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New Home Sales Hit Record Low
US New Home sales plunged to the their worst reading on record in May with only 300,000 units sold against expectations of 410,000. The month prior data was also revised lower to 446,000 units from 504,000 originally reported. Sales were lower across the board but were especially hard hit in the West where demand fell by more than half, declining by -53.2%.
May was the first month after the expiration of the $8,000 first buyer tax credit and the very disappointing data shows that without government subsidies the housing market remains in a deep recession. The news bodes poorly for US GDP growth going forward. Although housing is no longer central to business activity the sector remains a key part of the US economy and the lack of demand for homes will likely result in weaker durable goods sales depressing retail purchases across the board.
Therefore, absent further government stimulus, the second half the year is likely to be much more challenging for the US economy than H1. Today’s upcoming FOMC statement may reflect that fact with monetary officials signaling that rates will remain stationary for the foreseeable future.
The bleak housing data sent risk FX lower with USD/JPY breaking the key 90.00 level. We noted earlier that Japanese authorities are likely to begin jawboning the market as they become increasingly uncomfortable with the strength of the yen, but given the weakness of economic data they may be powerless to stop the slide in the pair.
yeah did you ever see that articles coming out a couple months back recruiting for internment cops. It was on Monster.com at one time. could still be there
one reason why we became so powerful quickly is our fore fathers were common people like you and I. Now we are ran by people who could care less about us the rich and wealthy which will be our down fall. If you keep pulling on a rubber band eventually it will break
yeah your right, why do we need a separate military force? unless he knows what is coming which he does
lololololol
ha ha good analogy there
well he promised change but didn't tell us what kind of change was coming.
wow you guys can't even go swimming
well we're glad you poked your head in any way.
65??????????????? It's around 100 here everyday. One hot summer
I found 27 bugs on my computer yesterday using them. Didn't know they were there
Those 2 programs together find viruses that my anti virus program can't
7:00am CA Core CPI 0.3%(E) 0.3%(P) 0.3%(S) 50M
10:00am US Existing Home 6.17M(E) 5.77M(P) 400K(S) 50M
E = Expected Release Figure
P = Previous Release Figure
S = Deviation or Surprise Factor
M = Expected Movement In Pips (if deviation is hit)
News Trading
Tuesday June 22, 2010
[7:00am NY Time]
CPI or Consumer Price Index is direct measurement of inflation,
which is a high impact release that could have long term effect on
CAD, it is undoubtedly a high impact release that will be the focus
of early NY trading session. Here is the forecast:
CA Core CPI m/m Forecast 0.3% Previous 0.3%
ACTION: USD/CAD BUY 0.0% SELL 0.6%
We will be focusing on the Core CPI release today and our deviation
for this release based on historical track record is 0.3%, therefore
I'll be looking for tradable figures of 0.6% or better to SELL
USD/CAD or a 0.0% or worse to BUY USD/CAD.
USD/CAD has been strengthening on the back of China's announcement
of ending its peg to the USD, which resulted in better outlooks for
global commodity demands. With USD/CAD heading towards parity, it
is possible to see further strength in CAD if we get a surprise
positive release.
DEFINITION:
"CPI, Consumer Price Index, is a statistical estimate of the
movement of the prices of goods and services bought for consumption
purposes by households. Its computation uses price data collected
for a sample of goods and services from a sample of sales outlets in
a sample of locations for a sample of times and estimates of the
shares of the different expenditures in the total covered by the
index which are usually based upon expenditure data obtained for
sampled periods from a sample of households(wikipedia)." It is also
known as the "True Cost of Living".
Our focus is on the Core CPI, or CPI ex Energy and Food components,
which provides a better picture of inflation without the seasonal
factor.
[10:00am NY Time]
The plan for Existing Home Sales release from U.S. will be the
typical retracement trading method, where we'll wait for the release
and then wait for a decent retracement before getting into a trade.
Here is the forecast for this release:
US Existing Home Sales Forecast 6.17M Previous 5.77M
ACTION: USD/JPY BUY 6.60M SELL 5.80M
Because the Housing sector is one of the most important news events
out of the US, this release will certainly cause some volatility in
the market, especially if our tradable figures (+/- 400K) were hit.
With the focus of the nation, and of the world, on the possible
recovery of U.S. housing sector, this release may bring about a
strong sentiment of risk appetite if our BUY trigger is hit...
Furthermore, with this release scheduled at 10:00am US Time, it is
the last high impact news for the NY session, we could see some
exaggerated market movements as traders may just wait for this
release to be out of the way before committing to a position.
It is also important to consider that the New Home Buyer's credit
has ended... This number may very well be a huge disappointment,
similar to the building permits release last week, which came out at
60K less than expectation...
As usual, our deviation is the usual 400K, therefore on a release of
6.60M or better, we'll be looking to BUY USD; on a release of 5.8M
or worse, we'll be looking to SELL USD...
Definition:
"Measures the annualized number of existing residential buildings
that were sold during the previous month. A rising trend has a
positive effect on the nation's currency because large purchases
tend to be made by consumers that are optimistic and confident in
their financial position. The sale of a home also triggers
commissions for real estate agents, and often home owners will
purchase goods such as appliances and furniture shortly after
purchasing a home. Traders watch this report closely as it's the
month's first demand-side housing indicator to be released."
Top Stories
* German IFO beats expecations at 101.8 vs. 101.2
* UK emergency budget on tap today
* Asia follows Dow to the downside -1.2%, Europe softer on open
* Oil at $78/bbl
* Gold at $1236/oz. last
Overnight Eco
* NZD Credit Card Spending 3.4% vs. 0.7% last
* CHF Trade Balance 0.82B vs. 1.97B forecast
* EUR German Ifo Business Climate better at 101.8
* EUR Current Account -5.1B
Event Risk on Tap
* CAD CPI expected at 0.0%
* USD Existing Home Sales expected at 6.23M
* USD HPI expected at 0.2%
Price Action
* USD/JPY drops through 91.00 after Nikkei loses more than -125
* AUD/USD makes another run at .8800 after a dip to .8740 in Asia
* GBP/USD remains below 1.4800 ahead of the Osbourne budget speech
* EUR/USD holds 1.2300 in the wake of solid IFO but upside difficult
Risk FX stabilized in Asian and early European trade today in the wake of the reversal staged yesterday during the North American session. However despite a positive tone to newsflow, high beta currencies were unable to muster much of a rally as traders remained wary throughout the session. The yuan continued to strengthen, hitting a five year high of 6.7930 as Chinese monetary authorities made good on their promise to loosen the peg, but risk appetite remained muted and equities followed the Dow to the downside with Nikkei losing more than -1.2% which in turn pushed USD/JPY below the 91.00 level.
On the economic front the news was generally positive with Germany revealing that because of higher taxes and smaller costs for unemployment benefits, the budget deficit this year will be cut by 20 Billion euros. Meanwhile the IFO report beat expectations printing at 101.8 versus 101.2 as the index hit its best reading in nearly two years. As we noted earlier, “Overall the IFO survey painted a stable picture of business activity indicating that so far the recent volatility in the financial markets has not had a negative impact on the real economy. With the exception of retail, all sectors including manufacturing, construction and wholesale showed improvement.”
Still trading was cautious for most of the night with risk FX seeing little benefit from the positive newsflow. Cable was the weakest currency of the night dropping to within a few points of the 1.4700 figure ahead of the emergency UK emergency budget meeting at 12:30 GMT. UK Chancellor George Osborne is expected to reveal his austerity plans for dealing with the country’s massive budget deficit and traders remain nervous regarding his tax proposals for the financial sector.
In North American trade today, the eco calendar carries the US existing home sale figures with market anticipating a rise to 6.17M units from last month’s 5.77M reading. If the number does increase as expected it could help to whet risk appetite, calming fears that the US housing market is once again entering a downturn. Last week’s disappointing housing starts data has the market concerned and today’s news could prove to be positive catalyst if it shows a strong rebound.
If risk appetite revives the EUR/USD has a chance to run to the 1.2350 and possibly the 1.2400 level as the day progresses, but markets remain wary and any disappointment on the economic front during the North American session could trigger a further selloff in both equities and high beta FX as the recovery rally runs out of steam.
FX Upcoming
Currency GMT EST Release Expected Prior
CAD 11:00 7:00 CAD CPI 0.0% 0.3%
USD 14:00 10:00 USD Existing Home Sales 6.23M 5.77M
USD 14:00 10:00 USD HPI 0.2% 0.3%
Euro Stabilizes as IFO Posts a Solid Reading
German IFO business sentiment survey printed a bit better than expected at 101.8 versus 101.2 eyed despite the turmoil caused by the recent turbulence in the credit markets. The IFO beat expectations for the third month out of the past four rising to its best level in 2 years.
According to the IFO companies expected the recovery to continue, but have scaled down their expectations for export growth. The future expectations component of the survey reflected that fact dropping to 102.8 from 103.7 the month prior. Overall the IFO survey painted a stable picture of business activity indicating that so far the recent volatility in the financial markets has not had a negative impact on the real economy. With the exception of retail, all sectors including manufacturing, construction and wholesale showed improvement. Tomorrow’s GFK consumer confidence survey should provide more data to the market regarding retail sentiment.
The EUR/USD firmed in the aftermath of the release trading above the 1.2300 level as risk appetite stabilized after yesterday’s reversal in North American trade. The pair continues to consolidate its recent gains but remains capped by the 1.2500 barrier. Today’s solid IFO data could help assuage fears that EZ recovery is losing steam and could help to push the unit to a test of 1.2350 if risk flows improve as the day progresses.
Oh wow that sounds like you had a whole lot of fun down there. I would love to see the Myan pyramids
I agree, sometimes no trades are better then being in a trade. If it's not there it is not there
That show was funny and on top of that big hoss goes and breaks the potty chair right after that lolol
I guess scamming all of these investors is really paying off lol
yeah I agree there, just one big mess.
The Big 12 breaking up is not good for college football period. they need to stay connected
yep but unfortunately nobody will ever go to the NC lol
It's already hard enough going to the NC playing UF, UG, AU, AL, UT, LSU but imagine doing it adding in TX and OK.
yeah but then again they were robbed when they went undefeated the 90's
that will be crazy because it would probaly be TX and OK in the SEC
in outsiders eyes they won't be a powerhouse until they get the gonads and and have a big 10 championship. I remember Iowa like 10 years ago being a powerhouse but Ohio St got the nod and never even played them. Iowa whooped the heck out of Florida in a bowl that year. The Citrus I believe
my my my when it rains it falls
wonder what the big 12 will do, if all these creme of the crop schools leave then there is no longer any need for the Big 12.
just saw this, wow it's going to get interesting. I think OK is coming to the SEC. All I can say is that will be crazy
lolololol yeah your right
no problem my friend
well you reap what you sow. I can understand him wanting to leave but the way he did it it was very shady trying to take our recruits with him. I think he stole 2-3 recruits from us. Ed O was all behind that and Kiffin agreed with it.
EU is hitting the top of all trendlines right now and it is near the 20MA on the daily
Dollar Tanks on Ugly Retail Sales Number
U.S. retail sales dropped 1.2 percent in the month of May, triggering a sharp wave of risk aversion. Most economists including ourselves were looking for stronger retail sales, but to everyone's surprise, American consumers cut spending despite the continual improvement in the labor market. Finding jobs was not enough to get Americans to spend as today's number suggests that quality of jobs is far more important than the quantity. Most of the job growth last month was for the Census, which is a short term project. Weak private sector hiring in May contributed to the thriftiness of consumers. Thanks to the disappointing retail sales report, it will most likely be a risk off day in the financial markets with equities and high yielding currency pairs sliding across the board. The EUR/USD has already erased most of its earlier gains on the heels of the U.S. report while USD/JPY fell aggressively.
This was the ugliest retail sales number in 8 months and the worst part is that excluding the more volatile gas and energy components, retail sales still declined 0.8 percent. The largest drags were from a 9.3 percent drop in purchases of building materials, a 1.7 percent decline in motor vehicles and parts and a 3.3 percent drop in gas station receipts. There was a pickup in online spending and furniture sales, but not enough to offset other weakness. Since the labor market is improving, American consumers are most likely adding to their rainy day funds which is important if their jobs are temporary. The first decline in consumer spending since Sept 2009 downplays Bernanke's recent optimism and reinforces the belief that the Federal Reserve will keep the low for long "extended period" language in the FOMC statement when they meet later this month. Dollar Tanks on Ugly Retail Sales Number
lololololol wonder if Kiffin can keep USC clean for 4 years lolol
oh come on, Kiffin is the best thing since sliced bread lol
lololol oh ok
wow what a bad move by Big Blue. At least go after Kiffin lololol j/k
I guess I should of made the point it was for football only. If it was for basketball then KY would be on there as well
just call it the Big Tex lol