Forex Blog

The U.S. currency continued to climb versus the euro despite mixed data being published today in North America, with some considerably bad figures as consumer confidence slumped much below forecasts. The factors behind the euro’s downfall are still much stronger than any eventual turbulence caused by negative reports published today in the U.S. EUR/USD currently trades at 1.3547.

Richmond Fed manufacturing index rose to 2 in February, from a previous reading of -2 in January. Forecasts expected this production index to be at 0. This report is definitely positive for the U.S. manufacturing, as its the first reading above 0 in months, indicating an increase in production.

Consumer Confidence, which had increased in January, reverted the trend and fell to 46.0 in February, down from the revised value of 56.5 in the past month. Forecasts didn’t expect such sharp drop and suggested confidence to be at 55.0.

If you have any comments on the recent EUR/USD action, please, reply using the form below.

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

MetaTrader is a great software for charting, analyzing, trading and testing. It has many useful features and supports many tools that make the life of the Forex trader much easier. But when it comes to drawing the new candles/bars on the chart there is a tricky part of MetaTrader.

Both in MT4 and MT5 the candles are drawn depending on the ticks (each tick is a moment when a new quote from the broker came) rather than on the time, while the charts themselves are displayed based on time. The problem is that the new candle won’t be drawn on the chart exactly at its expected start time; you’ll have to wait for the next tick after that start time and only then the candle is displayed on the chart. For example, you look at the M1 chart, it’s quite obvious that 13:45:59 is the last second of the previous candle, the next candle should be available on 13:46:00, but you may still end up looking at the previous candle even on 13:46:05 or later (depending on the market volatility). If the tick comes on 13:46:10, the new candle will be drawn at that time with the Open value at the price which came with the tick.

So why should it matter? What consequences such behavior has on trading? First, the candle charts look different because of it. Often, Close value of the previous candle isn’t the same as the Open value of the next candle — we have to wait for the new quote and new quote often means a new price. Second, we can’t base our trading solely on time, especially if we try to be precise up to a second. All scripts, expert advisors and indicators have to rely on the time of the last tick rather than on the exact time.

So, how do you avoid being affected by all this? When you trade based on the candle/bar charts in MetaTrader, always keep in mind that the candles depend on ticks, not on time. If you trade on longer timeframes, it won’t be difficult, especially if the Forex market is slow. If you trade on M1/M5, pay attention to prevClose/Open difference when trying to apply the candlestick chart patterns. If you write an indicator (or some other MetaTrader program), try to avoid relying on the round time values, remember that the system is tick-based, use the ”>=” comparison instead of the strict “=” when dealing with the seconds.

The EUR/USD oscillated considerably today after reaching the lowest price in 9 months as mixed data published in the U.S. caused divergent opinions among traders towards the dollar. Speculations that the Fed might lift economic stimulus and that some investors may start buying back euros allowed to euro to pare some of its early losses. EUR/USD is near its record low for 2010 at 1.3584.

Producer Price Index (PPI) increased by 1.4% in January from a previous revised advance of 0.4%. Forecasts expected this price index to grow 0.8%.

Initial jobless claims advanced to 472k applications in the past week from a previous revised reading of 442k applications. This report ended a series of consecutive weekly improvements, and forecasts expected 440k new applications.

Philadelphia Fed index increased to 17.6 in February from a previous reading of 15.2 last month. Forecasts were near actual figures expecting this manufacturing index to be at 17.2.

Leading indicators index increased by 0.3% in January following a 1.2% revised gain in December. Forecasts expected indicators to grow by 0.6%.

U.S. crude oil inventories increased by 3.1 million barrels from the previous week. Oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week, and are also above the upper limit of the average range.

The dollar outperformed virtually all of the 16 main traded currencies as domestic reports ranging from manufacturing to housing showed better than expected numbers for the U.S. economy, boosting attractiveness for assets in the country as the economic growth accelerates. The euro erased yesterday’s gains as the EU is unlikely to fund a bailout for Greece to solve its budget deficit issues. EUR/USD is near the lowest level in 2010 and trades at 1.3608.

Building permits were at seasonally adjusted annual rate of 621k in January, showing figures below forecasts that expected 630k permits approved and from a previous reading of 653k (revised) in December. Housing starts for January were at a seasonally adjusted level of 591k from a previous revised rate of 575k in December. Forecasts expected housing starts to be at 580k.

Import and export prices published today showed an increase of 1.4% in import prices last month from a previous advance of 0.2% in December. Export prices rose 0.8 percent in January after advancing 0.6 percent in December.

Industrial production and capacity utilization rate rose in January. As industrial production increased 0.9% from a previous revised reading of 0.7% in December, utilization rate was at 72.6% from a previous revised reading of 71.6%. Forecasts were exact for the capacity utilization rate and expected industrial production to increase 0.7%.

Treasury budget report showed a deficit of $42.6 billion in January, compared to $63.5 billion in January 2009. This report came with better than expect figures as forecasts suggested the Federal budget balance to show a deficit of $44.2 billion.

The dollar erased yesterday’s advanced versus the euro as better than expected corporate earnings brought risk appetite back to trading markets as speculations suggested that euro losses would be too significant compared to the size and the relevance of the Greek economy in the EU. The dollar fell despite positive domestic data and the EUR/USD currency pair currently trades at 1.3668.

N.Y. Empire State Manufacturing index increased to 24.9 in February from a previous reading of 15.9 in December. Actual figures were much above the forecasts which suggested this index to be at 17.9.

Net long-term purchases of the U.S. securities by the foreign investors were at $63.3 billion in December from a previous revised reading of $126.4 billion in November. Forecasts expected purchases to be at $50.3 billion.

Today I’ve added another e-book on the psychology of trading to my site. It’s The 7 Deadly Sins of Forex (and How to Avoid Them) by Marc Low. The e-book is rather short, only 24 real pages, but it’s an advantages as it says only that what should be said about its subject. The author described the 7 popular emotional problems that may become the deadly sins of every Forex trader. They include:

1. Impatience.
2. Lack of Clear Vision (Flip-Flopping).
3. Sleep Deprivation.
4. Over-Trading.
5. Reliance on Outside Sources.
6. Superficial Research.
7. Over-Leveraging.

But each of the mentioned problems is not only described, it’s provided with a detailed solution. I recommend this book to every trader (especially newbie). It has an advertisement in the end, but it’s not a problem. You can download it now:

• The 7 Deadly Sins of Forex

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

The EUR/USD currency pair is ending this week posting a decline as economic data published in Europe was again less optimistic than in the U.S., after retail sales and business inventories improved in the North American country in reports published today, as well as employment conditions, which could be verified in a jobless claims report published yesterday. In Europe, quarterly gross domestic product released today brought more pessimism to the region as actual data frustrated forecasts. EUR/USD is currently at 1.3614.

Retail sales advanced 0.5% in January from a previous revised declined of 0.1% percent. Forecasts expected this monthly report to advance 0.4%.

Business inventories declined 0.2% percent in December from a previous revised advance of 0.5% in November. Forecasts were considerably more pessimistic than actual figures expecting an increase of 0.3% in the inventories.

U.S. crude oil inventories increased by 2.3 million barrels from the previous week.Total motor gasoline inventories increased by 1.3 million barrels last week. Both remained above the upper limit of the average range.

Preliminary Michigan Consumer Sentiment was the last important report for the U.S. economy this week and declined to 73.7 in January from a previous revised reading of 74.4. Forecasts expected this index to rise up to 74.8.

Initial jobless claims published yesterdaydeclined during the past week to 440k applications, compared to a previous revised number of 483k two weeks ago, below forecasts that expected new jobless applications to be at 460k.

The U.S. dollar pared losses versus the euro today despite the negative numbers brought by a trade balance report published today, since the Greek crisis is still the factor defining market sentiment. The dollar fell yesterday on speculations that an EU summit to be held tomorrow would include a proposal to rescue Greece, but today, as these expectation faded out, the dollar returned to its bullish pattern. EUR/USD currently trades at 1.3734.

U.S. trade balance figures published today showed another monthly decrease in December with a deficit of $40.2 billion, from a previous report showing a deficit of $36.4 billion in November. Forecasts expected the trade balance to rebound with a deficit of $35.8 billion.

Wholesale inventories published yesterday decreased by -0.8% in December from a previous revised increase of 1.6% in November. Actual figures surprised traders positively since forecasts expected this report to post another increase of 0.5%.