Stocks Slip After Data Released on Consumer Spending, Manufacturing By Joe Bel Bruno, AP Business Writer

NEW YORK (AP) -- Stocks dipped Friday, the last trading day of the third quarter, as Wall Street mined mixed economic reports and remained cautious ahead of the upcoming earnings onslaught.

The stock market appeared wary of strong economic news, which could lower the chance of another rate cut. Last week, the Fed helped restore some confidence in the financial markets by reducing the target federal funds rate by a half point.

The Commerce Department said consumer spending increased 0.6 percent in August, the fastest growth in more than two years. Meanwhile, Chicago's National Association of Purchasing Management said business activity in the heavily industrialized Chicago area increased in September by more than analysts expected, and the University of Michigan said consumer sentiment during the month has held steady.

Also weighing on investors Friday was lingering concern that corporate earnings power was lessened in the third quarter. This is the last trading day of one of the most volatile periods in years -- one that pulled stocks sharply lower after the Dow Jones industrial average closed at a record 14,000.41 in mid-July.

Still, though energy and food prices are surging, core inflation appears to be under control, which is keeping rate cut hopes alive. The Commerce Department report showed that a closely watched gauge of core inflation showed a year-over-year rise in August of just 1.8 percent -- the smallest increase since a similar rise in February 2004. The reading is within the Fed's comfort zone of 1 to 2 percent.

"A second Fed cut will go a long way in reassuring the stock market that the worst is over. The focus going forward will be whether the Fed is going to lower rates to shore this up, or decide the risk of inflation is too high," said Janna Sampson, director of portfolio management at Oakbrook Investments.

The Dow shed 15.77, or 0.11 percent, to 13,897.17.

Broader indexes also declined. The Standard & Poor's 500 index fell 4.14, or 0.27 percent, to 1,527.24, and the Nasdaq composite index fell 6.86, or 0.25 percent, to 2,702.73.

Bonds rose, pushing the yield on the 10-year Treasury note down to 4.54 percent from 4.57 percent late Thursday.

The dollar fell against most major currencies as inflation appeared to be easing. The euro surpassed $1.42 for the first time, hitting a record against the U.S. currency for the seventh straight session.

The dollar's weakness has bolstered commodity prices throughout the quarter, and helped lift prices again on Friday. Crude oil prices rose 45 cents to $83.33 on the New York Mercantile Exchange.

"We're going to see crimped corporate profits if they eat those costs, and inflation if they pass those down. Neither of those are good," Sampson said.

In corporate news, shares of 3Com Corp. shot higher after the telecommunications equipment company said it will be sold to affiliates of private equity firm Bain Capital Partners LLC for $2.2 billion in cash. 3Com rose $1.28, or 34.8 percent, to $4.96.

As the tumultuous third quarter draws to a close, investors appear a bit less concerned about the tightening in the credit markets that sent stocks plummeting in late July and August. On Thursday, the Fed said banks slowed their borrowing from central bank this week to the smallest amount in six weeks, after a huge spike last week.

But while most market watchers agree that conditions have improved, the credit markets still don't appear they are back to operating normally. Levels of outstanding asset-backed commercial paper fell about 17 percent in the week ending Wednesday -- not as steep a decline as seen a few weeks ago, but still suggesting that demand isn't meeting supply.

Meanwhile, the bulk of third-quarter earnings start pouring in in mid-October, which should give investors a better idea of how companies weathered the summer's tumult and what they expect in the coming months.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 285.9 million shares.

The Russell 2000 index of smaller companies fell 4.68, or 0.57 percent, to 809.33.

In European trading, Britain's FTSE 100 fell 0.30 percent, Germany's DAX index fell 0.10 percent, and France's CAC-40 fell 0.31 percent.

In Asia earlier, Japan's Nikkei index fell 0.28 percent and Hong Kong's Hang Seng Index rose 0.29 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com

USD Struggles on Soft Reports by Korman Tam

The beleaguered dollar found no reprieve in today’s US economic reports, with GDP and new home sales falling short of consensus estimates, sending the currency to another record low against the euro at 1.4188. Concerns of deteriorating conditions in the US economy continue to plague the greenback, raising expectations that the Fed will cut interest rates again by at least 25-basis points this year.

The final reading for Q2 GDP growth was weaker than initially anticipated, falling to 3.8% versus calls for a decline to 3.9% from 4.0% in the preliminary reading. However, PCE prices, the Fed’s preferred gauge on inflation, crept up higher than expected, with the headline at 4.3% from 4.2% while the core PCE reading rose to 1.4% versus 1.3%. The housing market continues to deteriorate, with more evidence revealing slowing activity as new home sales plunged by 8.3% to 795,000 units in August. Meanwhile, weekly jobless claims improved to 298,000, down from the previous week at 311,000.

The week concludes with a series of key US releases on Friday morning, consisting of August PCE, personal consumption, personal income, September Chicago PMI, and the University of Michigan consumer sentiment survey. Manufacturing is seen struggling, with the Chicago PMI expected to decline to 53.3 from 53.8. The University of Michigan consumer sentiment survey is forecasted to improve slightly to 99.0, up from the preliminary reading at 98.4. However, given this week’s surprise drop in the Conference Board’s consumer confidence survey to 2-year lows, it will be interesting to see if the University of Michigan survey is resilient to the recent financial market turmoil and can shrug off burgeoning fears of recession.
Euro Buoyed

The euro continued to forge ahead against the dollar and yen amid a combination of robust Eurozone economic data and renewed signs of a faltering US economy. The single currency jumped to a fresh all-time high versus the greenback just shy of the psychologically key 1.42-level at 1.4188.

Germany’s labor report improved better than anticipated with the unemployment rate for September unexpectedly falling to its lowest level in 14-years at 8.8%. Meanwhile, unemployment change in September declined by 50k to 3.694 million. The robust data adds further support for at least another 25-basis point rate hike by the ECB before year-end.

JPY Slumps Ahead of Data

A barrage of Japanese economic data is due out this evening and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

Dollar Shrugs off Soft Data by Korman Tam

The dollar was little changed against the euro and sterling despite a sharply weaker than expected August US durable goods orders. The typically more volatile figure reversed its previous month’s gains, with the headline number falling by 4.9% versus a 6.0% increase from July. Meanwhile, the excluding transportations reading posted a 1.8% drop compared with a 3.8% gain in the previous month. The disappointing data however, were overshadowed by a strong opening in the US equity bourses after an agreement was reached between GM and UAW to end the strike of auto workers. Moreover, the yen weakened across the board amid gains in global equities.

Traders will turn to several key reports due out in the Thursday session, consisting of Q2 GDP, Q2 PCE, August new home sales, weekly jobless claims and Q2 corporate profits. The final GDP growth figure is seen softer at 3.9%, down from 4.0% in the preliminary reading. The Fed’s preferred gauge of inflation, the PCE is unchanged from the previous quarter – with the headline figure holding steady at 4.2% and the core PCE reading at 1.3%. Weekly jobless claims are seen creeping up slightly to 316k, from 311k last week.
Sterling Mixed

The sterling traded sideways against the dollar, hovering above the 2.01-level while edging higher versus the yen toward the 233-mark. Data released overnight revealed slightly stronger than expected economic growth from the UK for the second quarter, with the annualized figure edging out estimates for an unchanged reading at 3.0%, instead growing at 3.1% and the quarterly reading steady at 0.8%. The current account deficit was also smaller than anticipated at 9.1 billion sterling, shrinking from 12.2 billion sterling in the first quarter.

In the session ahead, UK data will include September nationwide house prices and CBI distributive trades. The pound continues to be weighed by fears of a UK credit crunch and its subsequent impact on the overall economy, thereby raising expectations that the next rate move by the Bank of England will be a cut.

Cable has retreated since testing the descending trendline resistance at 2.03 earlier in the week and holds steady above the 2.01-mark. We expect the pair to continue to trade sideways and lag in performance relative to the euro or Aussie against the dollar, as a result of tempered rate hike expectations. Support begins at 2.0120, followed by 2.01 and 2.0070. Additional floors will emerge at 2.0040, backed by 2 and 1.9970 and 1.9940. Gains will target initial resistance at 2.0180, followed by 2.02 and 2.0230. Subsequent ceilings are seen at 2.0275 and 2.03.

Euro Climbs to Record High by Korman Tam

The single currency jumped to another fresh all-time high against the greenback despite a softer than expected reading from Germany’s Ifo sentiment survey. The euro continues to benefit from fears of further deterioration in US economic fundamentals, and now sets its sights on the next key psychological resistance at the 1.42-level. Moreover, the outlook for interest rates between the Fed and the ECB also remains favorable for the euro, with the FOMC likely to further ease policy while the ECB is seen tightening by at least 25-basis points before the end of the year.

ECB Board member Liebscher reinforced the economic strength of the Eurozone. Despite the prevailing downside risks, Liebscher said the Eurozone economy is in a good state and that the economic expansion remains dynamic. Meanwhile, the ECB’s Garganas sounded a hawkish tone, suggesting that “upside risks to price inflation dominate any effects stemming from the appreciation of the euro”. He deems the main drivers of Eurozone inflation are domestic, but added that it was appropriate to await more information prior to taking additional action. Garganas also added that the primary impact of recent market turbulence would be higher risk perception and would otherwise not affect the main scenario.

Germany’s Ifo sentiment survey was lower than forecast, with the business climate index falling to 104.2, compared with calls for 105 and down from 105.8 a month earlier. The current conditions component slipped to 109.9, versus estimates for a smaller decline to 111.0 from 111.5, while the expectations index dropped to 98.7 and down from 100.4. The Ifo said that the initial signs of “brake to growth” emerging and that the retail sector climate has deteriorated considerably. However, it added there was no strong impact on export expectations from a stronger euro. The Ifo’s chief economist Nerb believes that the German business climate has been impacted by the market turbulence and foresees a softening in the Germany economic rebound rather than an end.

Eurozone economic data over the coming sessions will reveal further clues into the state of the region’s economy. The reports will include Eurozone money supply, Germany’s September labor report, Eurozone sentiment surveys, and the September Eurozone HICP.

USD Slumps on Data by Korman Tam

The dollar was dragged lower in the Tuesday session on the heels of lackluster US economic reports, plunging to a new record low versus the euro at 1.4154 and again falling to parity against the Loonie. We expect the greenback to remain under pressure over the coming months amid persistent worries that the US economy may slump into recession and the increased prospects for additional rate cuts from the FOMC.

The data released earlier in the session reinforced the pessimism surrounding the US economy, with consumer confidence and housing reports pointing toward further weakness. The Conference Board’s consumer confidence index tumbled to its lowest level in nearly 2-years, at 99.8 for September down sharply from August at 105.6. The dismal confidence figure reflects heightened market volatility, growing uncertainties stemming from the housing market and worries over the prospects of a US recession. There was also renewed evidence of the slumping housing market with existing home sales down 4.3% at 5.49 million units, versus 5.75 million units in July.

Dollar Mired Near Lows by Korman Tam

The dollar continues to reel from last week’s 50-basis point Fed rate cut, falling overnight to a fresh record low against the euro at 1.4129 and stumbling versus the sterling to 2.0316. Renewed fears of a faltering US economy will continue to drive the foreign exchange market this week as concerns of a possible recession weigh on the greenback. However, given the abrupt nature of the Fed’s aggressive ease, traders must keep a close eye on US inflation data for fear that the 50-basis point rate cut may strengthen inflationary pressure over the coming quarters.

Economic data slated for release this week will provide further clues on the US outlook, with reports to shed light on growth, the housing market, inflation, manufacturing, and consumer sentiment. On the whole, consensus estimates look for weaker data compared with the previous releases. The housing market slump will continue to lead the deterioration in US fundamentals, with August existing home sales seen falling to 5.49 million units, versus 5.75 million units previously and new home sales forecasted to drop to 830k units compared with 870k units in July. The final reading of Q2 GDP is estimated to be revised lower to 3.9%, from 4.0%, while the Fed’s preferred gauge on inflation is seen unchanged in Q2 with core PCE standing pat at 1.3%. Additionally, durable goods orders and Chicago PMI will provide more clues on the extent of the slowdown in manufacturing. Although durable goods orders are typically a volatile figure, estimates are calling for the number to fall by 3.1% in August, reversing the previous month’s 6.0% increase. The excluding transports reading is also seen declining, down by 1% versus a 3.8% gain a month earlier.

With additional monetary policy easing expected from the Fed this year, particular emphasis will be placed on the outlooks for central bank decisions from the ECB, BoE and BoJ. Among the banks, only the ECB is expected to maintain its current tightening cycle with another 25-basis point rate hike before year-end. However, economic data from the Eurozone will be closely scrutinized to assess the impact thus far on the region’s economy from previous rate hikes. Traders will turn to Germany’s September Ifo sentiment survey, due out early Tuesday morning at 4:00 AM, and is seen softening from August. The September Ifo expectations component is seen declining to 99.5, down from 100.4, while the current conditions figure is forecasted to fall to 111 versus 111.5.

Meanwhile, both the Bank of Japan and the Bank of England are expected to leave policy unchanged for the remainder of the year given the current global and domestic economic outlook. The BoE is even anticipated to cut rates given tightening credit conditions and the impact of global financial volatility on the UK economy. Later in the week, traders will digest Q2 UK GDP, seen unchanged at 0.7% q/q and 3.0% y/y.

A barrage of Japanese economic data is due out this week and will provide further clues as to if and when the BoJ may raise rates again. Our view is for the Bank to remain on hold until Q1 2008. The reports slated for release include the August labor report, retail sales, manufacturing PMI, CPI, housing spending, industrial production, and housing starts. With exceptions in household spending and industrial production, the reports are largely unchanged from the prior readings. However, industrial production is estimated to post a strong gain, improving by 3.2% in August versus a 0.4% decline in the previous month. Household spending is forecasted to gain by 1.2% compared with a 0.1% decline in the prior month.

CAD Hit 31-yr High 0.9940 vs Dollar by Yan Xu

The Canadian dollar touched a 31-year-high at 0.9940 versus the dollar and it gave back some of its gains after a government report showed retail sales fell unexpectedly for a second month. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.41, followed by 1.4120 and 1.4150. Additional ceilings will emerge at 1.4180, backed by 1.42. Support starts at 1.4050, backed by 1.40, 1.3980 and 1.3950. Subsequent floors are eyed at 1.39.

USDJPY encounters interim resistance at 115.80, backed by 116 and 116.30. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.30 and 115, followed by 114.70. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.02, backed by 2.0220 and 2.0250. Subsequent ceilings will emerge at 2.0270, followed by 2.03 and 2.0320. On the downside, support begins at 2.0170, followed by 2.0150 and 2.0120. Additional floors are eyed at 2.01, backed by 2.0080 and 2.0050.

Euro Edged Lower after Weak PMI by Yan Xu

After hitting a new record high at 1.4120 versus the dollar, the euro edged lower versus the dollar on weaker-than-expected manufacturing and services PMI reports from the euro zone.

The Euro zone services PMI fell from 58 to 54 in September, below the estimate of 57.5. The manufacturing PMI dropped from 54.3 to 53.2, weaker than the expectation of 53.9. Euro zone current account balance shrank from 11.4 billion euros to 3.3 billion euros in July. The main reason behind the weak figures is the recent global financial market turbulence beginning from August.

The dollar remains under pressure after the Fed cut half a percentage-point this Tuesday. Fed Chairman Ben Bernanke yesterday said credit market turmoil may make the housing recession more severe, adding to the worries over the nation’s economy. Interest-rate futures indicated traders bet a 70 percent chance of a quarter-percentage point cut to 4.50% at the Fed’s policy meeting on October 31.

The Fed’s aggressive move lifted investors risk appetite and carry trades increased modestly. That is why the dollar weakened against most of its rivals except the yen after the rate cut.

Besides, the sterling has been recovering from subprime crisis concern sparked by the Bank of England bailing out the nation’s fourth biggest home mortgage lender Northern Rock. The currency on Friday strengthened to around 2.02 versus the dollar.

Dollar Weakened to 1.41 vs Euro by Yan Xu

The dollar extended its loss against its major rivals today on speculations that the Fed may continue to lower fed fund rates in the rest of the year. The euro touched 1.41 versus the dollar, while the yen strengthened to as low as 114 against the dollar.

The dollar index fell to an all-time low at 75.73 yesterday. Interest-rate futures pricing indicated traders see an 80 percent chance that the Fed may cut a quarter-percentage point to 4.50% on its policy meeting at the end of October.

In the early session, US weekly jobless claims fell 9k to 311k, beating the estimate of 321k. Philadelphia Fed business conditions index dropped from 0.4% to minus 0.6% in August, below the estimate of minus 0.2%.

Fed Chairman Ben Bernanke today said in a congressional hearing that subprime mortgage delinquencies are likely to rise further, and the Fed is committed to prevent lending problems. He added the market tends to self-correct over time and subprime mortgage market has adjusting sharply. US Treasury Secretary Henry Paulson said the Fed’s move help stabilize market credit crunch.

The dollar extended its loss after London’s Daily Telegraph newspaper cited that Saudi Arabia did not lower its interest rates in line with the Fed, though King Abdullah’s advisor said the country will not unpeg its currency from the dollar in the near future.
CAD Reached Parity with USD

The Canadian dollar rallied sharply on rising commodity prices. Crude oil surged to 83.46 dollars per barrel today. The currency equaled the dollar for the first time since November 1976. The market will pay attention to Canada retail sales report due tomorrow. Canada retail sales are expected to remain unchanged in July, after a 0.9% drop in June. Excluding food and energy, core retail sales may rose 0.3% versus a 0.3% decline in the previous month.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 114.70, backed by 115 and 115.30. Subsequent ceilings will emerge at 115.50, followed by 115.80 and 116. On the downside, support begins at 114.30 and 114, followed by 113.80. Additional floors are eyed at 113.50, backed by 113 and 112.70.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0170. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0050, followed by 2 and 1.9970. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

FX Rangebound by Korman Tam

At 4:30 AM UK August Retail Sales m/m (exp 0.1%, prev 0.7%)
UK August Retail Sales y/y (exp 4.0%, prev 4.4%)
At 8:30 AM US Weekly Jobless Claims (exp 321k, prev 319k)j
At 10:00 AM US August Leading Indicators (exp -0.2%, prev 0.4%)
At 12:00 PMUS September Philadelphia Fed Survey (exp 2.3, prev 0.0)

The greenback holds steady against the majors heading into the Thursday session, continuing to recover following the post-FOMC selloff. The dollar is trading just beneath the 1.40-barrier against the euro and near 2.0020 versus the sterling. We expect the 50-basis point Fed rate cut to weigh on the greenback over the coming weeks and foresee the currency to tumble to fresh lows against the euro and fall closer toward parity versus the Canadian dollar.

Economic data from the US in the coming session will include weekly jobless claims, August leading indicators and the September Philadelphia Fed survey. Weekly jobless claims are estimated to edge up slightly to 321k, from 319k from the previous week. August leading indicators are seen falling by 0.2%, compared with a 0.4% increase from July. Meanwhile, the Philadelphia Fed survey is forecasted to improve to 2.3 for September, up from a flat reading in August.

Currency traders will focus closely on global equity bourses amid the increase in risk taking following the Fed rate cut. Any fresh revelations of deteriorating banks’ balance sheets or tightening credit conditions would likely prompt a renewed sell-off in equities, and subsequently a sharp pull back in the yen carry trades. Despite the Fed’s aggressive policy easing, the US economy remains in a precarious state – amid heightened fears of a recession due to the slumping housing market.
Sterling Hovers Above 2

Cable holds steady near 2.0020 ahead of UK retail sales later in the session. The retail sales report is seen falling to 0.1%, from 0.7% in the previous month, while the annualized figure is forecasted to fall to 4.0%, versus 4.7% a year earlier.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Dollar Recovered From Fed Rate Cut by Yan Xu

The dollar today pared its loss from the Fed’s aggressive rate cut as investors believe the rate cut will help the US economy. The currency fell sharply yesterday after the Fed slashed interest rates by 50 basis points yesterday.

US equities gained further today with the Dow Jones Industrial Average rose 76.17 to 13,815.56 and the Standard & Poor’s 500 index rose 9.25 to 1529.03 at 4:15 pm. The rally in stock market stimulates carry trades modestly. The yen weakened to above the 116 level against the dollar.

The euro failed to extend beyond the record high at 1.3687 set on as traders sold the euros to protect option bets at 1.40 against the dollar. The pair consolidates in range between 1.3940 and 1.3987.

Earlier in the US session, a bunch of inflation and housing reports came out weaker than expected, supporting the rate cut yesterday. US CPI declined 0.1% in August, below the estimate of an unchanged reading. Excluding food and energy, core CPI rose 0.1%, less than the estimate of 0.2%. US housing starts dropped 2.6% to an annual rate of 1.33 million units in August, while building permits fell 5.9% to 1.307 million units.

Tomorrow will see US weekly jobless claims, August leading indicators, and September Philadelphia Fed index.

The sterling was still under pressure from the liquidity problem in UK banking system due to subprime issue. After Northern Rock was bailed out last week, the Bank of England announced today to allow commercial banks to use mortgages as collateral to borrow via three-month repos. The sterling fell off the high at 2.0172 set Tuesday to the key level at 2 versus the dollar.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 116.30, backed by 116.50 and 116.80. Subsequent ceilings will emerge at 117, followed by 117.30 and 117.50. On the downside, support begins at 116 and 115.70, followed by 115.50. Additional floors are eyed at 115.30, backed by 115 and 114.70.

GBPUSD encounters interim resistance at 2.0030, backed by 2.0070 and 2.01. Subsequent ceilings will emerge at 2.0140, followed by 2.0170 and 2.02. On the downside, support begins at 2, followed by 1.9980 and 1.9950. Additional floors are eyed at 1.9930, backed by 1.99 and 1.9870.

Free Signal Today 19 Sept2007

SELL LIMIT GBP/USD AT 2.0117
TAKE PROFIT 2.0067 & STOP LOSS 2.0167
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

SELL LIMIT GBP/JPY AT 233.20
TAKE PROFIT I 232.40 & STOP LOSS 234.20
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

GJ 18 september 2007

SELL GJ : 228.84
STOP LOSS : 230.77
TP : 227.78

FX Awaits Data, FOMC by Korman Tam

At 4:30 AM UK August CPI m/m (exp 0.4%, prev -0.6%)
UK August CPI y/y (exp 1.9%, prev 1.9%)
UK August RPI m/m (exp 0.4%, prev -0.6%)
UK August RPI y/y (exp 4.0%, prev 3.8%)
UK August RPI-x m/m (exp 0.3%, prev -0.6%)
At 5:00 AM Germany September ZEW Current Conditions (exp 75.0, prev 80.2)
Germany September ZEW index (exp -15.5, prev -6.9)
At 8:30 AM US August core PPI m/m (exp 0.1%, prev 0.1%)
At 9:00 AM US July TICS (exp $85.0 bln, prev $120.9 bln)
At 1:00 PM US September NAHB (exp 20.0, prev 22.0)
At 2:15 PM FOMC Policy Decision (exp 5.00%, prev 5.25%)

The major currency pairs will likely remain locked in range ahead of Tuesday’s highly anticipated FOMC monetary policy announcement, slated for 2:15 PM. Although the Fed meeting will garner the lion’s share of market attention, there will also be several key data releases that should impact central bank monetary policy decisions, namely the Bank of England and the European Central Bank.

The data include inflationary reports from the UK, consisting of the consumer price index and retail price index and from the Eurozone, the Germany ZEW sentiment survey. The ECB is expected to lift rates by 25-basis points over the remainder of the year, while the rate outlook for the BoE is less certain. There is now increased speculation that the next move from the Bank of England would be a rate cut given fears about the impact from the subprime mortgage fallout on UK banks.

The sterling remains pressured against the greenback and yen following yesterday’s news of the UK’s Northern Rock bank. The news fuelled fears of large subprime exposure among other UK banks, raising expectations that the BoE may soon ease its bench-mark lending rate. In the session ahead, UK CPI data is seen up 0.4% in August, versus a 0.6% decline in the previous month, while the annualized figure is expected to remain unchanged at 1.9% -- beneath the BoE’s 2% inflation target. The retail price index is estimated to edge up to 4.0% versus 3.8% from the previous year and seen reversing the prior month’s 0.6% decline to edge higher by 0.4%.

The key highlight will be the FOMC’s monetary policy announcement, in which a 25-basis point rate cut to 5.0% is largely anticipated. It is worth noting that Fed Board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Market Focus Shifts to FOMC by Korman Tam

Japan’s Market Closed for Holiday
At 5:00 AM Eurozone July Trade Balance (exp 6.8 bln euros, prev 7.8 bln euros)
At 8:30 AM US September NY Fed Manufacturing (exp 18.0, prev 25.06)

The greenback remains mixed against the majors, mired near all-time lows versus the euro around 1.3865 but firmer against the yen and the sterling. The week will kick off to a slow start with the Japanese market closed in observance of the Respect for the Elderly Day holiday. The primary focus among traders will be the FOMC monetary policy meeting on Tuesday, in which market participants are anticipating a 25-basis point rate cut to 5.00%.

While an FOMC rate cut this week is not a foregone conclusion, recent deterioration in US economic fundamentals have raised speculation that the Fed will need to preempt a potential recession by easing policy to stimulate the economy. However, board members have delivered conflicting messages, with some maintaining their mantra of keeping inflationary pressure in check. It will be interesting to see whether the Fed responds to market calls for a cut while concurrently tempering inexorable expectations for further easing over the coming months. If a 25-basis point reduction does materialize on Tuesday, Bernanke will likely perform a balancing act between quelling burgeoning recessionary fears and containing runaway expectations for a series of rate cuts – given lingering concerns from Board members about inflation.

Recent price action in the currency market suggests traders have priced in a 25-basis point rate reduction this Tuesday, which increases the significance of the Fed’s subsequent statement and any post-meeting comments from FOMC Board members. We expect the greenback to remain under pressure over the coming months given the state of the US housing market and the subprime mortgage meltdown. In the week ahead, US economic reports will include the September NY Fed manufacturing survey, August CPI, PPI, July TICS, September NAHB, building permits and the Philadelphia Fed survey. It will also be important to focus on earnings reports from major financial firms that will be releasing this week to assess the full impact of the subprime debacle on their balance sheets.

Former Fed Chairman Greenspan was quoted in the FT as saying the US housing price declines will be more significant than most expect. He said he would not be surprised if US house price declines extended into double digits. However, he cautioned against cutting rates too aggressively for fear of an “inflationary resurgence”, which are greater now than when he was Chairman. Greenspan also added that the negative wealth effect from the housing slump results in a crisis that is “trickier” to control.

Dollar Slumped after Fed Cut 50 bps by Yan Xu

The dollar slumped across the board after the Fed cut federal funds rate half a percentage point to 4.75%. The unanimous decision surprised the majority of the market who had expected a rate cut of only 25 basis points.

Against the dollar, the euro broke the 1.39 handle easily and rose up to an all-time high at 1.3980. The dollar dropped 50 pips instantly to 115.25 versus the yen after the FOMC announcement. The rate cut fueled the stock rally and also gold surged to a 28-year high on that.

The FOMC statement showed the rate cut is designed to forestall adverse economic effects. The Fed will continue to monitor effects and act as needed. It also stated that readings on core inflation have modest improvement and tightening of credit conditions may intensify housing correction.

Earlier in the session, US PPI, an inflation gauge, unexpectedly declined 1.4% in August, the largest drop since October 2006. This added to the expectation of a Fed rate cut. Excluding food and energy, core index rose 0.2%. US TICS data showed net long-term flows excluding swaps, fell from 120.9 billion to 19.2 billion in July, indicating a decline in international demand for US assets. Besides, US September NAHB came out at 20 as expected.

The euro was little changed after a weaker-than-expected Germany ZEW report as the market focus was on the FOMC. The headline declined to minus 18.1 in September, below the estimate of minus 15.5 and a previous reading of minus 6.9. The current conditions dropped from 80.2 to 74.4 as expected.

The European Central Bank Miguel Angel Fernandez Ordonez, a member of ECB governing council, said today there is still a chance that inflation may accelerate.

EURUSD will face interim resistance at 1.40, followed by 1.4020 and 1.4050. Additional ceilings will emerge at 1.4080, backed by 1.41. Support starts at 1.3950, backed by 1.3930, 1.39 and 1.3880. Subsequent floors are eyed at 1.3850.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

GBPUSD encounters interim resistance at 2.0150, backed by 2.0170 and 2.02. Subsequent ceilings will emerge at 2.0230, followed by 2.0250 and 2.0280. On the downside, support begins at 2.01, followed by 2.0070 and 2.0030. Additional floors are eyed at 2, backed by 1.9980 and 1.9950.

Free Signal Today!

BUY STOP GBP/JPY AT 231.75
TAKE PROFIT 232.35
STOP LOSS 230.75

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

Free Signal Today!

BUY LIMIT GBP/USD AT 2.0060
TAKE PROFIT 2.0110
STOP LOSS 2.0010

SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!

Dollar Remains Weak, Eyes on FOMC by Yan Xu

The dollar remains weak against most of its rivals on Monday on expectations that the Fed will cut interest rates by at least a quarter percentage point tomorrow.

The euro hovers above 1.3850 versus the dollar and is very likely to break 1.39 after the FOMC on Tuesday afternoon. The yen is trading in a narrow range between 114.68 and 115.36 against the dollar in today’s trading session.

After recent financial turbulence caused mostly by credit crunch, the Federal Reserve is widely expected to lower its benchmark rates to avoid recession. Some in the market even look for a 50 basis point rate cut. The market will keep range bound until the Fed makes interest rate announcement at 14:15 eastern time tomorrow.

Besides, tomorrow will see Germany ZEW index, UK RPI and CPI, US PPI, TICS and NAHB. Germany ZEW headline is seen down 15.5 in September, compared to a –6.9 reading in the previous month. Germany ZEW current conditions index is expected to fall from 80.2 to 75 in September.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.
Sterling Fell Below 2

The sterling extended its loss as this is already the third day that thousands of customers withdrew money from Northern Rock Plc branches across the UK. The Bank of England last Friday provided financial support to this Britain’s fifth largest home mortgage lender to ease its liquidity needs. Subprime is still a problem for the US and European economy. The currency today fell below the major psychological level at 2 versus the dollar.

GBPUSD encounters interim resistance at 1.9980, backed by 2 and 2.0030. Subsequent ceilings will emerge at 2.0060, followed by 2.01 and 2.0150. On the downside, support begins at 1.9920, followed by 1.99 and 1.9870. Additional floors are eyed at 1.9850, backed by 1.9830 and 1.98.

U.S. Stocks Rise, Erasing 2 Weeks of Losses, on Credit Outlook

By Michael Patterson and Lynn Thomasson

U.S. stocks rose, erasing losses from the last two weeks, on speculation lower borrowing costs and resilient consumer spending will sustain profit growth.

Countrywide Financial Corp., the largest U.S. mortgage lender, snapped a four-week slide after lining up $12 billion of financing. McDonald's Corp., the biggest restaurant company, jumped to a record after posting August sales that beat analysts' estimates and boosting its dividend. General Motors Corp. had its best gain in more than a year as investors speculated automakers will win union concessions on health-care costs.

The Federal Reserve said the decline in the U.S. commercial paper market narrowed last week and Kohlberg Kravis Roberts & Co.'s bankers found buyers for loans to finance its takeover of U.K. pharmacist Alliance Boots, bolstering expectations that debt markets will recover from a summer swoon. Stock prices also rallied as traders bet the Fed will cut interest rates at its Sept. 18 policy meeting.

``Consumer demand looks reasonably strong and there's hope that the problems in the commercial paper and debt markets won't be as bad as first expected,'' said Jerome Dodson, president of Parnassus Investments in San Francisco. ``The economy is going to be pretty well off, so right now I'm reasonably bullish.''

The Standard & Poor's 500 Index climbed 2.1 percent to 1,484.25, bouncing back from two straight weekly declines. The Dow Jones Industrial Average rose 2.5 percent to 13,442.52, the biggest weekly gain since April. The Nasdaq Composite Index added 1.4 percent to 2,602.18.

FOMC Meeting

The Fed's Open Market Committee next week will lower the overnight lending rate between banks to 5 percent from 5.25 percent, according to the median forecast of economists surveyed by Bloomberg News. The reduction would be Fed Chairman Ben S. Bernanke's first and may be followed by at least two more before year-end, federal funds futures suggest.

``This Fed meeting is crucial,'' said Walter ``Bucky'' Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama. ``The stock market has been responding nicely the past few days in anticipation that the Fed will do what it's supposed to do.''

Countrywide climbed 6.6 percent to $19.42. The lender's ability to find new sources of capital ``should substantially address funding concerns,'' a team of Credit Suisse Group analysts wrote. Countrywide last month borrowed $11.5 billion from bank credit lines to help weather a decline in investor demand for mortgages and reduced access to the commercial paper market, where the company usually borrows money.

Investment Banks Rally

Lehman Brothers Holdings Inc., the biggest underwriter of U.S. mortgage bonds, climbed 12 percent to $59.50 for the largest weekly advance since October 2002. Bear Stearns Cos., the No. 2 underwriter, gained 11 percent to $117.19, the biggest rise since September 2001.

Investors snapped up shares of Lehman, Bear Stearns, Morgan Stanley and Goldman Sachs Group Inc. before the investment banks report quarterly earnings next week.

Bank and brokerage stocks have tumbled this year on concern credit market turmoil will hurt earnings from trading and debt underwriting. The S&P 500 Financials Index has dropped 8.7 percent since December for the worst performance among 10 industry groups.

McDonald's added 13 percent to $55.45. August sales advanced 8.1 percent as customers bought chicken snack wraps and iced coffee in the U.S. and McFlurry desserts in Europe. The company also this week boosted its annual dividend by 50 percent as part of a plan to return as much as $17 billion to investors.

GM Advances

GM, the biggest U.S. automaker, increased 16 percent to $34.22 for the top gain in the S&P 500. Citi Investment Research urged investors to buy the shares on the possibility of an agreement with the United Auto Workers on retiree health care.

The stock may climb to $57 a share if GM gets an accord to set up a union-run fund for the medical coverage, Citi analyst Itay Michaeli said.

The Fed reported short-term debt dropped by $8.2 billion last week, compared with a decline of $31.3 billion a week earlier. Debt maturing in 270 days or less fell to a seasonally adjusted $1.92 trillion, including a $21.6 billion decline in asset-backed commercial paper. Commercial paper outstanding has fallen $306.4 billion in five weeks.

Deutsche Bank AG, JPMorgan Chase & Co. and UniCredit SpA, which last month abandoned selling 6 billion pounds ($12 billion) of mostly senior loans to fund the Boots takeover, probably will finish syndicating 750 million pounds of mezzanine debt that ranks last for repayment, two bankers involved said.

KKR's eight underwriters have been saddled with all of the 9 billion pounds of debt backing Europe's biggest leveraged buyout after investors rejected high-risk, high-yield loans.

Buyout Debt Backlog

Banks have committed about $350 billion for leveraged buyouts in the U.S. and 60 billion euros ($83 billion) in Europe that have yet to syndicate, according to UBS estimates. Underwriters agree to provide the financing to private-equity firms when the acquisitions are announced. If market conditions sour, banks are forced to hold debt they can't sell.

Boots spokesman Richard Constant, Deutsche Bank spokesman Richard Thomson and JPMorgan spokeswoman Colette Campbell, all in London, declined to comment.

Energy companies in the S&P 500 advanced 3 percent as a group for the top gain among 10 industries. Oil reached a record this week and closed above $80 a barrel for the first time on Sept. 13 after Hurricane Humberto briefly shut three refineries in Texas. Crude for October delivery closed at $79.10 a barrel in New York yesterday.

Exxon Mobil Corp., the world's biggest energy company, advanced 3.4 percent to $88.67. Chevron Corp., the second-largest U.S. oil producer, increased 3.4 percent to $90.65.

Treasuries fell as traders reduced holdings of the safest debt and bought riskier assets. The yield on the two-year note rose about 0.14 percentage point to 4.05 percent. Bond yields move inversely to prices.

Sterling Hit By Northern Rock Crisis by Yan Xu

The sterling fell sharply after the Bank of England provide an unspecified amount of financial support to UK¡¯s fourth largest home mortgage lender, Northern Rock, which suffered losses from recent rising lending rates sparked by US subprime crunch. This unusual move reignited worries that credit market problems may hit global economy. The sterling dropped to a 10-day low at 2.0062 versus the dollar.

The dollar was almost flat against the euro and yen on Friday though a soft US retail sales report reinforced speculations on a 50 basis point Fed rate cut next week. US retail sales rose 0.3% in August, below the estimate of 0.4%. Excluding autos, core retail sales dropped 0.4%, worse than the expectation of a 0.2% growth. US import prices declined 0.3% due to lower oil prices in August, while export prices rose 0.2% as expected. Current account deficit came out at 190.79 billion as expected in the second quarter. Industrial production rose 0.2% in August, below the estimate of 0.3%. University of Michigan consumer sentiment index was almost unchanged from previous month at 83.8. Business inventories were up 0.5% in July, beating the estimate of 0.3% and 0.4% a month earlier.

Earlier in US session today, US Treasury Secretary Henry Paulson said in CNBC interview today that credit markets have had some modest improvement. He reiterated that a stronger dollar is in US interest, giving the dollar a knee-jerk boost.

Also worth noting is that ECB Chairman Trichet today made some comments on global economy. He stated that inflation risk in the region remains to the upside, setting stage for a rate rise later in the year. He also said Japanese economy is on recovery path and foreign exchange rate should reflect this, calling for a stronger yen.

EURUSD will face interim resistance at 1.39, followed by 1.3930 and 1.3950. Additional ceilings will emerge at 1.3980, backed by 1.40. Support starts at 1.3850, backed by 1.3830, 1.38 and 1.3770. Subsequent floors are eyed at 1.3750.

GBPUSD encounters interim resistance at 2.01, backed by 2.0130 and 2.0160. Subsequent ceilings will emerge at 2.02, followed by 2.0220 and 2.0250. On the downside, support begins at 2.0060, followed by 2.0030 and 2. Additional floors are eyed at 1.9980, backed by 1.9950 and 1.99.

USDJPY encounters interim resistance at 115.50, backed by 115.80 and 116. Subsequent ceilings will emerge at 116.30, followed by 116.50 and 116.80. On the downside, support begins at 115 and 114.80, followed by 114.50. Additional floors are eyed at 114.30, backed by 114 and 113.70.

SIGNAL FOREX TRADING FOR 14 SEPTEMBER 2007

BUY STOP GBP/USD AT 2.0180
TAKE PROFIT 2.0240 & STOP LOSS 2.0120
SIGNAL VALID FROM 10.00 AM - 7.00 PM TRADING TIME

BUY STOP GBP/JPY AT 231.50
TAKE PROFIT I 232.50 & STOP LOSS 230.00
TAKE PROFIT II 233.35 & STOP LOSS 230.00
TAKE PROFIT III 234.20 & STOP LOSS 230.00
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME

Happy Trading!
Status Signal for 13 September :Profit

Dollar Extended Loss, Eyes on Retail Sales by Yan Xu

The dollar continues to weaken across the board on expectation that the Fed will cut interest rates by half a percentage point next week. The euro today hovers above 1.3860 and set a record high at 1.3927 versus the dollar. The sterling climbed above 2.03 to test a resistance at 2.0350 against the dollar.

The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.

The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.

The resignation of Japanese Prime Minister Shinzo Abe and the speculation that the government may downgrade its economic assessment put pressure on the yen. The yen pared its gains versus the euro and sterling. The dollar bounced up to test 115.50 versus the yen.

The swiss franc was little changed after the Swiss National Bank unexpectedly raised interest rates by 25 basis points to 2.75% on Thursday.

As a commodity currency, the Canadian dollar rallied on rising oil prices. It rose to a 30-year peak at 1.0314 against the dollar.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

FREE SIGNAL FOR 13 SEP 2007

BUY GJ : 231.77
STOP LOSS : 229.54
TP 1 : 232.43
TP 2 : 232.90
TP 3 : 233.67
BUY STOP GBP/USD AT 2.0292
TAKE PROFIT 2.0342 & STOP LOSS 2.0192
SIGNAL VALID FROM 11.00 AM - 7.00 PM TRADING TIME
Happy Trading!

USD Mired Near Record Lows by Korman Tam

At 8:30 AM Canada Q2 Current Account Balance (exp 83.2%, prev 83.0%)
US Weekly Jobless Claims (exp 325k, prev 318k)
At 10:00 AM US August Federal Budget

The dollar is mired near its lows against the euro amid heightened fears of accelerated deterioration in US economic fundamentals, to the extent of a recession. Markets are largely expecting the FOMC to jumpstart the economy with at least a 25-basis point rate cut when it deliberates policy next week. However, a shift in policy is not a foregone conclusion in light of recent conflicting comments from Fed officials, in which some reiterated lingering inflationary concerns.

In the session ahead, the US economic calendar is light with the release of weekly jobless claims and the August federal budget. The key reports will be released on Friday, consisting of August retail sales, Q2 current account balance, industrial production, capacity utilization, business inventories and the University of Michigan sentiment survey. The retail sales report will bear additional significance since it will be the last piece of consumer spending data the Fed will see before its policy setting meeting next week.
Euro Buoyed Near All-Time Highs

The euro remains favored as it hovers near its all-time highs just under the 1.39-figure. Although it remains unclear whether the ECB will continue its tightening cycle in the face of recent financial market turmoil, the Bank is largely expected to raise rates by 25-basis points by year-end to lift its benchmark lending rate to 4.25%. We expect the single currency to remain supported over the coming weeks, with an interim target of 1.40.

EURUSD holds steady near 1.39, with ceilings seen at 1.3920, followed by 1.3950 and 1.40. Support begins at 1.3860, backed by 1.3830 and 1.38.

Yen Mixed

The yen fell against the dollar while edging up higher versus the euro and sterling. Japan’s Prime Minister Abe resigned from his post amid a series of scandals and a poll defeat. However, the abrupt announcement had little impact on the currency market.

USDJPY trades near 114.30, with interim resistance starting at 114.60, followed by 115 and 115.50. Additional ceilings are seen at 115.75 and 116. Support starts at 114, followed by 113.70 and 113.40. Subsequent floors are eyed at 113, followed by 112.50 and 112.

Dollar Broke 1.39 vs Euro by Yan Xu

The dollar broke the 1.39 handle against the euro on Wednesday on raising concerns about US economy and the Fed outlook. The sterling rose to as high as 2.03 versus the dollar.

The market focus has shifted from general risks aversion to US-economy related risk aversion. Last Friday¡¯s unexpectedly weak non-farm payrolls added to the worries about the US economy. It is still hard to measure how much impact the subprime and credit market crunch may have on the broad economy. The Fed needs to cut interest rates to avoid economic recession. The market has fully priced in an interest rate cut by the Fed on September 18 meeting. Most in the market has a bearish sentiment over the greenback.
The Fed is the only central bank that is going to lower the rates, while the ECB and BOE are expected to raise interest rates by at least once this year.

ECB Governing Council member Victor Constancio said on Wednesday that the central bank are keeping all options open, reinforcing expectations for a rate hike by the year-end.

Besides, oil set a record intraday high at 78.84 per barrel today, pushing the dollar down futher.

Tomorrow will see US weekly jobless claims, which is expected to increase from 318k to 325k.

EURUSD will face interim resistance at 1.3920, followed by 1.3950 and 1.3980. Additional ceilings will emerge at 1.40, backed by 1.4020. Support starts at 1.3880, backed by 1.3850, 1.3830 and 1.38. Subsequent floors are eyed at 1.3770.

GBPUSD encounters interim resistance at 2.03, backed by 2.0320 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0450. On the downside, support begins at 2.0280, followed by 2.0250 and 2.0220. Additional floors are eyed at 2.02, backed by 2.0180 and 2.0150.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

FREE SIGNAL FOR 12 SEP 2007

BUY STOP GBP/JPY AT 231.55
TAKE PROFIT 232.55
STOP LOSS 230.55


BUY STOP GBP/USD AT 2.0303
TAKE PROFIT 2.0363
STOP LOSS 2.0223

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

Happy Nice Trading!

Dollar Weakens on Rate Cut Expectation by Yan Xu

The dollar fell to a record low at 1.3847 versus the euro on expectation that the Fed may cut interest rates on its September 18 policy meeting.

Several Federal Reserve officials yesterday expressed their concerns on the credit crunch and its impact on the broader economy, reinforcing expectations for a half percentage point cut instead of a quarter percentage point cut as anticipated earlier. Fed Chairman Ben Bernanke said in Berlin that the ¡°global saving glut¡± is still helping to keep interest rates low. Fed Governor Frederic Mishkin said there is an important downside risk to the US economy. San Francisco Fed President Janet Yellen said that losses related to credit market may slow growth.

Interest-rate futures pricing showed traders see a 68 percent chance that the Fed will cut interest rates by half a percentage point to 4.75 percent on its policy meeting on September 18.

US international trade deficit increased from 58.14 billion to 59.25 billion in July as expected. Tomorrow has no major economic data due from US. The market will focus on the retail sales report, current account deficit, industrial production capacity utilization, and University of Michigan consumer sentiment report on Friday.

ECB President Trichet said that credit losses in the euro-zone were not big enough to weaken financial institutions. He reiterated that inflation risks remain on the upside, raising expectations that the central bank may lift interest rates at least once this year.

The loonie strengthened against the dollar after a run of better-than-expected housing data. Canada housing starts increased from 215.6k to 226.5k in August, beating the estimate of 220k. New housing price index rose 0.9% in July, above the expectation of 0.6%.

EURUSD will face interim resistance at 1.3850, followed by 1.3870 and 1.39. Additional ceilings will emerge at 1.3930, backed by 1.3950. Support starts at 1.38, backed by 1.3780, 1.3750 and 1.3730. Subsequent floors are eyed at 1.37.

GBPUSD encounters interim resistance at 2.0350, backed by 2.0380 and 2.04. Subsequent ceilings will emerge at 2.0420, followed by 2.0450 and 2.0480. On the downside, support begins at 2.03, followed by 2.0280 and 2.0250. Additional floors are eyed at 2.0220, backed by 2.02 and 2.0180.

USDJPY encounters interim resistance at 114.50, backed by 114.80 and 115. Subsequent ceilings will emerge at 115.30, followed by 115.50 and 115.80. On the downside, support begins at 114 and 113.80, followed by 113.50. Additional floors are eyed at 113.30, backed by 113 and 112.70.

Yen Edges Higher on Data

The yen crept higher against the dollar in early Tokyo trading, edging up to 113.40 upon the release of a sharply higher than expected Japan machinery orders report. The core July machinery orders shot up by 17% m/m, far outpacing estimates for a 5.0% rise. The annualized core machinery orders also defied calls for a 2.0% decline, instead climbing by 8.0%.

Meanwhile, Japan’s economics minister Ota said he does not see a large change in Japanese economic conditions. He also expressed caution on whether the US economy can make a soft landing. Finance Minister Nukaga said he expects the BoJ to set appropriate policy with an eye on the global economy and market moves.

FX Awaits Data, Bernanke by Korman Tam

At 4:00 AM Germany August WPI m/m (exp n/f, prev 0.4%)
Germany August WPI y/y (exp n/f, prev 2.6%)
At 4:30 AM UK July Trade Balance (exp –6.4 bln stg, prev –6.3 bln stg)
At 8:15 AM` Canada August Housing Starts (exp 220k units, prev 215.6k units)
At 8:30 AM Canada July New Housing Price Index (exp 0.6%, prev 0.7%)
US July Trade Deficit (exp $59 bln, prev 58.14 bln)
Canada July Trade Surplus (exp C$5.0 bln, prev C$ 5.3 bln)

The currency market remains biased for a softer dollar amid a dearth of US economic data at the start of the week – with commentary from Federal Reserve members garnering the lion’s share of traders’ attention. Ahead of the blackout period before next week’s FOMC meeting, a barrage of comments from Fed speakers revealed mixed sentiment among its members providing little insight into the coming deliberations. However, market participants are largely anticipating a 25-basis point cut in the Fed funds rate with some even calling for a preemptive 50-basis point reduction to jumpstart the economy and stave off potential recession.

Earlier in the session, Fed governor Mishkin sounded a dovish tone in his commentary, saying that risks to the inflation outlook is now more balanced given the greater downside risks to growth. He added that the Fed must remain vigilant on inflation, but it also needs to be attentive to keeping demand from falling beneath supply as well. His comments echo a similar tone to Lockhart’s and Yellen’s, who both suggested that policy should incorporate the recent downturn in US economic fundamentals. Lockhart said the recent payrolls number is very important and must be taken very seriously. Moreover, he said another key piece of economic data that will play a particularly key role in policy deliberations is consumer-spending data. This week’s retail sales report on Friday will bear additional significance since it will be the last piece of key data before the Fed’s meeting. Furthermore, Fed Chairman Bernanke’s comments on Tuesday will be closely scrutinized, who is scheduled to speak at the Bundesbank at 11:00 am.

Economic data from the US will see the July trade deficit, which is expected to creep higher to $59 billion, up from June at $58.14 billion.

Free Signal Today 11 September 2007

BUY STOP GBP/USD AT 2.0268
TAKE PROFIT 2.0348
STOP LOSS 2.0218

SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.20
TAKE PROFIT 231.20
STOP LOSS 229.20

SIGNAL VALID FROM 10.30 AM - 6.30 PM TRADING TIME

Lets trade now!

Yen Strengthens Despite Soft Data by Korman Tam

The yen pushed higher against the greenback, firming to 112.62 and advancing versus the euro toward 155.19. Heightened risk aversion continues to benefit the Japanese currency amid growing worries of a US recession following last week’s dismal labor report. The yen is seen maintaining its stance as a safe haven currency and inversely track equity performances.
Economic data released earlier revealed softer-than-forecast GDP growth for Q2 in Japan, which shrunk by 0.3% q/q and by 1.2% y/y. The weak growth reports raise fears that the US economic slowdown may be taking its toll on Japan’s export driven economy. The Q2 revised capital expenditures reading was better than estimates, albeit down by 1.2% versus calls for a 1.8% decline.

USDJPY holds steady beneath the 113-level, with support beginning at 112.60, followed by 112.30 and 112. Subsequent floors will emerge at 111.60, followed by 111.20 and 111. Resistance begins at 113, backed by 113.30 and 113.75. Additional ceilings will emerge at 114, followed by 114.50 and 115.

USD Mired in Weakness by Korman Tam

t 4:30 AM UK August core PPI m/m (exp 0.2%, prev 0.2%)
UK August core PPI y/y (exp 2.4%, prev 2.2%)
At 2:00 PM US July Consumer Credit (exp $8.0 bln, prev $13.1 bln)

The greenback kicks off the week on softer footing, still reeling from the unexpectedly disappointing August jobs data -- which saw non-farm payrolls drop by 4k. With the FOMC policy meeting a little over one week away, the dollar will remain pressured amid expectations for a Fed rate cut in the face of deteriorating US economic fundamentals.

Data slated for release from the US include July consumer credit, trade balance, August retail sales, industrial production, capacity utilization, University of Michigan sentiment survey and July business inventories. Particular focus will be on the retail sales figures as a gauge on how resilient the US consumer is in the face of the recent financial market volatility and mortgage market turmoil.

The calendar for the session ahead is light, with the release of UK August PPI and core PPI. The core PPI figures are seen largely unchanged at 0.2% m/m and the annualized figure up slightly to 2.4%

FREE SIGNAL FOR 10 September 2007

SIGNAL FOREX TRADING FOR 10 SEPTEMBER 2007

BUY STOP GBP/USD AT 2.0324
TAKE PROFIT 2.0384 & STOP LOSS 2.0264
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

BUY STOP GBP/JPY AT 230.15
TAKE PROFIT 231.75 & STOP LOSS 228.65
SIGNAL VALID FROM 11.30 AM - 6.30 PM TRADING TIME

NB : All of risk not my own but i hope we can profit together!

Five Fibonacci Tricks

by Alan Farley

Fibonacci jumped into the technical mainstream late in the bull market. Futures traders had it all to themselves until real-time software ported it over to the equity markets. Its popularity exploded as retail traders experimented with its arcane math and discovered its many virtues.

Fibonacci ratios describe the interaction between trend and countertrend markets -- 38%, 50% and 62% retracements form the primary pullback levels. Apply these percentages after a trend in either direction to predict the extent of the countertrend swing. Stretch a grid over the most obvious up or down wave, and see how percentages cross key price levels.

Convergence between pattern and retracement can point to excellent trading opportunities. Keep in mind that retracements work poorly in a vacuum. Always examine highs, lows and moving averages to confirm the importance of a specific level.

Discord between retracement and the underlying pattern generates noise instead of profit. Move on to a new chart when nothing lines up correctly. This divergence generates most of the whipsaw in a price chart. Alternatively, strong phasing between Fibonacci and pattern exposes highly predictive reversals at narrow price levels.

Let's look at five tricks to improve your Fibonacci skills. Add these twists and turns to your toolbox and apply them to your next trade. I promise they'll serve you very well in the years ahead.

First Rise/First Failure

First Rise/First Failure marks the first 100% retracement of a trend within your time frame of interest. It provides an early reversal warning after a new high or low. The 100% retracement violates the major price direction and terminates the trend it corrects. From this level, the old trend can reestablish itself if it breaks through the old 38% level. More often, traders will use that level to enter low-risk positions against the old trend.

Parabola Hunt

Parabolic movement tends to occur between the 0%-to-38% and 62%-to-100% Fibonacci levels in all trends. This tendency offers a great tool for finding the big moves when looking for trades. Watch for congestion to form at the 38% or 62% level. Then use a simple breakout or breakdown strategy when price moves past it. The next thrust can be dramatic, with price moving like a magnet back to an old high or low. Of course, the strategy only works when you can find these levels in advance.

Continuation Gap Extensions

You can often target the exact price a rally or selloff will end at by using the continuation gap as a Fibonacci extension tool. Identify the gap by its location at the dead center of a vertical price wave. Then start a Fib grid at the beginning of the trend and extend it so the gap sits under the 50% retracement level. The grid extension points to the terminating price for the rally or selloff.

Overnight Grids

Find an active stock and start a grid from the high (or low) of a session's last hour. Stretch the grid to the opposite end of the next morning's first hour low (or high). This defines a specific price wave traders can use to uncover intraday reversals, breakouts and breakdowns. The overnight grid also offers a way to trade morning gaps. The gap will often stretch across a key retracement level and target low-risk entry on a pullback.

Second High/Low

Many traders can't figure out where to start a Fib grid. Here's a trick to help you place it where it'll do the most good. The absolute high or low in a price wave isn't the best starting point for a grid most of the time. Instead, look for a small double bottom or double top within the congestion where the trend began. Swing one end of the grid over this second high (or low), instead of the first. This will capture a specific Elliott Wave that conforms to the trend you're trying to trade.

Fibonacci Trading

Leonardo Pisano, better known by his nickname, Fibonacci, was an Italian mathematician born in Pisa in the 12th century. He is known to have discovered the Fibonacci numbers, said to be based upon observations of the Great Pyramid of Gizeh in Egypt. Fibonacci Numbers are a sequence of numbers where each successive number is the sum of the two previous numbers.

e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

It is the ratio of the Fibonacci sequence that is significant, rather than the actual numbers in the sequence. The quotient of the adjacent terms in the series possesses an amazing proportion, roughly 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, PHI, and the divine proportion. The dimensional properties that adhere to the ratio of 1.618 occur repeatedly in nature. Examples are as various as mollusk shells and the shapes of gallaxies containing billions of stars.

When used in technical analysis, the golden ratio is most often translated into three percentages: – 38.2%, 50%, and 61.8%. However, other multiples can be used, such as 23.6%, 161.8%, 423%, and so on. The Fibonacci sequence is applied to finance in several ways: retracements, extensions, arcs, fans, and time zones.

See also: Fibonacci Biography, Elliott Wave, R.N. Elliott, W.D. Gann

Countrywide May Fire as Many as 12,000 as Mortgage Demand Wanes

By Elizabeth Hester and Jody Shenn

Sept. 8 (Bloomberg) -- Countrywide Financial Corp., the biggest U.S. mortgage company, plans to cut its workforce by 10,000 to 12,000 in the largest round of firings since the industry's contraction began last year.

New U.S. home loans probably will drop 25 percent in 2008 from this year's levels, forcing the company to eliminate as much as 20 percent of its staff, Calabasas, California-based Countrywide said in a statement yesterday.

More than 15,000 jobs have been lost this week amid the worst U.S. housing slump in 16 years. IndyMac Bancorp, the second-biggest mortgage company, National City Corp. and Lehman Brothers Holdings Inc. cut staff. At least 100 mortgage companies have sought buyers or halted lending since the start of 2006, and foreclosures in the second quarter rose to a record, according to the Mortgage Bankers Association in Washington.

Countrywide's managers ``are taking the steps they need to take in light of the much lower origination volume,'' said Blake Howells, who helps manage $2.6 billion at Portland-based Becker Capital Management Inc. including Countrywide shares. ``The company had been actually criticized in the analyst community for growing their headcount.''

Angelo Mozilo, 68, the company's co-founder and chief executive officer, said in an interview he has ``no regrets'' about adding staff in recent years. ``We adjust to the environment we're in,'' he said. ``There was great opportunity for Countrywide to invest in a growing market.''

Shares Fall

The company's stock fell 27 cents, or 1.5 percent, to $18.21 in Friday's New York Stock Exchange composite trading. Countrywide shares have lost 57 percent this year.

Mortgage lenders have run short on cash as home sales slowed, more borrowers paid late and investors avoided mortgage bonds that don't have implied government guarantees. That prompted banks, securities firms and commercial-paper markets that finance mortgage companies to shut off credit.

Countrywide, which handled all types of mortgages, tapped $11.5 billion of emergency financing last month. A $2 billion investment from Bank of America Corp. on Aug. 22 helped ease concern that the lender might file for bankruptcy protection.

``It was impossible to anticipate the credit crisis we've seen on a worldwide basis,'' Mozilo said.

Concern about credit quality spread from the mortgage market to securities such as collateralized debt obligations tied to home loans, and later to short-term commercial paper. Central banks in Europe and the U.S. Federal Reserve have added more than $400 billion to money markets since Aug. 9 to encourage bank lending.

Guidelines Revised

Countrywide revised guidelines to ensure all loans are good enough to sell to investors or hold in its investment portfolio. Almost the entire residential lending business will be moved into the company's federally chartered thrift by the end of this month to reduce costs and improve liquidity.

Bill Ruberry, a spokesman for the U.S. Office of Thrift Supervision, which regulates Countrywide, declined to comment on the announcement. The company took out full-page ads in newspapers last month to stem withdrawals from Countrywide Bank FSB and reassure depositors that the thrift was sound.

``We have plenty of liquidity,'' Mozilo said. ``We're in very good shape.''

National City, Ohio's biggest bank, disclosed 1,300 job cuts, while Lehman Brothers, the biggest underwriter of U.S. mortgage bonds, said it's firing 850 people. Two weeks earlier, Lehman said it will close a subprime unit and dismiss 1,200.

Falling Payrolls

The mortgage industry's decline may have contributed to a drop of 4,000 U.S. jobs in August, reported yesterday by the U.S. Department of Labor. It was the first payroll decline in four years. Mozilo has predicted a recession unless home sales and prices rebound.

Countrywide is firing people because it's struggling to sell mortgages to investors, said Sean Egan, managing director of Egan-Jones Ratings Co. That's likely to continue next year, he said.

``It's probably not going to be the last cut,'' Egan said.

Brent Cunningham, a Countrywide security guard at the Calabasas headquarters, said yesterday no reporters were allowed on the property. Two Los Angeles County sheriff's cars were parked in front of the doorway.

Countrywide's statement said fewer jobs may be lost if markets improve. Mozilo said he's still adding salespeople.

``Events could change, though it's remote, to make things better than we anticipate,'' Mozilo said. ``Hopefully at the end of the day we won't have to cut as many as we've proposed. There's a potential for a refinance boom if rates come down.''

Dollar Slumped on Negative Payrolls by Yan Xu

The dollar slumped across the after US labor department released an unexpectedly weak employment report. Non-farm payrolls fell 4k in August, the first time decline in 4 years and far off the estimate of a 110k increase.

The negative job number solidified the expectation that the Fed will cut interest rates on its September 18 policy meeting. After the release of the report, the 2-year Treasury note yield fell below 4% for the first time in 2 years and the 10-year note dropped to a 9-month low. Interest-rate futures pricing showed traders added odds on a 50 basis point rate cut on September FOMC to 74% from 42% before the non-farm payrolls.
The euro broke the 1.37 handle and gained sharply to test the 1.38 level against the dollar. The sterling also rallied more than 100 pips to as high as 2.0323 versus the dollar, while the yen strengthened to 113.15 from above 115 versus the dollar.

US economy outlook is uncertain with subprime and credit market problem. Overall sentiment on the greenback is bearish and this also raises risk aversion. The yen becomes the biggest beneficiary as investors unwind carry trades.

EURUSD will face interim resistance at 1.38, followed by 1.3830 and 1.3850. Additional ceilings will emerge at 1.3880, backed by 1.39. Support starts at 1.3750, backed by 1.3730, 1.37 and 1.3670. Subsequent floors are eyed at 1.3650.

GBPUSD encounters interim resistance at 2.03, backed by 2.0330 and 2.0350. Subsequent ceilings will emerge at 2.0380, followed by 2.04 and 2.0430. On the downside, support begins at 2.0250, followed by 2.02 and 2.0170. Additional floors are eyed at 2.0140, backed by 2.01 and 2.0080.

USDJPY encounters interim resistance at 113.50, backed by 113.80 and 114. Subsequent ceilings will emerge at 114.30, followed by 114.50 and 115. On the downside, support begins at 113.20 and 113, followed by 112.80. Additional floors are eyed at 112.50, backed by 112.20 and 112.

How to investigate your Forex Broker

online forex trading is easy.The forex market is the largest market in the world, 1.9 trillion traded daily and unregulated - this last adjective is an often repeated warning, but what does it mean for you, the forex trader? When a forex broker offers guarantees on execution and account safety, can they really back this up?

The Commodity Futures Modernization Act, introduced in 2000 did not extend regulation of the CFTC to cover the spot forex market. However, The NFA offers a free database called BASIC which provides registration and membership information and shows regulatory actions brought against CFTC registrants by the CFTC, NFA or exchanges.

Here are two measures you can use to check into the background of your forex broker:

1. Check that your broker is a registered futures commission merchant. Get the brokers NFA ID and look them up at www.nfa.futures.org/basicnet/ Beware of affiliates.

2. Go to the CFTC website at www.cftc.gov/tm/tmfcm.htm and make sure that the registered FCM has substantial assets. The NFA required minimum is 250,000. However, many experts see this as a modest requirement and would like to see assets of at least 10 million.

To confirm the validity of your forex brokers price feed, cross check the trading platform feeds against eSignal and Reuters.

Slippage, (when you get a worse fill than the price you requested), and requotes (when you enter or exit the market and a different price comes up, leaving you seconds to leave the worse bid or offer) should be rare and only in fast markets. Slippage is already built into the spread

'FDIC insured' and 'segregated accounts' does not necessarily guarantee the safety of your account. Your funds would probably not receive priority in a bankruptcy as demonstrated by the Refco scandal.

Markets Await US Jobs Report by Korman Tam

At 1:00 AM Japan July Leading Indicator (exp n/f, prev 72.7)
Japan July Coincident Indicator (exp n/f, prev 80.0)
At 2:00 AM Germany July Trade Balance (exp 15.5 bln euros, prev 14.9 bln euros)
At 7:00 AM Canada August Unemployment Rate (exp 6.0%, prev 6.0%)
Canada August Jobs-Change (exp 18k, prev 11.3k)
At 8:30 AM US August average earnings (exp 0.3%, prev 0.3%)
US August non-farm payrolls (exp 110k, prev 92.0k)
US August unemployment rate (exp 4.6%, prev 4.6%)
At 10:00 AM US July Wholesale Inventories (exp 0.4%, prev 0.5%)
The major currency pairs traded narrowly in the early Tokyo session, as traders direct their focus to the closely watched US labor report. A key driver in FX movement continues to be sentiment over global central bank decisions, with the ECB and BoE both keeping rates unchanged yesterday.

US economic reports will be closely scrutinized for its potential impact on the upcoming FOMC policy setting meeting on September 18th. Although many are expecting the Fed to cut rates by 25-bp -- lowering the Federal funds rate to 5.0%, the decision is not a foregone conclusion. Comments from Fed board members recently have suggested the FOMC is not ready to move given the outlook for inflation. The recent liquidity injections and reduction in the discount rate have eased credit conditions somewhat and may buy the Fed another month before cutting its benchmark-lending rate.

The key highlight for the session ahead will be the US August jobs report. Consensus forecasts are calling for non-farm payrolls to improve to 110k, up from July at 92k. Average earnings are seen remaining unchanged at 0.3% and the unemployment rate is also expected to stand pat at 4.6%. Firm jobs data could prop the dollar higher against the majors on prospects that improving labor conditions may sway the Fed into remaining unchanged in a few weeks.

Canada will also release jobs data for August, with the unemployment rate unchanged at 6.0% and jobs-change edging up to 18k from 11.3k previously.

The euro maintains its buoyant tone against the dollar, hovering just below 1.37. We anticipate the single currency to continue to creep higher versus the greenback, with resistance starting at 1.37, followed by 1.3750 and 1.38. Additional ceilings are eyed at 1.3850 and 1.39. On the downside, support begins at 1.3620, backed by 1.36 and 1.3550. Subsequent floors will emerge at 1.3520, followed by 1.35 and 1.3460.ok friend enjoy your forex online trading.

Free Signal Today!

GJ 7 september 2007

SELL GJ : 232.75
STOP LOSS : 234.32
TP 1 : 231.97
TP 2 : 230.95
TP 3 : 229.71

Market Unrest Appears Good for Gold ETFs By MATT WHITTAKER

Money continues to flow into exchange-traded funds that focus on gold, despite the pressure that gold markets have at times faced recently as risk-averse investors fret over the impact of the credit crunch on economic growth.

This shows that gold, despite recent volatility as stocks have alternately swooned and rebounded, at its heart remains a safe-haven asset, some analysts said.

Gold ETFs allow investment in the metal without physical delivery, since the ETFs themselves physically buy gold to back outstanding shares. They then sell gold when investors sell shares.

Tradition Holds

"Some traditional attitudes are standing up to financial-market turbulence as investors pump money into gold exchange-traded funds despite volatile [gold] spot prices," said John Reade, head of metals strategy with UBS Investment Bank in a report last week.

Gold held in the world's largest such ETF, StreetTRACKS Gold Shares, have hit a record high of 515.44 metric tons, or 16,571,995 ounces. Those holdings are valued at more than $11 billion. Gold holdings for London-based ETF Securities Ltd. tripled last week to 331,835 ounces as nearly 200,000 ounces of gold were bought in a day.

StreetTRACKS Gold Shares is followed in size by LyxOR Gold Bullion Securities, which has a primary listing in London. The Comex iShares fund comes in third.

On Guard

Investors have been investing in gold ETFs to guard against political, economic and financial concerns, said Carlos Sanchez, precious-metals analyst with CPM Group. The current credit crunch is just the latest iteration of these types of financial concerns.

Holdings in the world's gold ETFs have been increasing across the board, with a combined total 23.6 million ounces as of Aug. 24, up from 20.2 million ounces at the end of last year, Mr. Sanchez said.

But Leonard Kaplan, president of Prospector Asset Management, cautions against looking at gold ETF inventories in a vacuum.

"You don't know how much of their success is due to cannibalizing" of other gold-trading business such as bullion, coin sales, physical demand and shares of gold mining companies, he said. "Just to look at that number alone is totally foolish. The fact that the ETF is rising is not by itself a bullish phenomenon.

"I would take it positively, certainly [but not] wildly so," Mr. Kaplan said.

Not surprisingly, Matthew Graydon, a spokesman for the World Gold Council, which was instrumental in creating the concept for physically backed gold ETFs, was more optimistic.

"Growth in exchange-traded funds is bullish for gold," he said. "We know from research that most of this has been demand from new investors who had not previously invested in gold -- there has been only a small amount of cannibalization from other forms of gold investment," he said.

FX Awaits Data Barrage, CB Meetings by Korman Tam

At 4:30 AM UK July Manufacturing Production m/m (exp 0.2%, prev 0.2%)
UK July Manufacturing Production y/y (exp 1.2%, prev 0.9%)
UK July Industrial Production m/m (exp 0.2%, prev 0.1%)
UK July Industrial Production y/y (exp 1.0%, prev 0.8%)
At 6:00 AM Germany July Industrial Orders m/m (exp –2.5%, prev 4.6%)
At 7:00 AM Bank of England Monetary Policy Decision (exp 5.75%, prev 5.75%)
At 7:45 AM ECB Monetary Policy Decision (exp 4.0%, prev 4.0%)
At 8:30 AM ECB Pres Trichet Press Conference
US Q2 Productivity (exp 2.4%, prev 1.8%)
US Q2 Labor Cost (exp 1.6%, prev 2.1%)
US Weekly Jobless Claims (exp 330k, prev 334k)
US July Building Permits (exp –5.3%, prev –0.4%)
At 10:00 AM US August non-manufacturing ISM (exp 54.8, prev 55.8)
Canada August Ivey PMI

The yen maintains its strength against the majors in early Tokyo trading as persistent worries over the global economic outlook and credit conditions remain. The currency market will derive its direction from a barrage of economic data and central bank decisions on Thursday. Reports from the US continue to reveal further deterioration in the housing market, with traders pondering to what extent the FOMC will allow conditions to worsen before moving to ease the Federal funds rate.

Data slated for release today include US Q2 productivity, labor cost, weekly jobless claims, July building permits and August non-manufacturing ISM. Productivity is expected to improve to 2.4% in Q2, compared with 1.8% from the first quarter. Labor costs in Q2 are seen slipping to 1.6%, down from 2.1% in Q1. Weekly jobless claims are largely unchanged from the previous week, down slightly to 330k versus 334k. Meanwhile, the August non-manufacturing ISM survey is forecast to decline to 54.8 from 55.8 – but remain above the key 50-level, which distinguishes expansion from contraction.

Tata MF, Invesco in offshore fund tie-up

Tata Mutual Fund has tied up with Invesco, a UK-based global investment management house with nearly $500 billion under management, for the former’s new scheme, ‘Indo-Global Infrastructure Fund’ launched today.

The Indo-Global Infrastructure Fund would invest 35 per cent of its money into global infrastructure companies, mainly in other Asian markets.

The remaining amount would be invested in top-notch infrastructure companies listed on the Indian stock markets.

Ved Prakash Chaturvedi, managing director of Tata Mutual Fund explained that the new product will be a feeder fund in which Tata MF will collect money in India and invest in Invesco’s Asia Infrastructure Fund. Invesco, in turn, will invest the funds in various equities across Asia.

The global portfolio for the fund (ex-Asia) will be invested in an ETF (Exchange Traded Fund) called Powershare. Invesco, which has been investing in Asia since 1962, has a strong focus and presence in China.

Some of the Asian stocks which it has invested into are Keppel Corp (Singapore), China Mobile (China), Macquarie Bank (Australia), China Resources and Power (China).

Tata Mutual Fund already has an Infrastructure Fund in India, which has been one of the best performing funds, giving returns of 66.66 per cent.

The new launch is the latest from an Indian fund house after the Reserve Bank of India hiked the total amount that the domestic fund houses can invest in overseas markets to $4 billion with a cap of $200 million per fund house.

The launch follows the relaxation in norms, allowing the fund houses to invest across sectors globally. Earlier, domestic fund houses could invest only in those foreign companies that had at least 10 per cent holdings in their Indian subsidiaries.

Principal PNB, Franklin Templeton, Fidelity, Kotak Mahindra and Sundaram-BNP have launched offshore funds in India, giving the domestic investors an option to diversify their portfolio into other overseas markets.

ICICI-Prudential has also launched an Indo-Asian Equity Fund recently, which is managed by Prudential Asset Management, the foreign partner of the domestic venture.

Tata MF’s alliance with Invesco follows a trend whereby fully-owned Indian mutual funds are tying up with a foreign partner for launching offshore funds in the country.

UTI Mutual Fund, the country’s oldest asset management company, has tied up with US-based Select Street Global Advisory (SSgA) for a ‘Global Navigator Fund’, an offshore fund for the Indian investors.

Similarly, Kotak Mutual Fund joined hands with US-based T Rowe Price for its ‘Kotak Global Emerging Market’.

Yen Gains as Watanabe Spurs Risk Aversion, U.S. Home Sales Fall

By Bo Nielsen
he yen rose versus the 16 most- actively traded currencies after Japan's chief financial regulator said he will monitor credit market losses at the nation's banks and U.S. pending home resales plummeted.

The Japanese currency also gained on speculation investors will pare purchases of higher-yielding assets made with loans in Japan and Switzerland. Global stocks fell as higher lending rates indicated banks are reluctant to lend.

``Markets are still very jittery and they are almost waiting for the next shoe to drop,'' said Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto. ``That's benefiting the yen.''

The yen rose to 115.33 against the dollar at 10:58 a.m. in New York, from 116.33 yesterday. It also climbed to 157.42 per euro from 158.26. The euro gained 0.3 percent to $1.3650.

Yoshimi Watanabe, who was appointed earlier this week, today said he'll watch banks' half-year earnings results for any losses related to U.S. subprime mortgage defaults, prompting investors to dump stocks.

European stocks fell for the first time in six days while Asian shares extended losses. The Standard & Poor's 500 Index declined 1 percent to 1,473.89. Japan's Nikkei 225 Stock Average fell 1.6 percent.

The Organization for Economic Cooperation and Development lowered its forecast for growth in the U.S. this year to 1.9 percent from an estimate of 2.1 percent in May. The Group of Seven industrialized nations, including Germany and Japan, will grow 2.2 percent, slower than an earlier estimate of 2.3 percent.

`More Ominous'

``Downside risks have become more ominous,'' Jean-Philippe Cotis, the OECD's chief economist, said today in Paris.

Japan's currency climbed 1.1 percent against the Australian dollar and 2.1 percent versus New Zealand's dollar, favorites of carry trades.

In a carry trade, the investor makes money by borrowing in a country with low interest rates, such as Japan, converting the money to a currency where interest rates are higher, such as the U.S. or euro countries, and lending the money at that higher rate. The profit comes from the spread between the borrowing and lending rates; the risk is that exchange rates may change.

Interest Rates

Japan's 0.5 percent target lending rate is the lowest among industrialized nations, helping push down the yen against 12 of the 16 major currencies over the past 12 months. The rate compares with 5.25 percent in the U.S., 4 percent in the euro region and 8.25 percent in New Zealand.

The dollar extended its loss versus the yen after a private report showed the number of Americans signing contracts to buy previously owned homes fell in July by the most since records began in 2001, extending a U.S. housing slump that is weighing on credit markets and the economy.

The index of signed purchase agreements, or pending home resales, fell 12.2 percent to 89.9, the lowest since September 2001, after increasing 5 percent in June, the National Association of Realtors said today in Washington. The median estimate of economists polled by Bloomberg News projected a 2.2 percent drop.

``The numbers show that it's not just a financial crisis anymore, but that it's spilling into the real economy in a very material manner,'' said Alan Ruskin, head of international currency strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut. ``We're in for a big slide in the housing market in the months to come. It should be very negative on risk appetite and benefit the yen.''

Canada's Dollar

The Canadian dollar fell 0.2 percent to 95.06 U.S. cents after the Bank of Canada kept its benchmark lending rate unchanged at 4.5 percent and suggested credit market problems may slow domestic demand and exports.

The Reserve Bank of Australia kept its key rate at 6.5 percent today after boosting borrowing costs last month to curb inflation.

``Both central banks were looking to hike rates at this round, but opted to wait and see what will happen with the credit markets,'' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago.

The Bank of England and European Central Bank will leave rates unchanged tomorrow, according to Bloomberg surveys. The U.K.'s benchmark rate is 5.75 percent.

The U.K. central bank acted today to free up England's money markets by allowing an increase in commercial banks' reserves and boosting the amount of money offered at its regular fine-tuning operations.

The Federal Reserve will release a survey at 2 p.m. in Washington, known as the beige book, that may show mortgage defaults and rising financing costs are curbing demand in the world's biggest economy.

`Dollar Remains Weak'

``The dollar still remains weak,'' said Koji Fukaya, senior currency strategist in Tokyo at Deutsche Securities. ``The beige book may show a downside risk with the U.S. economy. The Fed may indicate the correction of housing markets will adversely affect consumer spending.''

Fed Bank of Richmond President Jeffrey Lacker said in an interview with Reuters yesterday he would support a rate cut if financial turmoil led to slower economic growth, while cautioning that the outcome is ``unclear.''

The Fed cut its rate on loans to banks on Aug. 17, saying risks to growth had increased.

Interest-rate futures show a 70 percent chance the Fed will lower its 5.25 percent target rate for overnight loans between banks to 4.75 percent at its Sept. 18 meeting, up from 44 percent a week ago. The odds of a reduction to 5 percent are 30 percent.

Mexican Peso, Local Bonds Decline as Demand for Risk Wanes

By Valerie Rota

Sept. 5 (Bloomberg) -- Mexico's peso weakened the most in a week and local-currency bonds fell on concern a rout in international credit markets will slow global growth and cut demand for exports from emerging-market countries.

The peso's decline followed a drop in global stocks and most developing-nation currencies. Concern losses on securities linked to U.S. subprime mortgages will spread has led investors to trim purchases of riskier assets.

``There is still a lot of risk out there,'' said Christian Stracke, an emerging-market strategist at CreditSights Inc. in London.

The peso weakened 0.5 percent to 11.0867 per dollar at 11:12 a.m. in New York and earlier fell as much as 0.6 percent, the most since Aug. 28.

The yield on the 10 percent security due December 2024 rose 5 basis points, or 0.05 percentage point, to 7.82 percent. The price, which moves inversely to the yield, fell 0.58 centavo to 120.57 centavos per peso, according to Santander Central Hispano SA.

The government's benchmark bond snapped a four-day rally that was fueled by comments from opposition legislators suggesting congress will approve a bill this week to raise the country's tax collection, which would help wean Mexico off its dependence on income from oil exports.

Losses in Mexican assets ``would be worse were it not for progress on the tax bill,'' Stracke said.

President Felipe Calderon is pushing to get the bill approved this week so the government can include changes to the tax code in next's year budget plan. The government has until Sept. 8 to submit its budget bill.

The tax bill may fuel faster inflation should legislators approve a provision to levy a tax on gasoline and diesel, according to Banco UBS Pactual economist Guillermo Aboumrad. Mexico's inflation rate could rise by 0.4 percentage point in 2008, Mexico-City based Aboumrad wrote in a research note today.

Lawmakers from Calderon's party presented to congress this week a plan to tax fuel by 5.5 percent as part of the government's proposal.

Yen Rebounded on Credit Crunch by Yan Xu

The yen advanced against high-yielding currencies, recovering after yesterday¡¯s sharp slide, as several bad news related to credit market raised risk aversion.

An Australia hedge fund, Basis Yield Alpha Fund, collapsed today because of US home loan defaults. New Zealand-based Five Star Consumer Finance Ltd. also filed bankruptcy today. Those negative news added to worries over the subprime and credit market. Large amounts of hedge funds suffered huge losses from securities backed by US home loans.

The Australian dollar fell from 95.70 to as low as 93.67 versus the yen. The dollar was trading in high 115 versus the yen during the US trading session today.

The market was little moved after a bunch of US data came out in line with expectations. US preliminary GDP rose at an annul rate of 4.0% in the second quarter as expected. US weekly jobless claims increased from 322k to 334k, slightly above the estimate of 322k. US PCE rose 4.2% in the second quarter, below the forecast and previous reading of 4.3%. The market tomorrow will focus on the monthly PCE report, Chicago PMI, durable goods orders, and University of Michigan consumer sentiment index.

Fed Chairman Ben Bernanke is scheduled to have a speech on Friday at the Federal Reserve annual symposium in Jackson Hole, Wyoming. In an August 27 letter to New York Senator Charles Schumer, Bernanke said that the central bank is closely monitoring the market and is prepared to act as needed.

The market is waiting for interest rate decisions from several central banks including the European Central Bank, the Reserve Bank of Australia and the Bank of Canada.

EURUSD will face interim resistance at 1.3650, followed by 1.3680 and 1.37. Additional ceilings will emerge at 1.3730, backed by 1.3750. Support starts at 1.36, backed by 1.3570, 1.3550 and 1.3520. Subsequent floors are eyed at 1.35.

GBPUSD encounters interim resistance at 2.0130, backed by 2.0150 and 2.0180. Subsequent ceilings will emerge at 2.02, followed by 2.0230 and 2.0350. On the downside, support begins at 2.01, followed by 2.0080 and 2.0050. Additional floors are eyed at 2.0020, backed by 2.0000 and 1.9970.

USDJPY encounters interim resistance at 116, backed by 116.20 and 116.50. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.50 and 115.20, followed by 115. Additional floors are eyed at 114.80, backed by 114.50 and 114.20.

Yen Dropped as US Stocks Rose by Yan Xu

The yen dropped versus high-yielding currencies as US stocks rose with boost from technology sector.

The S&P 500 index climbed more than 1 percent, and the Dow Jones industrial average gained more than 100 points. Strong US equities performance today helped investors pick up confidence in carry trades. The dollar edged up to 116.40 versus the yen, while the sterling rallied 250 pips against the yen.

US August manufacturing ISM fell from 53.8 to 52.9 in August as expected. A reading above 50 indicates an expansion in manufacturing sector, raising speculations that the nation¡¯s economic growth is more likely to slow down gradually rather than deteriorating.

Euro zone July PPI came out at 1.8% in July, down from 2.3% in the previous month but above the estimate of 1.7%. The region¡¯s GDP rose at a quarterly rate of 0.3% in the second quarter, down from the previous reading of 0.7%.

Before the financial market turmoil recently, the ECB was widely expected to raise rates on this Thursday¡¯s policy meeting after raising interest rates from 3.75% to 4.0% in June.

EURUSD will face interim resistance at 1.3650, followed by 1.3680 and 1.37. Additional ceilings will emerge at 1.3730, backed by 1.3750. Support starts at 1.36, backed by 1.3570, 1.3550 and 1.3520. Subsequent floors are eyed at 1.35.

GBPUSD encounters interim resistance at 2.0150, backed by 2.0180 and 2.02. Subsequent ceilings will emerge at 2.0230, followed by 2.0250 and 2.0280. On the downside, support begins at 2.01, followed by 2.0070 and 2.0050. Additional floors are eyed at 2.0020, backed by 2 and 1.9980.

USDJPY encounters interim resistance at 116.50, backed by 116.80 and 117. Subsequent ceilings will emerge at 117.30, followed by 117.50 and 118. On the downside, support begins at 116 and 115.80, followed by 115.50. Additional floors are eyed at 115.30, backed by 115 and 114.80.

Australia's central bank leaves cash target rate at 6.50 percent

SYDNEY (Thomson Financial) - The Reserve Bank of Australia (RBA) said Wednesday its board decided to leave the cash target rate at 6.50 percent after Tuesday's monthly policy meeting.

Economists had expected no change in the rate this month but believe the central bank stands ready to hike rates further once federal elections are over. The RBA raised the rate by 25 basis

points last month to help contain inflation.

Economists believe the RBA's decision to leave monetary policy steady was partly due to the

recent financial market instability which reduced liquidity in credit markets.

The Federal Government is yet to call an election but Prime Minister John Howard said this week that elections will be held well before Christmas. Political analysts are tipping Oct 27 as the most likely election day.

The central bank is likely to remain on hold for the remainder of the year unless third-quarter

consumer inflation data, due on Oct 24, reads on the high side, said NAB Capital Markets chief economist Rob Henderson

Henderson said Tuesday's release of second-quarter gross domestic product data, showing that Australia's economy grew by a brisk 4.3 percent from a year earlier, suggests that the RBA will maintain a tightening bias.

He said continuing strong economic growth, which could fuel inflationary pressures, means the odds of another rate hike ahead have gone up with NAB Capital Markets putting them at 40 percent plus.

After the second-quarter GDP data was out, the market priced in around a 60 percent chance of a 25 basis point rate hike at the RBA's February 2008 meeting.

Yen Rallied after Bernanke, Bush Speeches by Yan Xu

The yen rallied broadly after Fed Chairman Ben Bernanke and US President George W. bush gave separate speeches with regard to recent credit crunch.

On the central bank’s annual symposium in Wyoming, Bernanke said market turmoil can hit many outside the markets and the Fed policy must take into account. He reiterated that the central bank will act as needed to protect the economy, leaving the door open for an interest rate cut in September. The market is divided on whether the Fed may cut interest rates from 5.25% on its monetary policy meeting on September 18. The dollar gained versus the euro and yen after Bernanke said it’s not the Fed’s job to protect investors from their own financial decision.

Later, Bush gave a speech on how to help homeowners struggling to pay their mortgages. He said there have admittedly been excesses in mortgage supplies. He said new foreclosure avoidance initiative will help avoid repeat of current situation. Also,he is asking Congress for a temporary change in tax code to prevent people from being penalized when they refinance subprime mortgages. However, like Bernanke, he said government’s job is not to bail out speculators. He said the economy is strong enough to withstand any turbulence and recent subprime issues are modest in relationship to the size of the economy.

Since all eyes were on Bernanke and Bush’s speeches today, the market was little moved after a bunch of US data. US PCE deflator for July maintained a growth rate of 0.1% in July, below the estimate of 0.2%. US personal income rose 0.5% and personal spending was up 0.4%. Chicago PMI changed from 53.4 to 53.8 in August. University of Michigan consumer confidence index fell from 90.4 to 83.4 in July, above the forecast of 82.7.

Besides, the Canadian dollar strengthened after a government report showed the second quarter GDP expanded at an annual rate of 3.4%, beating the consensus forecast of 2.8%.

EURUSD will face interim resistance at 1.3650, followed by 1.3680 and 1.37. Additional ceilings will emerge at 1.3730, backed by 1.3750. Support starts at 1.36, backed by 1.3570, 1.3550 and 1.3520. Subsequent floors are eyed at 1.35.

GBPUSD encounters interim resistance at 2.0180, backed by 2.02 and 2.0230. Subsequent ceilings will emerge at 2.0250, followed by 2.0280 and 2.03. On the downside, support begins at 2.0150, followed by 2.0120 and 2.01. Additional floors are eyed at 2.0080, backed by 2.0050 and 2.0020.

USDJPY encounters interim resistance at 116, backed by 116.20 and 116.50. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.50 and 115.20, followed by 115. Additional floors are eyed at 114.80, backed by 114.50 and 114.20.

FX Quiet on Labor Day by Yan Xu

Markets remain rangebound as US markets were closed on Monday for the Labor Day.

The sterling gained against the dollar after a report showed UK manufacturing PMI index rose from 55.9 to reach a three-year peak at 56.3 in August, reinforcing the fact that the UK economy grows steadily.

Besides, the euro zone manufacturing PMI index dropped slightly from 54.9 in July to 54.3 in August, beating the estimate of 54.2 though.

The Bank of England and the European Central Bank are separately scheduled to release interest rates decisions on Thursday. Following recent financial market turmoil, both of the banks are expected to keep interest rates on hold for now. ECB Chairman Trichet¡¯s post-meeting comments will be scrutinized for any clue as to whether the bank will raise rates by the year-end.

Tomorrow will see US August manufacturing ISM(exp 53.0, prev 53.8) and several reports from the euro zone including July PPI(exp 1.7%, prev 2.3% y/y; exp 0.1%, prev 0.1% m/m) and Q2 GDP (exp 0.3%, prev 0.7% q/q; exp 2.5%, prev 3.1% y/y).

EURUSD will face interim resistance at 1.3650, followed by 1.3680 and 1.37. Additional ceilings will emerge at 1.3730, backed by 1.3750. Support starts at 1.36, backed by 1.3570, 1.3550 and 1.3520. Subsequent floors are eyed at 1.35.

GBPUSD encounters interim resistance at 2.02, backed by 2.0220 and 2.0250. Subsequent ceilings will emerge at 2.0280, followed by 2.03 and 2.0330. On the downside, support begins at 2.0170, followed by 2.0140 and 2.01. Additional floors are eyed at 2.0080, backed by 2.0050 and 2.0020.

USDJPY encounters interim resistance at 116, backed by 116.20 and 116.50. Subsequent ceilings will emerge at 116.50, followed by 116.80 and 117. On the downside, support begins at 115.80 and 115.50, followed by 115.20. Additional floors are eyed at 115, backed by 114.80 and 114.50.

Forex Research - USD/JPY Chart Points

USD/YEN Chart Points

Resistance:

117.15 (Aug 23 high)

116.76 (Aug 27 high)

116.62 (Aug 31 high)

116.14 (Sept 3 high)

116.00 (intra-day high)

115.33 (intra-day low)

115.21 (Aug 30 low)

115.00 (pivotal level)

113.86 (Aug 29 low)

113.72 (61.8% of 111.60-117.15)

113.68 (Aug 20 low)

111.60 (key Aug 17 low)

Support:

Comments: $/yen extending its pivot of 116 to 5 days in a row and while this “big figure” is not a pivotal level, the price action reflects the current uncertainty in the market. This has allowed the 20 day mva to come within the current range and a firm move above it would be needed to put the downtrend at risk but only a break of 117.15 would confirm. Note, $/yen has traded below its 20 day mva since breaking through it on July 10. With that said, risk is on the downside (i.e. market bias to sell upticks) while below it but contained as long as 115+ trades.

Euroshares off lows midday as Deutsche Bank, other financials gain

LONDON (Thomson Financial) - Europe's leading exchanges were off earlier lows midday as strong gains by a handful of heavyweight banking stocks offset losses by oil and utility plays.

At 11.43 am, the Dow Jones STOXX 50 was down 1.28 points at 3770.04 and the STOXX 600 was down 0.46 points or 0.12 pct 376.52.

Spread bettors, IG Index, said the Dow looks set to fall 40 points as it re-opens after the Labor Day holiday yesterday, with investors looking ahead to a key manufacturing report and construction data to help provide direction.

Deutsche Bank jumped 2.53 ahead after reassuring comments by its chief executive Josef Ackermann. He said the company is not exposed to further deterioration of the US sub-prime loan market, putting pay to recent rumours that the banking group would announce a higher exposure than previously stated.

Societe Generale added 2.24 pct after Merrill Lynch upped its stance to 'buy' from 'neutral'. KBC added 1.13 pct as it was also upgraded to 'buy' by the US broker.

Merrill Lynch also downgraded Lloyds TSB, down 0.37 pct, to 'neutral' from 'buy'.

Elsewhere, among financials, Swiss Life added 0.69 pct after the group reported a stronger than expected set of interims and said it expects to achieve its 2008 profit target a year early.

Standard Life was also higher after its numbers beat expectations and after recent underperformance. Shares added 0.16 pct.

Brit Insurance, though, fell 3.46 pct after the Lloyds insurer and re-insurer warned that second half profits may not be as good as those posted in the first half.

Elsewhere, Repsol moved 0.83 pct lower following news late yesterday that Algerian state oil company Sonatrach dismissed Repsol and Gas Natural from a 5 bln eur project to develop natural gas in the country.

Analysts said the project was key for Repsol to diversify its assets outside Argentina and to guarantee future reserves.

They noted however that it should not have an impact on the company's earnings in the short run.

"Our initial concern was about Repsol's reserves, but all considering, the stock isn't performing too badly. Analysts now seem to think that the impact is going to be limited," a trader at a leading international investment bank said.

Gas Natural slipped 1.81 pct. "Gas Natural is getting punished, however, as we still don't have much information on the longer-term impact for them," one trader noted.

Peers Suez and Gaz de France added to yesterday's losses amid ongoing investor concern about the likely timing and final pricing of their planned merger.

Analysts continue to welcome the deal and expressed some surprise at the selling pressure on the shares.

"We maintain our view that this is a positive deal that is likely to close sooner rather than later," analysts at UBS said, in a note.

Dexia raised its stance on Suez to 'buy' from 'neutral' noting, that given the merger's parity, "Suez shares would deserve to trade at 40.88 eur versus yesterday's close of 40.36".

Natixis analysts on the other hand downgraded their recommendation to 'add' from 'buy', to reflect the evaporation of the speculative interest which had driven gains prior to the merger announcement.

PSA Peugeot Citroen shed 1.33 pct as investors suggested the group's targets -- announced this morning -- may be too ambitious.

"Peugeot's margin targets are based on extraordinarily optimistic assumptions about European sales growth, emerging markets expansion, and cost reductions," UBS said.

In further M&A news, Valeo and Leoni were in focus after revealing that they were in talks about a potential sale of Valeo's wiring business Valeo Connective Systems to Leoni.

"This is an excellent deal, as Leoni is finally gaining access to French automotives, namely PSA and Renault," said Sal Oppenheim in a note.

Shares in Leoni were 3.85 pct higher while Valeo added 1.86 pct.

Nestle slipped 0.67 pct following news it plans to take over water bottling group, Henniez.

Lindt & Spruengli was 0.55 pct lower after reports it is planning to bid for Godiva.

In the staffing sector, Hays down 3.6 pct amid reports Dresdner Kleinwotrt placed 17 mln shares in the UK group and as traders say the group's management issued cautious noised on its conference call. The news overshadowed better than expected numbers from the group this morning.

Randstad was 1.02 pct lower and USG People and Vedior fell 1.54 pct and 0.48 pct respectively after data showed a slowdown in Dutch staffing market sales.

Oil prices lower in Asian trade as hurricane seen to bypass US refineries

SINGAPORE (Thomson Financial) - Oil prices were lower in Singapore morning trade Tuesday as Hurricane Felix looked to bypass US refineries.

At 10:36 am (0236 GMT) New York's main contract, light sweet crude for October delivery, was three cents lower at 74.01 US dollars a barrel.

Brent North Sea crude for October delivery was down 25 cents at 73.16 dollars.

Felix was not expected to track towards US oil refineries but the category five storm is a reminder to traders that September is the peak month of the Atlantic hurricane season.

"I think Felix is in the neighbourhood but it doesn't look like it will really affect US oil production in the Gulf of Mexico," said Victor Shum, a Singapore-based analyst with Purvin and Gertz energy consultancy.

"Felix is a reminder that we have just entered the peak month for the Atlantic hurricane season," he said.

Felix became the second hurricane of the Atlantic storm season on Saturday and by Monday, authorities in Honduras and Nicaragua urged coastal residents to flee for their lives as Felix headed toward central America at a potentially devastating maximum intensity.

Last month Hurricane Dean forced Mexican state-owned oil company Pemex to shut down its oil output of approximately 2.7 million barrels per day.

The oil market is also waiting the outcome of the OPEC meeting on September 11.

Twenty-one out of 23 analysts polled by Thomson Financial said the cartel was likely to keep production levels unchanged at the meeting on worries that volatility in equity markets might crimp oil demand.

At its last regular meeting in March, OPEC decided to keep its official production quota at 25.8 million barrels of oil per day.

Malaysia July trade surplus narrows to 7.97 bln rgt vs 9.04 bln as imports surge

KUALA LUMPUR (Thomson Financial) - Malaysia recorded a smaller trade surplus of 7.975 billion ringgit in July against 9.036 billion a year earlier as imports rose faster while exports showed a marginal decline, the Statistics Department said Tuesday.

The trade surplus in June was revised to 8.781 billion ringgit compared to 8.697 billion reported earlier.

Total trade in July amounted to 93.056 billion ringgit, up 1.1 percent from the previous year.

In a statement, the department said exports in July slipped to 50.516 billion ringgit from 50.525 billion a year earlier but were up 2.7 percent from June.

"The increase (from June) was mainly attributed to palm oil, liquefied natural gas, crude petroleum, as well as electrical and electronic products," it said.

Malaysia is a net exporter of oil and gas and is the world's leading palm oil producer.

Exports to the US, Malaysia's single largest trading partner, grew 1.5 percent from the previous month to 7.62 billion ringgit, supported by higher exports of refined petroleum products and palm oi.

Imports in July rose 2.5 percent from a year ago to 42.54 billion ringgit and were up 5.3 percent from June.

For the first seven months, Malaysia's total trade rose 2.1 percent from a year earlier to 615.634 billion ringgit. Exports in the period rose to 333.645 billion ringgit from 330.4 billion previously, while imports expanded 3.4 percent to 281.988 billion ringgit.

The trade surplus for the seven months to July stood at 51.656 billion ringgit, it said.

(1 US dollar = 3.50 ringgit)

China shares slightly higher in early trade; airlines remain strong

China shares were slightly higher in early trade with airlines continuing to rise amid optimism over foreign investment in the sector, dealers said.

At 9:42 am, the benchmark Shanghai Composite Index rose 7.18 points or 0.14 pct to 5,328.24, after opening up 12.35 points.

China Eastern Airlines Corp (SHA 600115; HK 0670; NYSE CEA) soared 1.06 yuan or by the 10 pct daily limit to 11.62. It rose 10 pct yesterday after announcing over the weekend that it has agreed to sell a combined 24 pct stake to Singapore Airlines and Singapore government investment arm Temasek for 7.2 bln hkd.

Shanghai Airlines Co Ltd (SHA 600591) added 1.18 yuan to 16.50, while Air China Ltd (SHA 601111) rose 1.39 yuan to 22.50.

Forex - US dollar mixed in early Sydney trade ahead of US markets reopening

SYDNEY (Thomson Financial) - The US dollar was mixed in directionless trade Tuesday morning as currency markets remained subdued after the Labor Day holiday in the US.

The markets remain split over the pace of US rate cuts and their subsequent impact on global risk appetite following Federal Reserve chairman Ben Bernanke's vow on Friday to do what is necessary to protect the US economy from the credit crunch.

At 10.15 am (0015 GMT) the US dollar was quoted at 115.74 yen, down from 115.84 yen in late European trade Monday, while the euro was quoted at 1.3616 dollars, down from 1.3631.

Markets are also awaiting interest rate decisions this week from central banks, including the European Central Bank (ECB) and the Bank of England on Thursday. Both are expected to keep rates steady, while the Reserve Bank of Australia is expected to leave its cash target rate unchanged on Wednesday.

NAB Capital Markets currency strategists said with little impetus from US markets, the euro is struggling to trade above 1.3650 dollars now that the ECB is expected to leave rates unchanged at 4.00 percent on Thursday.

The strategists said the euro could test 1.3600 dollars, while stops have been reported below 1.3590 dollars.

"We expect the ECB will delay its well flagged rate hike until at least October, but hawkish comments from president Trichet at the accompanying press conference should limit any potential selling pressure on the euro," NAB Capital Markets analysts said in a note.

Trichet's likely use of the code-words "strong vigilance" will remind market participants that the ECB still has a tightening bias, said analysts.

"Barring further turmoil in the banking sector we expect a rate hike at the meeting on Oct 4," the note said..

John Noonan at Thomson IFR said trading lacks momentum due to the closure of US markets, keeping currencies range bound.

Noonan said Tuesday's release in the US of the August ISM manufacturing survey will be the next trigger for the dollar, though Friday's release of the August non-farm payrolls data will be more keenly watched.

Both sets of data are considered important in determining whether the Fed will cut its federal funds overnight rate after the Sept 18 policy meeting, as they cover the period when the subprime mortgage crisis began to have a wider impact, threatening the US economy.

On Friday, Bernanke said policymakers will pay especially close attention to the "timeliest indicators" as well as information gleaned from businesses and banks around the country.

Sydney 10.15 am (0015 GMT)

US dollar

115.74 yen

1.2086 sfr

Euro

1.3616 usd

157.57 yen

1.6457 sfr

0.6749 stg

Sterling

2.0171 usd

233.44 yen

2.4379 sfr

Australian dollar

0.8207 usd

0.4068 stg

95.020 yen

New Zealand dollar

0.7006 usd

Japan MoF sets coupon on 10-year bonds at 1.7 percent

TOKYO (Thomson Financial) - Japan's Ministry of Finance said it has set a coupon of 1.7 percent on 1.9 trillion yen worth of 10-year government bonds it will auction Tuesday, lower than the 1.8 percent coupon given at the previous auction of 10-year debt last month.

Designated as No 288 issue, the bonds will be issued on Sept 20 and will mature on Sept 20,

2017, the ministry said.

At the previous 10-year debt auction on Aug 2, the lowest accepted price was 99.87 yen, giving a yield of 1.815 percent, with a bid-to-cover ratio of 2.65 to one.

The results of the auction will be announced at 12.45 pm (0345 GMT).

(1 US dollar = 115.90 yen)

US Economy Grows At Fastest Pace In A Year

The U.S. economy surged in the spring, rising faster than first thought, but analysts see the housing slump bogging down growth in the second half of 2007.

Gross domestic product rose at a seasonally adjusted 4.0% annual rate in the second quarter, the Commerce Department said Thursday. Originally, Commerce had estimated growth at 3.4% for the April-through-June period. Stronger business spending and overseas sales led to the upward revision to GDP, the measure of all goods and services produced in the economy. "The government revised its estimate of second-quarter growth and the statisticians managed to find a lot more growth," said Joel Naroff, who runs an economic consulting firm. "Much of it came from an even-better reduction in the trade deficit than first estimated and also in capital expenditures." The new, revised estimate of 4.0% GDP growth was much more robust than the first quarter's listless 0.6% pace and marked the strongest quarterly rate of growth since 4.8% during the first three months of 2006. But the troubles in the housing sector, which spilled into Wall Street this month and sent the stock market reeling, will haunt the economy through the rest of the year, analysts said. "Housing activity is going to weaken significantly further, and consumer spending is soggy," MFR Inc. analyst Joshua Shapiro wrote in a note to clients. "Real GDP growth in Q3 is thus likely to be well below that of Q2, with something on the order of 2.5% now looking to be a reasonable bet. A further slowdown is likely in Q4 as housing continues to bite and output growth slows in line with final demand." Housing is a component of GDP called residential fixed investment. It tumbled by 11.6% in the second quarter, the government said Thursday, a drop bigger than the previously reported 9.3% plunge.

Mortgage Market Woes May Eventually Restrain Consumer Spending

After years of climbing home sales, the housing sector turned. Builders who had broke ground on projects at an ever-rising rate as they watched mounting home prices grew cautious after demand topped out and started receding - a grim trend that left a burgeoning glut of supply of unsold homes. Fears of tightening credit is making a bad situation worse. The slump in housing has sucked growth out of the economy for six straight quarters. The sector's problems seemed to be improving slowly - the second-quarter decline in the housing component of GDP wasn't as sharp as the 16.3% fall in the first quarter, 17.2% in the fourth quarter of 2006 and 20.4% in the third quarter of last year. "Things were well on their way toward a stabilization by mid-2008 before the mortgage credit crunch intervened this summer," RBS Greenwich Capital Markets chief economist Stephen Stanley said. "Now, we may see ongoing declines of 10% or more through year-end and a slower climb back toward zero next year. The second and ultimately most important question mark for growth is whether consumer spending will finally succumb to the housing mess." Consumer spending is the big engine of the U.S. economy. It makes up 70% of GDP. Spending advanced by 1.4% in the second quarter, Commerce data showed. That's up a bit from a previously reported 1.3% increase for the quarter yet far below the first quarter's 3.7% climb. "The tightening mortgage market will send housing construction down even further, while tighter credit conditions and falling house prices will restrain consumer spending," Global Insight chief U.S. economist Nigel Gault wrote in a note to clients. "We expect (GDP) growth in the 1.5%-2.0% range from the fourth quarter of 2007 to the second quarter of 2008." While second-quarter consumer spending growth slowed and housing tumbled, other components of GDP advanced. Thursday's data showed businesses increased inventories in the second quarter by $5.4 billion, adding 0.21 percentage point to GDP. Originally, Commerce estimated a $3.6 billion increase, a contribution of 0.15 percentage point to GDP. Businesses increased inventories by $100 million in the first quarter. Trade gave the economy a bigger push than first estimated - because U.S. exports were revised up, rising by a rate of 7.6% instead of the originally reported 6.4%. Imports fell 3.2%; originally, the decrease was seen at 2.6%. The revised data showed trade added 1.42 percentage points to GDP in the second quarter. Originally, trade was seen contributing just 1.18 percentage points to GDP. Trade had reduced GDP by 0.51 percentage point in the first quarter. U.S. businesses elevated spending in the second quarter more than previously thought. Outlays rose by 11.1% in April through June; originally, spending was estimated rising 8.1%. Business spending climbed just 2.1% in the first quarter. Second-quarter investment in structures by business surged by 27.7%. Equipment and software increased 4.3%.

Fed Is Still Concerned About Inflation

Price inflation gauges contained in the second-quarter GDP data were revised slightly lower by the government, Thursday's report showed. The price index for personal consumption excluding food and energy rose 1.3%, below the previously estimated 1.4% advance. The 1.3% rate was lower than the first quarter's 2.4% increase. "Inflation receded, with the core personal consumption deflator advancing by only 1.3%, revised down from 1.4%," Global Insight's Gault said. "But the year-on-year gain remains at 2.0%, at the upper end of the Fed's comfort zone." The Federal Reserve is concerned about inflationary pressures, according to a statement released Aug. 7, when bankers met on monetary policy. But financial market turmoil fed by anxieties about credit and the subprime loan crisis led the Fed to slice its discount interest rate 10 days later. Wall Street is hoping for a subsequent cut in the Fed's target funds rate. Ben Bernanke, the Fed chief, is scheduled to talk about housing and monetary policy at an economic conference Friday in Wyoming. The Commerce Department data Thursday showed corporate profits strengthened in the second quarter. Profits after taxes grew by 5.4% to $1.154 trillion, after rising by 1.5% in the first quarter. Year over year, profits increased 3.5%. A separate report Thursday showed the number of U.S. workers filing new claims for jobless benefits jumped last week. Jobless claims rose 9,000 to 334,000 on a seasonally adjusted basis in the week ended Aug. 25, the Labor Department said. "Initial jobless claims increased for the fifth straight week in the period ended August 25, rising by 9,000 to 334,000, the highest level since mid-April," RBS Greenwich Capital Markets analyst Omair Sharif said. "Given that there were no special factors in the latest period, it seems that the surge in layoffs in the mortgage industry may be starting to filter through to the data."

BOJ Highly Likely To Hike Rates By Year-end

The Bank of Japan is highly likely to raise interest rates again by the end of the year, and in doing so probably won't face any resistance from Prime Minister Shinzo Abe's new Cabinet, former economy minister Heizo Takenaka said.

But pushing rates higher could endanger Japan's economy and knock back further the government's goal of conquering deflation, Takenaka told Dow Jones Newswires in a recent interview. If Abe's government wants to prevent monetary policy missteps from prolonging deflation, it should change the BOJ Law so that the central bank will make reviving inflation its top priority, not lifting Japan's low rates back to normal levels, said Takenaka, key architect of former Prime Minister Junichiro Koizumi's drastic economic reforms. Takenaka's comments came after Abe earlier this week reshuffled his Cabinet to shore up the government's falling public approval ratings. Because the new Cabinet contains fewer opponents of rate increases than the previous one, analysts speculate that, while the BOJ gave up on tightening policy this month amid global market turmoil, it may become more inclined to bolster rates in the future. The Cabinet lineup "basically is friendly to bureaucrats," Takenaka said, pointing to new Chief Cabinet Secretary Kaoru Yosano, who is known for having close ties with the Ministry of Finance. "And the BOJ, in a sense, is part of the bureaucracy." Based on his observation that the BOJ is putting policy normalization over economic growth, "I think (the bank) is 100% certain" to push short-term rates to 0.75% from the current 0.50% by the end of the year, Takenaka said. Yet, "it's clear that the BOJ shouldn't do that," Takenaka said. "Bringing rates higher while letting deflation continue may satisfy (the bank's goal of) monetary normalization but could put the economy in harm's way." "If the BOJ takes any irrational steps, it would put off by a couple of years" the ending of deflation, he said.

BOJ Responsible For Failure To Beat Deflation Last FY

The central bank's moves last year to scrap its crisis-era policy of flooding the banking sector with cash and anchoring rates around zero have been the sole cause of the government's failure to meet its official goal of beating deflation in the fiscal year ended in March, he said. "There are absolutely no other reasons than that," Takenaka said. "Why is Japan still in deflation even though its real economy is this good and crude oil prices are rising? That's because money (supply) isn't rising here." "If (the BOJ) had done what it was supposed to, Japan would have escaped from deflation in fiscal 2006," he said. "The BOJ is just like the Ministry of Finance in 1997. The MOF back then brushed aside the economy and tried to normalize fiscal conditions, and their attempts ended up in a big failure. The same thing is gradually happening here." Takenaka urged the government to change the current legal framework that he said is too vague on what the BOJ should aim at and thereby is giving the bank too much latitude in handling monetary policy. "If the BOJ doesn't commit itself (to fighting against deflation), the government would better change the Bank of Japan Law and establish a framework of policy goals" for the bank to follow, he said. "Things would be better off if the government changes the BOJ Law." The second clause of the law, which guarantees the bank's independence and defines its tasks, says monetary policy "should be aimed at, through the pursuit of price stability, contributing to the sound development" of Japan's economy. But critics say the language is too broad and opaque if not meaningless. Commenting on who should succeed BOJ Gov. Toshihiko Fukui when the governor's term runs out in March, Takenaka said, rather sarcastically, that it can be "just an ordinary person who understands economy and finance." Takenaka said he hasn't been asked by Abe or any other government officials for recommendations. Takenaka served as state minister of economic and fiscal policy from 2001 to 2005, playing a major role in privatizing Japan's mammoth postal services - Koizumi's pet project - and prompting the nation's banks to get rid of bad loans that had long crippled Japanese growth. From late 2005, he worked as internal affairs minister before he retired from politics last autumn. Takenaka became an upper-house lawmaker in 2004 on the ruling Liberal Democratic Party's ticket. He is currently a professor at Keio University in Japan.

Forex Money Management

By FX Master

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.

It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.

There are different money management strategies. They all aim at preserving your balance from high risk exposure.

First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.

If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$

It's important to understand what's meant by core equity since your money management will depend on this equity.

We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Money management strategy

Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3%

1% risk of a 100,000$ account = 1,000$

You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.

If you are a short term trader and you place your stop loss 50 pips below/above your entry point .
50 pips = 1,000$
1 pips = 20$

The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 10,000$ = 10% of your balance.

If you are a long term trader and you place your stop loss 200 pips below/above your entry point.
200 pips = 1,000$
1 pip = 5$

The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 2,500$ = 2.5% of your balance.

This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions.

Diversification

Trading one currnecy pair will generate few entry signals. It would be better to diversify your trades between several currencies. If you have 100,000$ balance and you have open position with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you should calculate 1% risk of your core equity not of your starting balance!. Itmeans that the second trade risk should never be more than 900$. If you want to enter a 3rd position and your core equity is 80,000$ then the risk per 3rd trade should not exceed 800$

It's important that you diversify your prders between currencies that have low correlation.

For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then your risk is 6% since the trades will tend to end in same direction.

If you want to trade both EUR/USD and GBP/USD and your standard position size from your money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$ GBP/USD. In this way,you will be risking 0.5% on each position.

The Martingale and anti-martingale strategy

It's very important to understand these 2 strategies.

-Martingale rule = increasing your risk when losing !

This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc

This strategy assumes that after 4 or 5 losing trades,your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example,if a trader started with a abalance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase ths size of his position 4 times to recover his loss. If he lose,his balance will be 2,000$!! He will never recover from 2,000$ to his startiing balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.

-Anti-martingale rule = increase your risk when winning& decrease your risk when losing

It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$

Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$

High return strategy

This strategy is for traders looking for higher return and still preserving their starting balance.

According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern:

1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)

In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit.

Disclaimer: Trading any financial market involves risk. This course and the website www.fxmaster.net and its contents is neither a solicitation nor an offer to Buy/Sell any financial market. The contents of this course are for general information purposes only. The information provided in this course is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or which would subject us to any registration requirement within such jurisdiction or country. We reserve the right to change these terms and conditions without notice.

Be Careful, Someone Wants Your Money

The United States Commodity Futures Trading Commission (“CFTC”) warns consumers to take special care to protect themselves from the many types of commodities fraud being perpetrated in today’s financial markets. The CFTC is the federal agency that regulates commodity futures and options markets in the United States. We have seen a great increase in the number of scams that falsely promise high profits with low risks. Many of these scams are targeted at ethnic communities in their language, from New York to South Florida and from the Southwest to California, among other areas.

The public should be wary of any firm that offers to sell commodities or commodity futures or options. They might be selling precious metals, such as silver or gold, or on foreign currency, such as Euros, Yen or Deutschmarks. They might be selling futures or options on precious metals or foreign currency, or on other commodities such as crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans, or cattle. The firm might be offering to manage your money for you to trade in commodity futures or options, or to pool your money with other customers. If a firm offers any of these investments, and promises high profits and low risks, or claims that they have made profits for all of their customers, you should not believe them without proof. The commodities and futures markets are very risky, and you can lose your entire investment very quickly. Anyone who claims otherwise might be breaking the law.

Foreign currency trading scams often attract customers through advertisements in local newspapers, radio promotions or attractive Internet sites. These advertisements may tout high-return, low-risk investment opportunities in foreign currency trading, or even highly-paid currency-trading employment opportunities. The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks, or that employment as a currency trader will make you wealthy quickly. Precious metals scams often work the same way.

Commodity pool operators often solicit investments from friends, neighbors, co-workers and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, the investment schemes turn out to be fraudulent, and investors lose their entire investment, in many cases as a result of outright theft. Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate “Ponzi” schemes in which little or none of the money sent in by investors is ever invested as promised – in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony “profits" to
earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors. Be wary of such payouts if you do not fully understand the source of any purported profits.

Introducing Brokers often use advertisements on radio and television, as well as infomercials – program-length television commercials – to promote commodity futures and options. These advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events create an opportunity to make big money by trading in commodity futures and options. The advertisements and infomercials promise quick riches – such as turning $5,000 into $20,000 in just a few months – with predetermined risk. The CFTC has brought actions against wrongdoers who lured customers by claims that one could earn large profits with little risk based on predictable seasonal demands, published reports, or well-known current events.

Japanese Candlesticks

In the 1700s a Japanese man named Homma, a trader in the futures market, developed a method of technical analysis to analyze the price of rice contracts known as candlestick charting. Candlestick charts display the high, low, open, and close for a security each day over a specified period of time, in a format similar to a bar chart, but in a manner that extenuates the relationship between the opening and closing prices. A narrow line (shadow or wick) shows the day's price range. A wider body marks the area between the open and the close, referred to as real body. If the close is above the open, the body is white or green (not filled); if the close is below the open, the body is black or red (filled). Steve Nison is credited with popularizing candlestick charting in the west and is seen as a leading expert on their interpretation.

Bullish Reversal Candlestick Patterns

A reversal pattern is one that indicates possible change in trend direction. Market trend must be bearish leading into the bullish reversal formation.

Long White Body, Hammer, Inverted Hammer, Bullish Belt Hold, Engulfing Pattern, Harami, Harami Cross, Piercing Line, Evening Doji Star, Meeting Lines, Three White Soldiers, Morning Star, Morning Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Up, Three Outside Up, Kicking, Unique Three Rivers Bottom, Three Stars in the South, Concealing Baby Swallow, Stick Sandwich, Homing Pidgeon, Ladder Bottom, Matching Low, Marubozu

Bullish Continuation Candlestick Patterns

Continuation patterns appear in the middle of an existing trend and suggest that the trend will resume once the pattern is complete.

Separating Lines, Rising Three Methods, Upside Tasuki Gap, Side by Side White Lines, Three Line Strike, Upside Gap Three Methods, On Neck Line, In Neck Line, Marubozu

Bearish Reversal Candlestick Patterns

Long Black Body, Hanging Man, Shooting Star, Belt Hold, Engulfing Pattern, Harami, Harami Cross, Dark Cloud Cover, Doji Star, Meeting Lines, Three Black Crows, Evening Star, Evening Doji Star, Abandoned Baby, Tri-Star, Breakaway, Three Inside Down, Kicking, Ladder Top, Matching High, Upside Gap Two Crows, Upside Gap Three Crows, Deliberation, Advance Block, Two Crows, Three Buddha Top, Three Mountains Top, Tweezer Top, Marubozu

Bearish Continuation Candlestick Patterns

Separating Lines, Falling Three Methods, Downside Tasuki Gap, Side by Side White Lines, Three Line Strike, Downside Gap Three Methods, On Neck Line, In Neck Line, Marubozu

Candlesticks that Reflect Indecision:

Spinning Top, Doji

Daily Candlestick Play Instructions

Bullish Harami Candlestick Play Instructions
Bearish Harami Candlestick Play Instructions
3 Black Crows Candlestick Play Instructions
3 Soldiers Candlestick Play Instructions
Long Red Candlestick Play Instructions
Long Green Candlestick Play Instructions
Bullish Thrusting Line Candlestick Play Instructions

Weekly Candlestick Play Instructions:

Bullish Harami (Weekly) Candlestick Play Instructions
Bearish Harami (Weekly) Candlestick Play Instructions
3 Black Crows (Weekly) Candlestick Play Instructions
3 White Soldiers (Weekly) Candlestick Play Instructions

Why Is Day Trading So Difficult?

by Bennett McDowell:

There are three main reasons why day trading is so difficult:

1)When day trading, trading time is compressed. Losses and wins come at you faster and more often which requires a mature, developed psychology to properly handle that kind of instantaneous feedback in such a short period of time.

2)You must develop the psychology not to be seduced by the open market. Trading must remain emotionless and objective.

3)Your day trading results can be highly impacted by trading at higher time frames and the shorter your time frame, the greater this effect will have on you.

The psychology of day trading requires you to not let a string of losses or wins that occur in a short period of time affect your mental state. A frail ego or mind will not do well in handling the results of immediate trade feedback in such a compressed amount of time. It will be too over whelming and may cause incredible frustration and a feeling of hopelessness. This is why position trading using daily charts is recommend for new traders because it allows them time to absorb trade feedback in a manner they can handle while they get a grasp of their trading results.

The open market can be quite seductive especially to the new trader. Day trading requires that you make trading decisions based on sound judgment and analysis void of emotion. New traders that day trade have a tendency to become seduced by the excitement of the open markets and therefore often become emotional traders acting on impulse rather than sound analysis and judgment.

When comparing day trading to position trading, it is easy to see that position trading requires using higher time frame charts like the sixty minute, daily, weekly, and even in some cases the monthly chart. If you are position trading using a daily chart you don’t have many time frames above you that could impact your trading. Compare this to day trading where many time frame are above you. If you are day trading using a one minute chart for example, you have the three, five, ten, fifteen, thirty, forty five, sixty, daily, and weekly traders above you. As a one minute trader you have many traders above you that can throw off your trading approach no matter how good it is. As a position trader, you may have only the weekly and monthly traders above you who do not trade that often.

The differences between day trading and position trading can be as distinct as the difference between day and night. Your success will all depend on your psychology, trading abilities, skills, and your aptitude. As a new trader you will more than likely need to walk before you run, and believe me, day trading is running!

Introduction to Forex Trading

The 1971 abandonment of the Bretton Woods Accord and the subsequent unwinding of the system of fixed exchange rates gave rise to the foreign exchange market as we know it today.

Forex refers to the foreign exchange market, where brokerage firms and banks are connected over an electronic network that allows them to convert the currencies of countries around the globe.

The forex market is the largest and most liquid financial market in the world. The daily dollar volume of currencies traded in the currency market exceeds $1.9 trillion, many times larger than the combined volume of all U.S. equities and futures markets.

While forex trading used to be executed exclusively between government central banks and commercial and investment banks, trading forex has become increasingly accessible to private investors thanks to the PC and internet.

The most commonly traded currencies are the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. The FX market runs 24-hour hours a day, 5 days a week with continuous access to global dealers. Trading is not centralized on a physical location or an exchange, as with the stock and futures markets.

Foreign Exchange is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).

For example, you would execute a trade when you expect the currency you are buying to increase relative to the one you are selling. If the currency you are buying increases in value, you must sell the other currency to close the position and take a profit. The first currency in the pair is called the base currency and the second is called the counter or quote currency. Usually the US currency is the base currency and quotes are given in $1 USD per counter currency, e.g. USD/JPY. The exceptions are the British Pound, the Euro and the Australian Dollar.

Understanding forex quotes: 1 unit of the base curreny = the exchange rate in the quote currency. Eg if EUR/USD is trading at 1.2762, 1 Euro will buy you 1.2762 Dollars.

Understanding contract size in forex trading: The contract size is normally a lot of 100,000. This means per standard contract you are controling 100,000 units of the base currency. For this contract size, each pip (the smallest price increment) is worth $10. Many firms offer mini accounts now where you can trade units of 10,000, where the pip value is $1.

Trading the Forex market allows very low margin requirements relative to other markets.

Why is the Forex market attractive to investors and home-based traders?

Professional investors for individual accounts have dramatically increased their level of participation in the cash Forex markets in recent years. Add to this the growing use of cash Forex by individual investors and home-based traders, and you have a rapidly growing industry of cash flow creating profits whether the market goes up or down.

The Forex is very liquid, and this market can absorb trading volumes and per trade sizes that diminish the capacity of any other market. On the simplest level, liquidity is a powerful attraction to any investor or independent trader as it suggests the freedom to open or close a position at will.

A substantial attraction for participants in the Forex market is the 24-hour nature of the market. In Forex, a participant need not wait to react to an unfavorable event, as is the case in many markets.

Many professional investment managers have a particular time horizon in mind when they establish a position. In the Forex market, a position can be established for a specific period of time, which the trader desires.

Because the market is highly liquid, most trades can be executed at a single market price. This avoids the problem of slippage found in futures and other exchange-traded instruments where limited quantities can be traded at one time at a given price.

Over long historical periods, currencies have shown substantial and identifiable trends. Each individual currency offers a unique historical pattern of trends providing investment managers and home-based independent Forex traders diversification opportunities within this massive cash exchange, the Forex.

From 1971 until recent years, the virtual owners of this market were the banks, multinational corporations and large brokerage firms. If an individual wanted to invest in this market, he could invest with a bank and with a $1 million cash deposit backed by the requirement of a $5-$10 million net worth. A slightly better option was provided by the brokerage firms which asked a lower minimum deposit on average of a quarter million dollars.

But now, the Forex market has been opened up to small-scale, home-based traders. Unlike the huge sums previously required by the banks and brokerage firms, comparatively far lower margin requirements are finally available which now allow virtually any individual to trade with the big boys. In addition, independent traders can take advantage of the growing boom in computer and communication technologies that have made this market accessible in ways previously exclusive only to large players.

What moves the Market?

The primary factors influencing exchange rates include the balance of payments, the state of the economy, implications drawn from chart analysis and political and psychological factors.

Ebb and flow of capital between nations, otherwise known as Purchasing Power Parity (PPP), is the central factor that determines market momentum. In addition, fundamental economic forces such as inflation and interest rates are constantly influencing currency prices. Faith in a government’s ability to stand behind its currency will also impact currency price. This is done in two ways: controls and intervention. Controls restrict citizens from doing things, which have a negative effect on the exchange rate (such as sending money abroad). Intervention takes two forms: changing the interest rate on the currency to make it more or less attractive to foreigners, or buying/selling the currency to raise or lower its market value.

Any of these broad-based economic conditions can cause sudden and dramatic currency price swings if such conditions are seen to be changing. This is a key concept, because what drives the currency market in many cases is the anticipation of an economic condition rather than the condition itself.

Activities by professional currency managers, generally on behalf of a pool of funds, have also become a factor moving the market. While professional managers may behave independently and view the market from a unique perspective, most, if not all, are at least aware of important technical chart points in each major currency. As major support or resistance levels approach, the behavior of the market becomes more technically oriented and the reactions of many managers are often predictable and similar. These market periods may result in sudden and dramatic price swings as substantial amounts of capital are invested in similar positions.