• Adam Kritzer analyzes the latest rate moves by the Federal Reserve from a distance. The raise of the discount rate had a different impact on each currency.
• Michael Greenberg reports that 5500 comments have been submitted against the proposed regulation of 1:10 leverage limit by the CFTC. He claims that this isn’t enough.
• Kathy Lien shares her favorite currency pair: GBP/AUD and talks about the direction: down. I hold the same sentiment for a long time.
• Larry Greenberg talks about the Euro – a monetary union between 16 countries, and calls it an “imbalanced marriage:.
• Casey Stubbs discusses the importance of setting achievable goals for trading.
• Fransesc Riverola reports that the UAE shows more and more interest in forex trading. Forex is global…

That’s it. Have a great weekend!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Ben Bernanke shocked the financial markets near the end of last week with a hike of the interbank discount rate. While Federal Reserve officials downplayed this move and announced it after the New York close, it had a strong effect on forex trading. Some currencies took it harder than others.

The Greek crisis is on the sidelines, but it might return to the limelight, especially on a day with few events. It currently seems contained, and affects only EUR/USD, but it could impact other currencies as well.

Now for the events:

Australia’s New Motor Vehicle Sales are posted a nice rise last month, and are expected to continue this trend. For more on the Aussie, which is expecting more rate hikes, read the AUD/USD forecast.

In Canada, BOC Senior Deputy Governor Paul Jenkins will make a public appearance and might refer to the central bank’s rate policy. This might move the loonie, currently at the critical 1.04 line. Read more in the Canadian dollar forecast.

Japan closes the day with the Monetary Policy Meeting Minutes which follow an unexciting rate decision. There are many discussions regarding the carry trade, and the yen’ role in it.

That’s it for today. Major events start pouring in tomorrow. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Apart from the scheduled releases, note that the World Economic Forum talks start today in Davos, Switzerland. Statements from there can move the markets as well.

Australian CPI provides a strong start to the day. It’s predicted to rise by 0.4%, less than 1% that was printed last quarter. After PPI disappointed with a drop, a weaker number sure is possible. Also note the Trimmed Mean CPI, or Core CPI, which is predicted to rise by 0.6%.

This release critical for the rate decision next week. For more on the Aussie, read the AUD/USD forecast.

Following the rate decision in Japan and the downgrade by S&P, the BOJ Monthly Report could give a dark picture of the Japanese economy, despite the easing of deflation. On the other side of the day, Japanese Retail Sales are predicted to rise this time – by 0.3%.

German Prelim CPI will be released from the various German states during the the day. After last month’s 0.8% rise, a drop in prices is predicted this time. For more on the Euro, read the EUR/USD forecast.

In Britain, the day after the weak growth report brings another important figure: CBI Realized Sales. It’s expected to drop from 13 to 11 points, after a few good months. Also in Britain, MPC member Andrew Sentance will be speaking today.

For more on the GBP/USD, read the British Pound forecast.

In the US, Treasury Secretary Geithner will make a public appearance and might shake the markets. American New Home Sales are expected to recover from the blow they got last time, as they dropped to 355K. The number is expected to rise to 372K. This might have a muted impact, as a bigger American event is due later.

The Federal Reserve is expected to leave the interest rate unchanged at a maximum rate of 0.25%. Ben Bernanke is also expected to leave the wording of the FOMC Statement unchanged, with a renewed pledge to leave the rates low “for an extended period of time”.

Last month, it took the markets 6 hours to digest the statement before moving. It sure was confusing.

Also in New Zealand, the central bank makes a rate decision. Alan Bollard’s RBNZ isn’t expected to lift the Official Bank Rate above 2.5%. Prospects for the future might be hinted at the RBNZ Rate Statement. NZD/USD is getting close to 0.70 – a critical line for it.

That’s it for today. Happy forex trading!

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

British Claimant Count Change fell for the first time this year: The number of people claiming for unemployment benefits fell.. This is  far better than the expectations for a 13,900 rise.

It’s important to note also the revision to last month’s positive figures. The initial report talked about a rise of 12,900, and now it was revised to a rise of only 5,900.

Claimant Count Change relates to November that ended recently. This early release makes it important.

The other figure is a late one, relating to October, but still very important: the unemployment rate. It rose from 7.8% to 7.9%, a little better than the early expectations that spoke of a rise to 8%.

GBP/USD initially rose from 1.6250 to 1.63, but lost most of these gains quite quickly. Also last month, the gains that followed good employment numbers in Britain didn’t hold their ground.

The markets are waiting for the Fed decision this evening. This is a crucial rate decision this time, as there is no consensus on the outcome. No result can fall within expectations. Here’s my preview for the FOMC Meeting.

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Image credit: Gage Skidmore

There is a consensus about the unchanged interest rate. It won’t be raised now. The wording of the FOMC Statement isn’t known – and this is what matters.

Before the previous FOMC meeting, I mentioned four scenarios. The outcome was the one with the highest probability was the copy-paste scenario – no change in the wording.

The bottom line of Ben Bernanke’s statement was that the interest rate would stay low for an extended period of time.This expected decision didn’t really impact forex trading, and the event turned into a non-event.

No option for non-event

Things have dramatically changed since then:

• US Non-Farm Payrolls that showed almost no job losses. This publication, on December 4th, was a small earthquake. It sent the dollar up. This normal behavior of good American data that sends the dollar up was hardly seen in forex trading since the beginning of the crisis. Good data would raise the appetite for risk and send the dollar down. In addition, the improving employment situation made traders think of a possible rate hike.
• Bernanke’s speech: On a speech on December 7th, Bernanke was rather dovish on the economy, and still talked about the problems that face the US. This downplayed the option of a rate hike. Only temporarily.
• Retail Sales were an excellent surprise last Friday, December 11th. This could be explained by Thanksgiving sales or by a correction of sales after many months of modest data. It didn’t really matter to forex traders: the dollar strengthened across the board, sending EUR/USD down. Since then, the dollar continued strengthening, breaking long term patterns in some currency pairs.
• Inflation: Producer Price Index rose more than expected. Although this isn’t the most important economic indicator out there, it is an inflation measure. If inflation is lifting its head, Bernanke can use the rate tool at his hand. Consumer prices will be published before the rate decision and are unknown at the moment. I’ll update this post with the figures.

So, we’re down to two scenarios this time:

1. New wording – dollar up: So, on one hand we have improving economic indicators, and maybe even fresh inflation. This could lead Bernanke to omit the word “extended” from his FOMC statement and the dollar would get a huge boost, continuing the trend from the last days.
2. Old wording – dollar down: On the other hand, Bernanke’s recent speech suggests that nothing has changed and this could lead to a repeat of the “extended period of time of low rates” wording. This would send the dollar down.

Maybe Bernanke has a totally different decision in mind. That would also be a surprise.

Update: Also on poll I ran with Currensee’s community, I got 53% thinking that the dollar will go up following the decision, and 47% that think that it will go down. Also the comments on the poll were split.

American Non-Farm Payrolls, that made a big surprise on December 4th, continue to overshadow the markets, as the dollar continues to strengthen. But this strength isn’t equal against all currencies. Let’s see what’s on the menu:

Monday, December 14th: Japanese Tankan Manufacturing Index provides a strong start for the week. It’s expected to rise but stay negative.

British Rightmove HPI will continue in the early hours. The British housing sector is getting better, and support a fragile hope to get out of recession. Swiss PPI is predicted to turn positive, but still far from inflation.

European Industrial Production is predicted to drop this time, while the Employment Change, a late figure, is predicted to remain unchanged.

Tuesday, December 15th: Australian Monetary Policy Meeting Minutes will supply hints about the next RBA meeting – it looks like another rate hike is underway, especially with the improving job market in Australia.

Swiss Industrial Production is expected to rise again, but in a modest pace. German ZEW Economic Sentiment is very important for the Euro. It’s expected to drop this time.

British prices are expected to rise, with CPI at 1.8% (annualized). This should help the Pound. Also the RPI, which measures retail prices, is expected to rise after dropping for a long time.

American PPI is predicted to rise by 0.8% – a higher rise might help bring a rate hike. TIC Long-Term Purchases, which represent cash flow, are expected to rise significantly and help the dollar.

Also in the US: Empire State Manufacturing Index, Capacity Utilization Rate and Industrial Production are released, with expected improvements on all fronts.

Wednesday, December 16th: Australian GDP is expected to show a quarterly rise of 0.4%, less than last month’s 0.6%. This will be the third straight quarter of growth. Australia was never in recession.

In Britain, important employment figures are due: the Claimant Count Change – the earliest of employment numbers, is expected to rise once again to 14.2, after last month’s surprise. The Unemployment Rate, a delayed figure, is expected to rise from 7.8% to 8%. These releases will shake the Pound.

In Europe, initial PMI reports will be released: first in France, then in Germany and finally for the whole continent. Most numbers are expected to advance.

European CPI is expected to remain unchanged at 0.6%, and so is Core CPI at 1.2%. Stronger figures are necessary to push EUR/USD higher, after being hit by many figures.

On the other side of the Atlantic, American CPI is rpedicted to rise by 0.4%, while Core CPI is predicted to remain stable at 0.2%.

Two housing figures are published as well: Building Permits and Housing Starts, which are both predicted to get close to 600K. Also note the Current Account, which is predicted to show a bigger deficit.

The more important event comes in the evening: The Federal Reserve is expected to leave the interest rate unchanged once again, despite the excellent Non-Farm Payrolls. Bernanke downplayed this option. While the Federal Funds Rate won’t move from 0.25%, the FOMC Statement will be of interest to traders, as future plans about the rate are expected to be heard.

Thursday, December 17th: Kiwi traders will be interested in the NBNZ Business Confidence which will be published early in the day.

British Retail Sales are predicted to rise again, this time by 0.5%. CBI Realized Sales are also expected to advance.

Canadian CPI will probably turn positive and rise. Core CPI is expected to stay stable at 0.1%.

American Unemployment Claims retreated last week, and are predicted to edge up this time. Also note the Philly Fed Manufacturing Index which is expected to drop.

Friday, December 18th: The rate decision in Japan isn’t expected to bring a change in the Overnight Call Rate, but the accompanying Monetary Policy Statement may lay out the policy for intervention, after the emergency BOJ meeting that was held about two weeks ago.

German Ifo Business Climate is another important survey for the continent, and it’s expected to edge up once again.

British Public Sector Net Borrowing is expected to double to 23.1 billion. This comes on the background of Alistair Darling’s problematic budget.

That’s it for the major events for this week. I’ll later post specific currency coverages. Stay tuned!

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For GBP/USD, look into the British Pound forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

In the monthly rate decision there was no surprise about the rate – European Minimum Bid Rate remained unchanged at 1%. The real news came in the press conference held by Jean-Claude Trichet:

Image credit: tetowawki on Flickr

Trichet began easing the stimulus means that it used with banks. Here’s a quote from Bloomberg:

“The improved conditions in financial markets have indicated that not all our liquidity measures are needed to the same extent as in the past,” Trichet said at a press conference in Frankfurt today after the ECB kept its benchmark interest rate at 1 percent, a record low. “Liquidity will remain extremely abundant for a large number of months to come.”

Also in the US, that is still suffering from a terrible job market, and a big deficit, recession is officially over, and also Ben Bernanke began sending his troops home, very carefully:

The Federal Reserve conducted a reverse repurchase agreement to test one of the tools for an eventual withdrawal of the central bank’s unprecedented monetary stimulus while stressing that the actions themselves don’t represent any change in policy.

In the meantime, Britain is still in recession, also in Q3, as confirmed last week. The Pound got another reality check today, A Services PMI fell back instead of rising.

The Pound gave up some of its gains of the past weeks. GBP/USD fell today from 1.6720 to 1.6560. Also EUR/GBP rose on the Pound’s weakness.

I continue to state the Pound is too high. High hopes about the British economy, as expressed for example by Spencer Dale, isn’t backed by the numbers.

The Pound didn’t hit the ground yet. European and American exit-strategy measures expose the Pound’s weakness. I believe it will lose more value.

Another sharp move was seen by the Japanese Yen: USD/JPY reached 14 year lows. The safe haven currency enjoyed the crisis as well. The Dubai crisis sent the Yen crosses face down to the mud. The dollar Yen correlation worked perfectly.

Monday, November 30th: New Zealand start the week early with Building Consents, which showed a nice rise last month. Japanese Prelim Industrial Production is expected to rise, pushing the Yen even higher.

In Britain, GfK Consumer Confidence is expected to improve, but remain negative. European prices are expected to rise for a change – the CPI Flash Estimate is predicted to rise by 0.5%.

Canada posts its monthly GDP for September, and it’s expected to turn positive after last month’s drop, that didn’t meet expectations. In the US, Chicago PMI is the first indicator for this week.

Tuesday, December 1st: Australia’s RBA will probably raise the rates once again, and send the Cash Rate to 3.75%. The positive remarks by Glenn Stevens and other officials are expected to be seen also in the accompanying RBA Rate Statement. Australia is way ahead of other Western counties in the interest rate.

Swiss GDP for Q3 is expected to rise by 0.3%, ending the recession that lasted 3 quarters. USD/CHF was already below parity before the Dubai crisis broke out.

In Germany, Retail Sales are predicted to turn positive while the Unemployment Change isn’t expected to budge, after last month’s excellent drop. The all-European Unemployment Rate is predicted to tick up once again, to 9.8%, a number that impacts policymakers.

In Britain, Manufacturing PMI is predicted to edge up. Nationwide HPI is due on Tuesday, and is expected to rise by 0.4%, like last quarter. Another housing figure, Halifax HPI is also predicted to be positive, rising by 0.8%. The British Pound got a reality check last week, with a confirmation of the recession.

On Tuesday, more serious American figures are due: ISM Manufacturing PMI is predicted to remain stable after the previous rises. Pending Home Sales, are expected to dip after the big surprise last month.

Wednesday, December 2nd: Two preliminary employment figures are due before the Non-Farm Payrolls on Friday: Challenger Job Cuts and ADP Non-Farm Payrolls (or ADP Non-Farm Employment Change if you wish), which are predicted to drop by 151K, less than last month’s disappointing 203K drop.

Also note the Beige Book, which will a give a broad overview of the American economy.

Thursday, December 3rd: Australian Retail Sales are predicted to rise once again, showing the strength of the Australian economy. In Britain, Services PMI complements the Tuesday’s Manufacturing PMI and is expected to rise again.

Revised GDP in Europe, is expected to confirm the 0.4% rise in Q3, that was accepted with hesitation.

The European Central Bank is expected to leave the interest rate unchanged. Jean-Claude Trichet isn’t expected to move the Minimum Bid Rate from 1%, but he might say something about the exit strategy at the ECB Press Conference. Also talks of a strong dollar will move move the markets. The Euro escaped the range, but only for a short time.

American weekly Unemployment Claims surprised last week with a nice drop, but are now expected to rise back to 480K, one day before the NFP. ISM Non-Manufacturing PMI complements the ISM Manufacturing PMI and is also expected to rise, up to 51.8K.

The more interesting event is a testament by Federal Reserve Chairman Ben Bernanke. He is expected to appear before the Senate Banking Committee. Contrary to speeches and to the FOMC statement, he might have to answer questions and get out of his comfort zone of blurry messages. The markets will rock.

Friday, December 4th: Swiss CPI is predicted to rise by 0.2%, following a higher rise last month.

Canada’s Unemployment Rate is expected to stay stable at 8.6% after excellent figures two months ago, and a very disappointing rise last month. Canadian Employment Change isn’t expected to be wild this time, after the sharp moves in previous months.

American Non-Farm Payrolls are expected to drop by 115K. This figure, the undoubted king of forex trading, is predicted to move the markets throughout the day. The complementary figure, the Unemployment Rate, is expected to remain at 10.2%, the bad figure that was recorded last month.

That’s it for the first week of December. I will later publish specific currency coverages, before the start of the new week. And here they are:

Further reading:

• For the EUR/USD, read the EUR USD forecast.
• For the beaten British Pound, look into the GBP/USD forecast.
• For the Australian dollar, read the AUD USD forecast
• For USD/CAD, read the Canadian dollar forecast.

Get started from as low as $30/month for FXTechstrategy premium services.

The Aussie and the kiwi already left the trading ranges that they were in, in the past two weeks. Will other pairs follow? Watch out for false breaks during Thursday and Friday, as the light trading on Thanksgiving may cause strange moves in the markets, similar to the vacation days in summer. Let’s see what’s awaiting us on the busy days at the beginning of the week:

Monday, November 23rd: European purchasing managers’ indices start the week. All the figures in France, Germany and then in all of Europe, are expected to remain above 50, indicating expansion.

Canada’s retail sales are expected to continue growing, after rising last month. In the US, Existing Home Sales are expected to rise modestly, after other housing sector numbers disappointed last week.

Tuesday, November 24th: The Swiss UBS Consumption Indicator is predicted to continue rising, while the employment level is expected to remain stable.

German Final GDP is expected to confirm the 0.7% growth in the third quarter. The highly regarded German Ifo Business Climate is expected to rise to 92.6 points. This will shake the Euro.

In Britain, Inflation Report Hearings will take place in parliament, a week after the CPI was OK. Mervyn King, governor of the BoE, will be speaking in the afternoon, and will definitely shake the Pound. Also note the BBA Mortgage Approvals which are predicted to rise.

American Prelim GDP, or the second release of GDP for the third quarter, is expected to be revised downwards, from 3.5% to 3%. Many have doubted the strong growth rates as the unemployment rate soared.

Later in the US, house prices will be updated with the S&P/CS Composite-20 HPI, which is expected to improve. The CB Consumer Confidence, which sent EUR/USD down last month, is expected to drop again.

FOMC Meeting Minutes which are released in the evening, might clear up the blurry message that was made by the Federal Reserve in the last decision. How long is the extended period of time in which rates will stay so low?

Japanese trade balance will close the day, with an expected rise in the surplus.

Wednesday, November 25th: British Nationwide HPI might be release today, and is expected to continue rising. What’s certain in Britain, is the release of the revised GDP for the third quarter. The initial release of a 0.4% contraction was a big shock to the Pound. It’s expected to be revised upwards to a drop of 0.3%.

American Durable Goods Orders are predicted to rise by 0.5%, less than last month. Core Durable Goods Orders, no less important, are predicted to rise as well.

Weekly Unemployment Claims are expected to stay the same, around 500K. New Home Sales are predicted to edge up, similar to the existing home sales released earlier in the week.

Also in the US, Personal Spending is expected to turn positive and rise this time.  The Revised Consumer Sentiment by the University of Michigan is predicted to rise to 67.2 points.

Just before the day ends, Japanese Monetary Policy Meeting Minutes are released. No big excitement is expected.

Thursday, November 26th: It’s thanksgiving day in the US, so light trading is expected. Also in other places in the world, there aren’t too many events. This light trading will also be seen on Friday.

Australia’s Private Capital Expenditure, an important quarterly figure, is predicted to rise by 1.1%, after a big leap last month. In New Zealand, the NBNZ Business Confidence is predicted to edge up once again. Near the end of the day, New Zealand’s trade balance is due.

German Prelim CPI, a key indicator of European inflation (or deflation), is predicted to remain unchanged. British CBI Realized Sales are expected to grow.

Speaking of deflation, Japan’s Tokyo Core CPI is expected to show an annualized decline of 2%, and so is the National Core CPI.

Japanese Unemployment Rate is expected to rise to 5.4%, while Retail Sales are predicted to drop by 1.5%. Japanese figures aren’t too good…

Friday, November 27th: New Zealand’s Inflation Expectations start this light day. No jump is predicted.

European Consumer Confidence is expected to stay stable, and negative, at -18 points. The Swiss KOF Economic Barometer is predicted to rise sharply to 1.89, indicating good economic conditions in Switzerland.

Canada’s Current Account will close the day, with an expected deficit.

That’s it for the major events for this week.

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For GBP/USD, look into the British Pound forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

Want to see what other traders are doing in real accounts? Check out Currensee. It’s free.

Get started from as low as $30/month for FXTechstrategy premium services.

The US Dollar Index retreated this week from 76.21 to 75.74, similar to the close about two weeks ago, before last week’s big comeback. It’s hard to say that last week’s surge was a short episode, or that this week’s stall was only temporary.

The rate decision by the Federal Reserve was expected: no change of wording – almost copy pasted from the previous FOMC Statement. In my post about 4 scenarios for the Fed decision, I gave this option the highest probability, but I hoped for something more interesting.

Some currencies did better than others this week:

• EUR/USD began the week by not believing the good figures in the US. It later went up, “erased” the 1.4842 resistance line and even reached 1.4917. It’s about to close at 1.4845, making a weekly gain of almost 150 pips. Check out Casey Stubbs’ latest EUR/USD technical coverage.
• GBP/USD enjoyed another positive week, riding on the favorable rate decision from Mervyn King to rise from 1.64 to 1.66, a neat 200 pips gain. Resistance is close.
• USD/JPY rose all the way to 91.31 but fell back down, and is about to close at almost the same level as week – 89.80. The Japanese Yen enjoyed last week’s fear, and stalled this week.
• USD/CHF: The Swiss Franc made gains against the dollar, and went down from 1.0260 to 1.0178, nearly 200 pips lower, and not too far from parity.
• USD/CAD: The Canadian dollar was hit by bad employment figures that erased last month’s impressing job figures. It  made rather minor gains against the US dollar. At 1.0744, it gained less than 100 pips.
• AUD/USD: Glenn Stevens raised the rates again up to 3.5%. The expected move was initially dismissed by the markets, but the Aussie got back on its feet and at 0.9156, AUD/USD is closing the week with almost 200 fresh pips. Check out Mohammed Isah’s latest AUD/USD technical analysis.
• NZD/USD: After last week’s disappointing rate decision that didn’t meet expectations, the kiwi recovered and gained more than 100 pips to 0.7250, after already passing 0.73.

That’s it for this week. Weekly  forecasts will be published towards the opening of the new week. Have a great weekend!