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mp6140 · Sat, 12-30-2006, 05:28 PM

MP -- New Year thoughts, STOLEN FOREX PREDICTIONS AND OTHER USELESS STUFF !

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hey international bankers, a New Years greeting to you all and a wish for a wonderful 2007.

Saw a video clip from "the man who has never been wrong forecasting the economy" (now, THATS a title that rates a corner office !) who claims the Fed wont do anything till late spring or early summer (read June) and then will drop rates -- of course, by then, the remainder of the worlds economies will also be dropping so we should end up about even, although at a lower price. Makes a lot of sense to me so Maybe he's right one more time !

The years recap that follows is a copy and paste from FXCM's board and worthy of reading. In the all to familiar Goofs and Gaffs Dept, Ter told me she was going to hold a position in AUD/USD overnite last week (just a small position to be sure of it) and i smiled --- and then got my butt into AUD as quickly as i could the next day. AUD is one of those "very quiet" currencies that comes to the senior prom with the class geek and turns out to be a phenominal dancer, daughter of an extremely rich man with no other children to leave his billions to, and drop dead gorgeous once she lets her hair down and puts her contacts in -- you know, the one NO one paid any attention to ! (who woulda known, huh ?)

Ive got the worlds greatest forecasting software and methods and systems that can be developed, but Ter just "feels" when its gonna move and I better start listening more or I'll continue being late to the parties shes enjoying so well ! How does one develop an indicator with "feelings" ??

Hidden in the Yen's sorta "didnt do that much" behavior (hit its highs in dec of 05 and while heading up, didnt come near the behavior of the EUR or Cable) is the rise of another asian currency starting with a "Y" also ! Its kinda like another country had the dollar also, and they had no where to go but UP -- whose would you go for ?

Weve had some really nice runs on the mentioned pairs and i imagine the party is not quite ready to end for a bit more, but I watch my LRC's and prior highs cause forex aint just about news -- there be a heck of a lot of technical in there, and traders around the world are watching their little squiggly lines also and when the squiggly line says sell - - - - - - - - - - -

Euro Surges After Strong Inflation Data Confirms Need for More Rate Hikes

US Dollar
2006 has been a tough year for the US dollar. It lost value against the Euro, Swiss Franc, British Pound and Australian dollar while only managing to end unchanged against the Japanese Yen, Canadian and New Zealand dollars. Volatility shrank to record lows and the breakout that we saw in late November lasted for no more than 2 weeks for most of the currency pairs. The US dollar ended the last trading day of the year stronger against every major currency except for the Euro. The calendar was very light with only the help wanted index released this morning. The index remained unchanged and resulted in zero volatility for the greenback. All markets are closed on Monday while the US stock markets will remain closed on Tuesday for National Mourning Day (for former President Ford). Futures markets will be open on Tuesday, but will close early. However, just because the US markets are closed on Tuesday does not mean that traders should not be prepared for the busy week ahead. There are a lot of important data set for release including manufacturing and service sector ISM, the minutes from the last FOMC meeting and non-farm payrolls. With the EUR/USD and GBP/USD consolidating for most of December, next weeks data could start the year with bang. Manufacturing ISM is due out Tuesday. After the strong Chicago PMI print yesterday, we could actually see the index rebound, especially since the ISM adjusted Philly Fed index increased in the month December despite the drop in the headline index. Traders will be paying a very close attention to the prices paid component since inflation is still the Federal Reserves top priority. Recent economic data has been mixed which means that the outlook for the economy is still uncertain. The non-farm payrolls report on Friday should help to clarify things, but in the beginning of the week, the ISM number will help to confirm or deny whether the manufacturing sector is still facing recessionary conditions.

Euro
The Euro is up 11.5 percent against the US dollar this year and is the only currency to strengthen against the dollar in the last trading day of 2006. The outlook for the EUR/USD is bullish both technically and fundamentally. The latest rise was sparked by the sharp jump in M3 money supply in the month of November. The annualized rate of growth hit 9.3 percent, which is the fastest pace of growth since February 1990. The 3 month moving average rose to 8.8 percent, which is the biggest gain since May 1990. The rapid growth is sure to raise the eyebrows of the already hawkish central bankers and will give them an even stronger reason to lift interest rates in the first quarter of next year. This comes in stark contrast to the US Federal Reserve who at best will keep interest rates on hold and at worst, will begin lowering interest rates in the first quarter. The ECB has said loud and clearly that they plan on continuing to raise interest rates. Just yesterday, ECB member Mersch reiterated the central banks view that interest rates remain very low and monetary policy is still accommodative. Like the US, there is a great deal of Eurozone economic data due for release next week. We are expecting manufacturing, retail and service sector PMI, along with inflation, unemployment, and retail sales. Meanwhile in Switzerland, the KoF leading indicator fell more than expected from 1.75 to 1.60. This confirms the drop in the UBS consumption index reported earlier this week. Swiss PMI and CPI are due out next week with potential weakness in both.

British Pound
Like the Euro, it has also been an extremely good year for the British pound, which has appreciated 13.6 percent against the US dollar. A recovery in the housing market as well as strong merger and acquisition flows has helped to drive solid gains in the currency. However, even though the Pounds move beat the Euros this past year, in the last 24 hours, mixed economic data was not enough to help the currency match the rise in the Euro. Mortgage approvals surged in the month of November, but mortgage equity withdrawal was lower than expected in the third quarter. The offsetting reports forced the British pound to fall victim to overall dollar strength. More housing market data is due out next week along with PMI indices, money supply and consumer confidence.

Japanese Yen
Even though USD/JPY ended the year basically unchanged from where it started, the Yen weakened significantly against all of the other majors, especially EUR/JPY which hit yet another record high on the last trading day of the year. The main question in the weeks ahead is when will the Bank of Japan raise interest rates. The JiJi news suggested earlier this week that we could see a 25 or 50bp hike in January. However last night, Nikkei news said that the BoJ will not rush to raise rates. No one is sure, which is what makes the Yen the biggest at risk currency in 2007. Economic data has been mixed and does not support a premature tightening. Consumer prices and consumer spending have been weak. The Manufacturing PMI survey released last night reported a drop from 53.7 to 53.1 in the month of December. BoJ Governor Fukui has already said that their decision remains data dependent. Unfortunately there is no data next week with the Japanese markets closed until Thursday, which means that Yen traders will need to continue to wait.

Commodity Currencies (CAD, AUD, NZD)
The Australian dollar ended the year up 7.5 percent against the US dollar, but its other commodity currency peers were not as lucky. Both the New Zealand and Canadian dollars ended the year basically unchanged as the commodity boom came to a halt in the summer of 2006. There was some secondary data from Australia and New Zealand reported overnight. Australia saw stronger private sector credit growth while New Zealand saw stronger money supply growth in the month of November. However the real story today was the Canadian dollar. The currency surged to a fresh 8 month high. With no news on the calendar, the move was driven primarily by acquisition flows. Canadas Power Corp will be buying March & McLennan Company's Putnam Investments money-management unit for $3.9 billion. There are some key Canadian data due out next week and light Australian and New Zealand data.

Kathy Lien is the Chief Currency Strategist at FXCM.

ok, international bankers --- lets have a blast in 2007

trade for the joy of it -- the money will come !

mp

Sat, 12-30-2006, 05:28 PM	#31 (permalink)
mp6140 CRUSTY ON THE OUTSIDE ! Join Date: Mar 2005 Posts: 799	MP -- EURO, POUND AND DOLLAR PROPHESIES MP -- New Year thoughts, STOLEN FOREX PREDICTIONS AND OTHER USELESS STUFF ! -------------------------------------------------------------------------------- hey international bankers, a New Years greeting to you all and a wish for a wonderful 2007. Saw a video clip from "the man who has never been wrong forecasting the economy" (now, THATS a title that rates a corner office !) who claims the Fed wont do anything till late spring or early summer (read June) and then will drop rates -- of course, by then, the remainder of the worlds economies will also be dropping so we should end up about even, although at a lower price. Makes a lot of sense to me so Maybe he's right one more time ! The years recap that follows is a copy and paste from FXCM's board and worthy of reading. In the all to familiar Goofs and Gaffs Dept, Ter told me she was going to hold a position in AUD/USD overnite last week (just a small position to be sure of it) and i smiled --- and then got my butt into AUD as quickly as i could the next day. AUD is one of those "very quiet" currencies that comes to the senior prom with the class geek and turns out to be a phenominal dancer, daughter of an extremely rich man with no other children to leave his billions to, and drop dead gorgeous once she lets her hair down and puts her contacts in -- you know, the one NO one paid any attention to ! (who woulda known, huh ?) Ive got the worlds greatest forecasting software and methods and systems that can be developed, but Ter just "feels" when its gonna move and I better start listening more or I'll continue being late to the parties shes enjoying so well ! How does one develop an indicator with "feelings" ?? Hidden in the Yen's sorta "didnt do that much" behavior (hit its highs in dec of 05 and while heading up, didnt come near the behavior of the EUR or Cable) is the rise of another asian currency starting with a "Y" also ! Its kinda like another country had the dollar also, and they had no where to go but UP -- whose would you go for ? Weve had some really nice runs on the mentioned pairs and i imagine the party is not quite ready to end for a bit more, but I watch my LRC's and prior highs cause forex aint just about news -- there be a heck of a lot of technical in there, and traders around the world are watching their little squiggly lines also and when the squiggly line says sell - - - - - - - - - - - Euro Surges After Strong Inflation Data Confirms Need for More Rate Hikes US Dollar 2006 has been a tough year for the US dollar. It lost value against the Euro, Swiss Franc, British Pound and Australian dollar while only managing to end unchanged against the Japanese Yen, Canadian and New Zealand dollars. Volatility shrank to record lows and the breakout that we saw in late November lasted for no more than 2 weeks for most of the currency pairs. The US dollar ended the last trading day of the year stronger against every major currency except for the Euro. The calendar was very light with only the help wanted index released this morning. The index remained unchanged and resulted in zero volatility for the greenback. All markets are closed on Monday while the US stock markets will remain closed on Tuesday for National Mourning Day (for former President Ford). Futures markets will be open on Tuesday, but will close early. However, just because the US markets are closed on Tuesday does not mean that traders should not be prepared for the busy week ahead. There are a lot of important data set for release including manufacturing and service sector ISM, the minutes from the last FOMC meeting and non-farm payrolls. With the EUR/USD and GBP/USD consolidating for most of December, next weeks data could start the year with bang. Manufacturing ISM is due out Tuesday. After the strong Chicago PMI print yesterday, we could actually see the index rebound, especially since the ISM adjusted Philly Fed index increased in the month December despite the drop in the headline index. Traders will be paying a very close attention to the prices paid component since inflation is still the Federal Reserves top priority. Recent economic data has been mixed which means that the outlook for the economy is still uncertain. The non-farm payrolls report on Friday should help to clarify things, but in the beginning of the week, the ISM number will help to confirm or deny whether the manufacturing sector is still facing recessionary conditions. Euro The Euro is up 11.5 percent against the US dollar this year and is the only currency to strengthen against the dollar in the last trading day of 2006. The outlook for the EUR/USD is bullish both technically and fundamentally. The latest rise was sparked by the sharp jump in M3 money supply in the month of November. The annualized rate of growth hit 9.3 percent, which is the fastest pace of growth since February 1990. The 3 month moving average rose to 8.8 percent, which is the biggest gain since May 1990. The rapid growth is sure to raise the eyebrows of the already hawkish central bankers and will give them an even stronger reason to lift interest rates in the first quarter of next year. This comes in stark contrast to the US Federal Reserve who at best will keep interest rates on hold and at worst, will begin lowering interest rates in the first quarter. The ECB has said loud and clearly that they plan on continuing to raise interest rates. Just yesterday, ECB member Mersch reiterated the central banks view that interest rates remain very low and monetary policy is still accommodative. Like the US, there is a great deal of Eurozone economic data due for release next week. We are expecting manufacturing, retail and service sector PMI, along with inflation, unemployment, and retail sales. Meanwhile in Switzerland, the KoF leading indicator fell more than expected from 1.75 to 1.60. This confirms the drop in the UBS consumption index reported earlier this week. Swiss PMI and CPI are due out next week with potential weakness in both. British Pound Like the Euro, it has also been an extremely good year for the British pound, which has appreciated 13.6 percent against the US dollar. A recovery in the housing market as well as strong merger and acquisition flows has helped to drive solid gains in the currency. However, even though the Pounds move beat the Euros this past year, in the last 24 hours, mixed economic data was not enough to help the currency match the rise in the Euro. Mortgage approvals surged in the month of November, but mortgage equity withdrawal was lower than expected in the third quarter. The offsetting reports forced the British pound to fall victim to overall dollar strength. More housing market data is due out next week along with PMI indices, money supply and consumer confidence. Japanese Yen Even though USD/JPY ended the year basically unchanged from where it started, the Yen weakened significantly against all of the other majors, especially EUR/JPY which hit yet another record high on the last trading day of the year. The main question in the weeks ahead is when will the Bank of Japan raise interest rates. The JiJi news suggested earlier this week that we could see a 25 or 50bp hike in January. However last night, Nikkei news said that the BoJ will not rush to raise rates. No one is sure, which is what makes the Yen the biggest at risk currency in 2007. Economic data has been mixed and does not support a premature tightening. Consumer prices and consumer spending have been weak. The Manufacturing PMI survey released last night reported a drop from 53.7 to 53.1 in the month of December. BoJ Governor Fukui has already said that their decision remains data dependent. Unfortunately there is no data next week with the Japanese markets closed until Thursday, which means that Yen traders will need to continue to wait. Commodity Currencies (CAD, AUD, NZD) The Australian dollar ended the year up 7.5 percent against the US dollar, but its other commodity currency peers were not as lucky. Both the New Zealand and Canadian dollars ended the year basically unchanged as the commodity boom came to a halt in the summer of 2006. There was some secondary data from Australia and New Zealand reported overnight. Australia saw stronger private sector credit growth while New Zealand saw stronger money supply growth in the month of November. However the real story today was the Canadian dollar. The currency surged to a fresh 8 month high. With no news on the calendar, the move was driven primarily by acquisition flows. Canadas Power Corp will be buying March & McLennan Company's Putnam Investments money-management unit for $3.9 billion. There are some key Canadian data due out next week and light Australian and New Zealand data. Kathy Lien is the Chief Currency Strategist at FXCM. ok, international bankers --- lets have a blast in 2007 trade for the joy of it -- the money will come ! mp __________________ Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages ! As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence -- BUT I KNOW WHERE THEY HID THE KEY !!