percent annual rate in the July-September quarter. American consumers slashed spending in the third quarter at a 3.7 percent pace. That was deeper than the 3.1 percent cut initially reported and marked the biggest reduction since the second quarter of 1980, when the country was in the grip of recession.

Also Tuesday, the Standard & Poor's/Case-Shiller U.S. National Home Price Index showed that home prices have tumbled to levels not seen since early 2004.

"This data shows the beginning of a technical recession which is likely to get worse before it gets better," said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon Corp. "We anticipate that the dollar is likely to continue to suffer over the next several trading sessions."

Germany's GfK research group reported a third consecutive small increase in its monthly index of German consumer confidence, despite the country's recent fall into recession. It said consumers' income expectations were boosted by falling oil prices and a recent industrial wage deal. Meanwhile, the country's Federal Statistical Office confirmed an initial estimate that the economy -- Europe's biggest -- contracted by 0.5 percent in the third quarter.

In other New York trading, the dollar bought 1.1878 Swiss francs, below 1.1988 francs late Monday, and fell to 1.2282 Canadian dollars from 1.2377.

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