Forex Blog

Now you can freely download another money management in trading related Forex book from my site — Mathematics of Money Management: Risk Analysis Techniques for Traders. It is written by Ralph Vince, the author of many books about the use of math in trading. Although this e-book is quite heavy on mathematics (calculus and statistics) it’s intended for the general readers — both for those that are fluent in numbers and those that are not. You’ll find some working methods and formulas there, that, if used in your own money management strategies, should help you to avoid many of the problems financial traders encounter. It’s quite a big e-book and isn’t very easy to understand, so be prepared for some long read.

EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: sell.
EUR/JPY trend: sell.

Euro is dropping down against the U.S. dollar for the fourth day in a row now. Declining stock markets force traders to cash out into dollars, increasing the demand for them. Today’s fall is minimal (less than 20 pips), but still keeps euro from rising and dominating over the dollar as it has been doing in 2007.

Leading indicators in U.S. released by the Conference Board showed a decrease in December by 0.2% after 0.4% drop in November, but still worse than 0.1% decline that was expected by the markets.

Reuters/University of Michigan released the preliminary results of its sentiment index today showing the unexpected rise from 75.5 to 80.5, while analysts expected a drop to 74.5.

Euro tries to reclaim the pips it lost yesterday during one of the strongest falls of the recent days. Yesterday EUR/USD lost 152 pips or more than 1% of its rate. Today only a small recovering is seen with no more than 30 pips trailback, which can be easily accounted to the technical correction. Overall picture of the EUR/USD daily chart more and more reassembles the “head and shoulders” pattern. Some average fundamental data were released today and are not currently affecting the dollar.

Housing data from U.S. was disappointing today. Building permits in December fell by a larger extent than it was expected going down 1,162,000 to 1,068,000. Meanwhile the housing starts for the same month dropped to 1,006,000 from 1,173,000 (revised from 1,187,000).

Initial jobless claims fell down by 21,000 and were at just 301,000 last week, while growth from 322,000 to 335,000 was expected by the market analysts.

Philadelphia Federal Reserve’s business activity index in January unexpectedly fell to -20.9, the lowest value since the October 2001, when it fell down after 9/11 attacks.

EUR/USD unexpectedly fell today after the moderate fundamental statistics were released in the United States. This currency pair declined from 1.4803 opening price to 1.4656 making it the largest daily drop for EUR/USD since December 14.

CPI (Consumer Price Index) in December showed a better than expected growth, increasing by 0.3% - still lower than in previous month (0.8%), but above the forecasted 0.2%.

Net foreign purchases of the long-term securities in November were at quite a high level - $90.9 billion, but lower than October’s $114.0 billion.

December’s industrial production stalled with 0% change, but that can be considered a good news, because the negative change has been expected. Industrial capacity utilization dropped slightly, going down from 81.6% (revised from 81.5%) to 81.4%.

U.S. crude oil inventories last week showed a gain at last increasing by almost 4.3 billion barrels after the previous report of 6.7 billion barrels dropdown.

EUR/USD has been ranging up and down through the whole day as the Forex traders were expecting the release of the important fundamental data today. After the retail sales report for December came out, euro started to gain at a fast pace against the U.S. dollar and broke the important resistance level of 1.4900.

December advance estimate of the retails sales fell down by 0.4% after a 1.2% growth a month earlier, while a stagnation at 0% was expected by the majority of the analysts.

PPI (Producer Price Index) in December, seasonally adjusted, fell down by 0.1%, while a moderate growth of 0.2% was forecasted after the November’s 3.2% growth.

New York Empire Manufacturing survey showed that this important manufacturing index fell down in January to 9.0 from 9.8 in December. The mean consensus for this index was at 10.0.

Manufacturers’ and trade inventories (seasonally adjusted) in November 2007 went up in accordance with the experts’ expectations - by 0.4% after October’s low 0.1% growth.

I uploaded a new Forex e-book to the site today - it’s called “The New Science of Technical Analysis“. It was written by Thomas R. DeMark, one of the founders of the modern technical analysis and developer of the DeMark’s pivot points. This book is more suited for the experienced Forex traders, because it goes quite deep into the techniques of chart analyzing, while being not very entertaining (of course, hardcore Forex traders will be entertained by such precious knowledge itself, but that’s another story ☺). The book is divided into 13 chapters with each of them describing a certain pattern or behavioral aspect of trading. Definitely - a good read for those who think that they know a lot about Forex trading.

EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: hold.
EUR/JPY trend: sell.

The dollar showed a mild growth against the euro today even after the trade balance report showed the widening of the deficit. Against the Great Britain pound the U.S. dollar also went up, with GBP/USD hitting the lowest value since march - 1.9481, but lost the most of the gain after the trade balance release.

The U.S. international trade balance deficit increased in November from $57.8 billion to $63.1 billion as the imports grew ten times faster than exports. Both average export and import prices rose by 0.3% - slowly than in October.

Treasury budget numbers for December were also reported today showing the surplus of more than $48.2 billion - a higher surplus than in December 2006 (almost $42.0 billion), but still lower than the expected $52.0 surplus for December 2007.

Today the European Central Bank decided to leave the interest rate unchanged at 4.00%, as it was expected by the markets. But the EUR/USD went up after the decision became known - the currency pair gained more than 70 pips. What has caused that? Along with the rate decision ECB announced another $20 billion intervention to the banks to add more dollar liquidity. That greatly cut the dollar’s position on Forex, especially against European currency.

Positive to the U.S. dollar was the weekly report on the initial jobless claims - last week they dropped from 337k to 322k, while a gain up to 340k has been anticipated by the market analysts.

Wholesale inventories (business) rose up by 0.6% compared with the October’s 0% unchanged value. Economic strategists forecasted only 0.4%, so this is a good news for dollar bulls.