Markets reverse on Iran fears...

It has been a very erratic day in the markets. We started out very positive. All economic numbers were looked at positivly and Stocks ralled and U.S. futures drifted lower on the idea that Rates will remain unchanged.

But all good things come to an end. The CB Governor said that Iran has no plans to stop selling oil in dollars COMPLETELY. Aslo Duties were inposed on some China imports. This is the real reason that the dollar came off so hard. The move was quick and rather painfull. Dollar Brazil, which yesterday took out a key option level at 2.0500, reversed sharply and currently is trading at 2.0530 (ouch).

I feel that in the bigger picture things are unchanged. My trades in order of conviction:

Stay long Euro's
Look for lower rates in Brazil.
Ride the curve in Argentina.

As for Mexico I reduced some of my position in the forwards as the curve is rather flat and I do not see much upside at this time. I am still short rats but not quite as short as before.

That is about it.....

Good Luck and Good Forex trading.

Markets like the numbers....

We had GDP out this morning and the numbers (the final revision of the 4th quarter) resulted in the market's reacting well. Although the numbers came in basically as expected (2.5% vs 2.2%) dealers seem to be taking this report and running with it. Emerging Markets currencies are stronger and Fixed income has preformed well.

Iceland CB officials warned of possible interest rate hikes in the future if new smelter projects are announced. Aslo Poland's Foreign Currency rating was upgraded to A- on balanced growth prospects. This was unexpected in the markets.

In Asia I am hearing reports of CB intervention in Singapore and India. Both currencies weakened considerable on the reports.

I am staying the course, short dollars (against Euro,Mexico,Brazil,Argentina) and looking for lower rates in Argentina,Mexico, and Brazil.

I am long dollars against Singapore and China.

Good Luck and Good Forex Trading.

Bernanke speaks....

Fed Chairman Ben Bernanke will be testifing before the Joint Economic Committee on the Economic outlook. Earlier he has testified that “predominant policy concern remains the risk that inflation will fail to moderate as expected.” It would be my guess the Mr Bernanke will restate this today. It all remains in the numbers. If the numbers come out weaker look for rate cuts. Moderate to stronger growth I believe we are in a holding pattern. Overnight crude prices spiked. This is not a good sign as higher crude will translate into higher inflation (or at least higher inflation fears). The U.S. economy is clearly on the edge. I am of the opinion that we will fall to the side of a weaker economy, with inflation on the higher side. Not a good combination.


Good Luck and Good Forex Trading.....

I am Back.....

Hello all, I am back. Actually returned Sunday night but have been a bit behind and trying to catch up. The tornument was fun, kids played well, and my little man made one spectacular diving catch in centerfield to end a rally. Ok he was 0 for 8 with 2 strikeouts and 2 walks but we will not talk about that.

On to the markets.

Really no where. I think this is what we are store for going forward. I think you need to pick and choose your spots, try to trade from a position of positive carry and take profit when available. Do not look for the homerun but rather a few singles and doubles.

Not alot in this post but just working my way back in.

Good Luck and Good Forex Trading.

Play Ball

Today is one of those days that I previously wrote about. A day off to watch my son play baseball. We are heading off in a few hours to Rehobeth Beach in Delaware to participate in a three day baseball tornument. Hopefully the weather holds out out (it looks like rain right now)and the kids have son fun. As for the market, I expect little change. It seems to have been a quiet overnight session and I still believe that the Mexican Central Bank will hold rates steady. Anyway I will try not to look at the markets until I return on Sunday evening (very late I hope as the Championship game is not till 4.30pm).

Everyone needs a break every now and then.

Good Luck and Good Forex Trading.

Slow and Steady

Stocks did well overnight with the Nikkei up 1.49% along with the rest of Asia. The Shanghai exchange (Chinese) which was reported to be the catalist of the meltdown earlier this month is at a higher level then before it "Melted Down". Interesting, isn't it?

I am not getting carried away, but I am pretty confident in my assesment of the market's. I think the dollar struggles and the EM, both rates and currency, do well.


Today we have initial jobless claims (323K) and Leading indicators (-.4%). I feel that these numbers can only add to the trend and not reverse it for now.

Good Luck and Good Forex Trading.

Fed on hold....and Yield Monkees Rejoice...

The FOMC maintained its Fed Funds target at 5.25% as was widely expected. The policy outlook statement was slightly changed, replacing the reference to "any additional firming that may be needed" with a neutral "future policy adjustment". The vote to hold rates steady was unanimous.

The markets really liked this news allowing stocks and bonds to rally on the anticipation of a rate decrease in the future. Bill Gross who runs the Pimco bond fund was on CNBC pointing out that the last time the Fed shifted from a tightening to a neutral bias was December of 2000. At the next meeting, one month later, the Fed cut rates. So the time could be near, very near. The "fly in the ointment" is inflation. The Fed stated that they expect inflation pressures to subside, but would be watching this very closely. They also stated that they expected the economy would grow at a moderate pace. HHmmm...well maybe, but I think moderate may be over stating it. This economy, in my mind has certainly slowed down and although I expect a soft landing I am not nearly as optimistic as the Fed. I again go back to my simple economic research to prove my point. Walking from my office to Grand central station I see numerous (and many more) empty store fronts (even the one under Trump tower).If store fronts are empty then rent is not getting paid. In addition during the winter months I rent out a batting cage (for 30 min)weekly for my youngest son. Last year it was a struggle to get a time. Every week the place was jammed full of teams and players practicing. This year the staff is greatly reduced and the time slots are readily available. This may be simple analysis but remember it is the likes of you and me which drives an economy.

As I said the markets liked this news. Emerging Markets faired particuarly well. If rates are falling Yield Monkee's (like myself) will be looking for better returns. Also remember that Mexico has been on the verge of raising rates (this Friday is their announcement), after this I see no way that it happens. As such the front end of the curve came off very very hard this afternoon.

I expect more of the same going forward. I think the direction has been set. Lower rates in the States. Well I hope so at least.

Good Luck and Good Forex Trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

MPC Dovish....Trichet hints at rate hike

Trichet before the EU Parliament's committee on Economic and Monetary Affairs echoed comments that he made at the March Meeting. On Growth he remained cautiously optimistic and on Inflation he repeated his warning that HICP was likely to fall in the Spring and Summer, but repeated that it was important to look through short term volitility in inflation. These comments are quite similar to those made by Governing Council member Garganas when he indicated that upside wage pressures constitues an upside risk to inflation. I think this will at least leave the ECB leaning toward another rate Hike.

Minutes from the Bank of Englands March meeting showed a 8-1 vote to hold rates unchanged. With the one dissenter calling for a rate cut! This to me is quite dovish. The Short Sterling interest rate contracts have been rallying steadily since the surprise rate increase earlier this year. I look for the next move in rates to be down in the U.K.

For EM it looks like the day is starting out on a positive note. Usd/Mxn is below 11.10. Short dates are flush and the entire region is on an upbeat note. Stocks are all holding thier own. I hold my trades as is for now.

Good Luck and Good Forex Trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Everything is OK !!

Emerging Markets are opening stronger once again today. With economic numbers in the U.S. today the markets have taken this opportunity to put risk on in the EM world. Stocks in Asia did better and stocks in Europe are holding thier own for now.

Two day Fed meeting kicks off today. No risk of a change in rates but the risk comes from the statement after the meeting concludes tomorrow. For now it seems rate differentials are once again driving the dollar. As I have said in the past in quiet markets, dealers will run for carry. That is what I think is happening now.

Good Luck and Good Forex Trading.

Quiet Start....and a Slovakia Revaluation.

It's a monday morning, Stocks did well overnight and no new U.S. economic numbers of consequence this morning. All this seems to add up to a slow start to the day. Opening call is for Emerging Market currencies to start stronger.

Of some interest is the Revaluation in Slovakia. 8.5% against the Euro. This should trigger quicker rate cuts by the Central Bank. This move was unexpected as far as I can see. The new central rate for the currency is 35.4424 verses the previous 38.455. This morning on the open the currency touched 32.80, 3% stronger then the preivious close.

I will stay the course with all my positions.

Good Luck and Good Forex Trading.


WWW.FXTRADINGIDEAS.BLOGSPOT.COM

The Storm has arrived.....

Well, as I said in my last post a storm was about to hit the East Coast and it has. Judging from my Kitchen window we received about 6-8 inches of Icy snow. My back hurts already. Is this the last storm for the year? I certainly hope so, remember I am supposed to head to Delaware next weekend for my son's Baseball tournament.

I guess this is how I have been thinking about the markets also, Is the storm over? Or more importantly hoping that the storm is over! For the past few weeks I feel like I have been trading from under my desk. Not really looking at the screens, just hoping things will go my way.Is it, well based on Fridays close, Stocks down moderately, Interest Rate futures grinding higher, and Emerging Market currencies closing on the weaker end of the range I am not sure. I always like to use a sleep test on my positions and currently although I am sleeping OK, I have little confidence that the positions that I have on will yield substantial profits. So what is a trader to do? I am beginning to think I should substantially cut down on my Interest Rate plays in EM. Cut back on my Mexico rates (meeting this Friday no change expected), play the curve in Argentina (small o/r risk) and small short rates in Brazil. This way I can look at other markets where I will have a chance to make some money. Where you say?

Lets start with the Euro. I feel that the U.S. is entering (if not already in it) a period of slowing growth. This should lead to the Dollar being under some pressure. Although this currency does not provide positive carry, I think being long may be the way to go here. I will however do some research on Monday and look for a way to put on a negative dollar positive carry trade.

U.S. Rates. If I am correct with my assessment of the U.S. economy the rates in the States should come lower. This has already started but more should be in the works. I am looking for a rate cut around August. This being said it may be better to express this view through a cross, say Euro/Usd. Rates in the Eurozone have not come off at the same speed as in the States. This trend should continue as Eurozone growth continues to outperform the U.S. Another reason I like this play is the guy who sits next to me at work has this basic trade on and has been making money on it all year. Remember you do not have to reinvent the wheel!!

Now it is time for my broken record trade. Iceland. On Thursday the countries Credit Rating was downgraded by Moody's in a move that took the market by surprise. The reason suggested was that current account defiect widened to a record level. The Krona moved from (appr) 67.20 to the dollar up to 68.00 to the dollar. I know a lot of weak shorts exited on this news. On Friday morning it was back at 67.20. But I stand by my opinion that this will (and has been this year already) a big winner by the end of the year. Although I always preach yield I think that you must be selective, have deep pockets (keep positions small enough to withstand a storm) and be patient. I know easier said then done.

Hang in there, enjoy the Snow (in the North East),NCAA tournament, and the weekend.

Good Luck and Good Forex Trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

One Last Snow Storm...

I hope you didn't put away your shovel like I did. It seems we have one more show storm about to hit the east coast. Schools have already been closed in anticipation of the impending storm. What does this mean for the markets, probably an early close as everyone tries to get out of the city before to much snow falls.

As for overnight trading, the Euro rallied quite a bit (about 1 big fig). I do not see a real reason for it but it is something I have been looking to happen for a while. Dollar/China was hit hard overnight also. Today we have CPI which is expected to be +.3% as well as Industrial production (+.3%) Capacity Utilization (81.3%) and the University of Michigan Confidence index (89.0). I look for CPI to come in pretty much as expected nd the markets to die an early death.

Good Luck and Good Forex Trading.

Stay the Course !!!

FXTRADINGIDEAS@AOL.COM

Emerging Markets Remain Bullet Proof

In spite of an unepectedly high PPI number 1.3% against .5 expected and weaker Empire Manufacturing and Philly Fed Emerging Market currencies continue to strengthen. Today was certainly strange. Interest rates in the States traded slightly higher which say to me that the market is putting more weight on the inflation number over the slowing economy. Greenspan certainly isn't helping the situation. I definitly believe that everyone is entitled to speak their mind, but I am sure Mr Bernanke would love for him to keep quiet. I do not remember Volcker on a press tour after his duties at the Fed were done.

I currently still have my interest rate plays in Brazil,Mexico and Argentina. I cut my spot Argentina position. I (finally) bought some Euro's and sold some more dollars against the Mexico.

These markets have not been easy and I am still abit concerned that Stocks may (I repeat MAY) move lower.

Good Luck and Good Forex Trading.

FXTRADINGIDEAS@AOL.COM

PPI at 8.30 am New York Time

A host of numbers out this morning so will wait till after them to formulate my next move.

PPI Expected +.5%
Initial jobless claims 328k
Continuing Claims 2540k
Empire Manufactyring 17.5
Philly Fed 4.0


Lets see how this plays out before adjusting existing positions.


Good Luck !

U.S. Stocks Rebound

Stocks today put in a very good performance. For a while it looked like they were down for the count but they rebounded to close the day +57 points. I think this will prove to be good news for the Asian markets. I am looking for stocks to be up tonight and lead to gains in Emerging Markets on the opening of the European and U.S. markets. We do however have the issue of PPI in the States tomorrow. This is a crap shot. Yes the economic numbers have been on the slower side which could lead some to believe a lower inflation number is in store. But gas prices have risen steadily which could counteract that. I am looking for a number at or below expectations.

Out of Mexico the the Central Bank President Ortiz stated that ``This is essential to protect salaries, families' savings and for long-term interest rates to be low,'' and that the ``The bank will do whatever is needed to make inflation converge to its target.''. This seemed hawkish at first glance but it was (or should have been) expected. More importantly (from my perspective) was that he also stated that inflation would be lower then the previous trend and is heading lower. The market took these comments along with the slowing U.S. environment to determine that no interest rate increases, believed to be on March 23, would take place. The currency and fixed income responded very positively to this news. I once again added to my interest rate risk in Mexico and went home short dollars against Mexico, Argentina and Brazil.

Good Luck and Good Forex trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Asian Stocks sink....

The Asian Stock Markets came under pressure last night. This comes as no surprise after the meltdown that the U.S. market experenced yesterday. Wha tI am finding a little interesting is that the only Asian markets which are currently up year to date are the Shanghai up 8.63% (this is the market which collapsed earlier this month), the KL exchange +6.4% and the Karachi exchange +12.35%. So what does this all mean. Well really no thing. I guess the markets needed a flush out and the China move earlier in the month was an excuse rather then the reason. I have cut most of my spot exposure and am sitting mostly with interest rate risk (the wrong way around for now).

Markets are definitly nervous as are dealers. The people that I am talking to are trading very (I repeat VERY) short term. Not my style so I am better off on the sidelines for now.

This Euro is very intriging to me. I think it should trade higher, but no real movement has occurred. It is definitly on my watch list.


WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Markets melting away......

Stocks are on the slide.....a large slide and Emerging Market currencies are sliding along with them. These markets have me slightly concerned. I was selling Interest Rates into this move all day and it certainly does not look good from where I am sitting right now. I think it is best to be cautious and as such I will cut my spot risks and look to cut back on my interest rate risk. When you are wrong get out and look to start again. That will be my theme for tomorrow.


Good Luck and Good Forex Trading.....

Halliburton...

So Halliburton is moving it's corporate headquarters to Dubai and shipping the CEO out there to head up operations. They say in the article that all other senior executives will stat in Houston and that non of the 4,000 employee's will be effected. Now I am not judgeing Halliburton's decision. Although I perfer job's to stay onshore we are all in the game of maximizing our profits. Halliburton must feel that this is the best way to do that. I do question however how all other senior management would be moved, and no stay effected. That to me seems impractical, but I guess time will tell.

Stocks slightly lower overseas on the open, but it will be Retail sales which will capture everyone's attention at 8.30am (New York Time).

Expected +.3%

Good Luck and Good Forex Trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Markets opening abit calmer this morning

So stocks up slightly across Asia last night. Nikke1 up .75%, Hang Seng +1.61% and China's Shanghai composite up .58%.

If stocks stabilize I am looking for a resumption of High Yield strength. Numbers today are minimal, but as the week progresses we have Retail sales tomorrow (expected +.3%), PPI Thursday (+.5%) and CPI on Friday (+.3%). If those numbers come in as expected look for markets to trade slightly stronger. I am still questioning the next move in the Euro. It is higher this morning.....If you have any thoughts please let me know.


FXTRADINGIDEAS@AOL.COM

Good Luck and Good FOREX Trading.

So Let's talk market's.....

So the employment numbers looked pretty good to me on Friday. As I previously posted I felt that a neutral to strong number would allow the markets to recover abit. I think this is exactly what happened. Maybe Employment number's are taking on slightly less importance. I am not really sure, but I would think that any confidence number's or forward looking numbers will be a little on the weaker side. Confidence because with stock markets (and housing markets)coming off, looking at your 401k's becomes a little harder. I always try to think about myself, how do I feel. Right now slightly less confident then three weeks ago for sure.

Saying all this I still think the Fed is on hold for now and that the next move in rates will be lower. My positions are now as follows.

Short dollars against
Brazil
Mexico
Argentina

Long dollars against
Singapore (not pleased with this one and I need to rethink)
China

Short rates in
Mexico
Brazil
Argentina.

I still think Globally rates are on a conversion path. Time will tell if I am right but I am trading rates with this thought in mind. I am interested in what people are thinking about the dollar, specifically against the Euro. The people I speak to in the market are giving me totally different outcomes and I am trying to formulate a plan. So please pass along your ideas and thoughts to me.

Thanks

FXTRADINGIDEAS@AOL.COM

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Good luck and Good Forex trading.

Saturday Morning Ramblings

Check out my latest read. The Alchemist, by Paulo Coelho. It was a very enjoyable fable refer ed to me by a friend (Thanks sY). I seem to remember reading it somewhere in my past (probably High School) but it still held my attention. It is a fable about a boy following his dreams, my son believes this is one of my "motto's". I must admit I wish it were. I am much better at preaching, that then actually living it. The book has been translated into 56 languages and while riding on a plane this week the person next to me (a Frenchman) told me in his broken English that he was very glad to see the book in English as he suggested it to a friend who didn't speak French very well. I presented him with my copy at the end of the flight (trying to mend the French/American tensions one person at a time). If you get a chance pick up a copy. I have already purchased another copy for my son to read.

Also one of my favorite pass time's is kicking into high gear Baseball. More specifically New York Met baseball. Growing up in New York city and not being a Yankee fan is a tall order. A few years back while in an local Queens (Met territory)Art's and Crafts store with my youngest son (age 5 at the time), the store owner threatened to call child services because I had him wearing a Met Hat! Sometimes I agree. It would have been much easier growing up a Yankee fan, but not quite as rewarding. There is no thing like Shea stadium in October for a big game. I know we haven't had many but the few we have had have been amazing. In 1986 I was at games 2,6 and 7 with my younger brother and last year I was at game 2 of the Dodger/Met playoff series with my youngest son. Great fun! I explained that this is why you remain a fan for these few occasions. Lets hope there are a few more in our future.

Good Luck and Good Forex trading.

Good Employment number.....

The Employment number today came out basically as expected at +97k (estmate +95k), but a stronger revision last month from 111k to 143k sent the futures markets lower. this on the back of a market opinion that the Fed will maintain its status quo approach to interest rates. It seems that the markets was looking for a weak number and since they did not get it, it provided dealers to take some profits on the previous weeks move. I have added to all of my core positions:

Short dollars against
Brazil
Mexico
Argentina

Long dollars against
Singapore
China

and short rates in Mexico,Brazil and Argentina.


Good Luck and Good Forex trading.

Everything is OK !!

Judging from the reaction of the markets this morning, it seems all fears have vanished. The Nikkei was up overnight (up 1.22%)as was most of the Asian exchanges. All Emerging Market Currencies are opening stronger this morning and all of the "talking heads" on TV are saying not to panic. Only Time will tell but remember if markets begin to trade sideways (as I think they will) then higher Yielding currencies will do better. I am going to be away the rest of the week and not sure that I will be able to update, so I will leave you with the positions I currently have on.

Short dollars against Mexico and Brazil and of course short rates in both (although only tiny short in the Mexico.

Don't miss me to much.


Good Luck and Good Forex trading.

More on "Inside the house of Money"

A write-up in yesterday's NYtimes.com on Inside the house of Money

Stocks suffer overnight....But Barrons betting on a rebound

The Asian stock markets suffered overnight as the Nikkei lost 575.69 (3.34%) Hang Seng lost 777.13 (-4%) and just about every other stock exchange in the region was off. The Nikkei only had one stock up on the day. These markets are definitly nervous and any opportunity to to sell will be taken advantage of. The front cover of Barronsis running quite an encouraging story for the markets. There is plenty out there for each investor to make his own determination. I for one need to see more data before I make a decision. But I tend to be more of an optomist (at least when it comes to markets) so for now i will be looking for a rebound in the coming weeks.


Good Luck and Good Forex trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Yield Monkey's huddle for protection

So this week has not been fun for us "yield monkey's". Markets started out weak and ended pretty much the same way. For anyone who has watched CNBC or any other financial news show there are very compelling arguments on both sides of the fence. Some are saying that this is just a correction and others are saying that this is a early sign that a recession is on the horizon. Well I try to break things down to the basics. For most Americans (in my opinion)their 401k and their homes are the majority of their savings. I have done zero research on this and base this opinion on what I hear and read in the news media. I tend to believe this. As such in this type of market where housing prices have stalled (at best!) and stocks begin to take a tumble the average American consumer will tighten up a bit. Does this spell recession, well maybe, but almost certainly a slowdown (soft landing?). Think about yourself, when you hear about the stock market making another new high do you enjoy looking up the balance in your employer's 401k plan? How about this week how many of you looked at it?


Look at the chart above. It is the DJIA for the past year. As you can see it has been a slow steady grind higher. No real correction's along the way. This certainly does not comfort me a whole lot to see a correction of this magnitude in a week, but pull backs are normal and healthy. Again I am not telling you the everything will be OK. Past experience indicates that the long term investor will make out fine after the dust will settle. It is up to the individual to decide their own risk parameter. This is something I call the sleep factor. All the books, and talking heads can give you all the advise they want on what percentage is right for your age group. Ultimately you need to decide for yourself what you are comfortable with. I always try to establish an escape plan if my world falls apart. Hang in there. It is always darkest before the dawn, but try to remember how you feel this week. Again I revert back to myself. When stocks rally there are times that I feel under invested. At times like this I realise that I just may not be.


Good Luck and Good Forex Trading.

WWW.FXTRADINGIDEAS.BLOGSPOT.COM

Rato, still talking

The IMF's Rato continued making comments this morning.

Chinese stockmarket "not necessarilt" a bubble waiting to burst
U.S. Sub prime mortgage market merits careful monitoring
Slowdown in U.S. housing market "probably welcome"

I do not really think any of these comments matter in the short term. All eyes are focused on Stocks (relativly stable overnight). Any excuse.....and I mean ANY, to sell stocks will be taken and as such Emerging Market currencies will be under pressure. I am core (therefore tiny) short dollars against Latam EM. An interesting note on Asia. Last night Usd/Krw weakened from 942.5 to a current level of 947.0. This in spite of the rest of the region strengthening against the dollar. I am not sure what it means but something is probable out of wack. I will report back any findings later.

Good Luck and Good Forex trading.

FXTRADINGIDEAS@AOL.COM

IMF Comments on the World Economy.

The IMF's Rato had a few comments this morning on the world Economy.

He Says

He Shares Bernanke's view of U.S. Economy
Says downside risks exist, but world growth at 5%
He believes world growth "Sustained"
The world in a "very benign" senario
Market fall's to do with risk appraisal, not fundamentals.


So pretty muted comments.


Good Luck and good Forex trading.

FXTRADINGIDEAS@AOL.COM