Can G20 Finance Ministers Prevent Currency Wars?

Market Leader informed

Today, on 22 October, South Korea is hosting an important meeting of G20 finance ministers intended to prevent ‘a currency war’ worldwide. The meeting of the world’s leading countries such as the US, Canada, Russia, Germany, France, Japan, China, India, Brazil and others traditionally chaired by the host country’s Minister of Finance is convened to analyze reasons of the currency war that has broken out and main contradictions among G20 leading nations in the war and adopt a summary document drafted, as unofficially reported by Dow Jones, a US-based agency, to include text that the West’s wealthy nations and rapidly developing countries with emerging markets will assume mutual obligations of ‘refraining from competition in the area of devaluation of national currencies’.

What does a currency war mean in the context of a crisis? According to our experts at the Masterforex-V Trading Academy, a currency war, under global crisis algorithms by MF, is intended to devalue national currencies and gain a more beneficial position against competitors in terms of exports of goods in global markets. As a result, national states are actually involved in protectionism favoring their own manufacturer, creating most advantageous competition conditions in global markets for them. This protectionism in the context of a de-facto currency war can cause a currency collapse in the global financial system when all world’s currencies start suddenly losing their value.

Toyota Recalling 1.5 Million Cars. How Will This Affect its Stocks?

Market Leader informed

Toyota made a decision to recall an average of 1.53 million of its vehicles worldwide for additional maintenance inspection and repair. Reasons included faulty brake cylinders and fuel pumps. Free services of the service company will be available primarily to models in the American market where experts discovered most faults.

Recalls mainly affect Japan and the United States of America. In general, these will include 600,000 faulty Toyota vehicles in Japan (mainly Lexus GS, Crown, and Lexus IS) and 740,000 vehicles in the US (mainly Highlander, Avalon, IS250, IS350 and Lexus GS300). Most recalls will involve cars produced between 2003-2006.

In their official report to the Japanese government, Toyota’s management points out that the vehicles to be recalled generally have faults either with their fuel pump or the engine and, in isolated cases – with both. The US-based unit of the car manufacturer reported its own diagnosis:

The US Wants No ‘Currency War’ or… Sees No Benefit in It?

Market Leader informed

The issues of ‘currency wars’ are probably as topical today as the issue of the impending global crisis was a few years ago because if China is followed by a few other countries starting to actively devalue their currencies this will result in real trade wars. Unfortunately…
Obviously, the US, directly affected by this problem, doesn’t want them, either. For example, US Secretary of the Treasury, Timothy Geithner, indirectly referred to his eagerness to implement amicable currency policies. In particular, in his interview to The Wall Street Journal, a popular American publication, he pointed out that in his opinion, major global currencies – the dollar, euro and yen – are currently placed in identical circumstances, i.e. they are to a certain degree aligned with each other. Moreover, given this situation, Washington does not intend to take any action to devalue its own currency. However, many analysts tend to believe that in this way Timothy Geithner implies that the US is unlikely to weaken the dollar in the near future though this doesn’t mean that the country ‘has taken no measures’ to devalue its national currency, according to the Secretary. Indeed, Geithner’s words have been supported so far by that fact that the US dollar has gained ground in the global market, rising by a few levels. On the other hand, experts point out that the dollar's growth against the euro (as of today) has been affected primarily by speech the US Secretary of the Treasury following which investors rushed in a crowd to buy US dollars…

Loonie is declining versus US dollar

Market Leader informed

Canadian dollar lost 2.2% versus its American counterpart since October 14 when it reached the parity with the greenback. Loonie was declining as the price of crude oil dropped and also due to the expectations that the Bank of Canada won’t raise its benchmark interest rate until 2011.

Elizabeth Belugina, an analyst of FBS brokerage company, claims that the main factor that’s making pressure on Canada’s currency is the dynamics of US dollar. According to her, it happens as weak US dollar provides an opportunity for short covering ahead of the Federal Reserve meeting scheduled on November 2-3.

British Pound in the light of austerity measures

Market Leader informed

Market uncertainty over GBPUSD forced George Osborne, the Chancellor of the Exchequer of the United Kingdom, to make a range of optimistic but radical statements.

According to him, Great Britain is able to maintain the army in Afghanistan, London police and to successfully combat the global terrorism without critical spending.

Moreover, he promised to allocate more funds for schools and protracted constructions. The austerity measures will be applied to a range of social benefits. Yet the major saving will result from the reduction of bureaucracy. It won’t affect the economic growth as public institutions will undergo considerable optimization.

GBPUSD: Volatility forecast for October 22th 2010

Market Leader informed

The downtrend of the British Pound, started last Friday, has slowed down as the market participants are perplexed with contradictory events: China has raised its interest rate; there is a chance that the Bank of Japan may continue market interventions; G20 meeting is to be held soon. US Secretary of the Treasury Timothy Franz Geithner indicated the reluctance to devalue USD. Yesterday the downward movement of GBPUSD was sluggish and ambiguous. On its way down GBPUSD has an important option barrier at 1.5700. If the price crosses and settles below it the next support level is 1.5600. The uptrend is restrained with 1.5900 (an option level).
Today’s volatility of GBPUSD (Oct 22nd) will be conditioned mostly by the news on the EU as today GB offers no news. At 8.00 GMT Germany releases IFO - Business Climate, reflecting the sentiments of Germany’s major manufacturing, construction and wholesale companies for the next 6 months.

Singapore Dollar: will the “sea lion” reverse?

Market Leader informed

Not many of us know that Singapore (a city, an island and a state) consists of 2 words: singa (lion) and pore (city). Yet Singapore’s most prominent symbol is a sea lion.
For several days this flourishing part of the planet has been suffering from a regional-scale disaster – forest fires in Sumatra. The smoke density has led to a range of problems.
Is it the reason why at the end of the last week SGD stopped growing against USD at 1.2891 and formed an H8 wave against the trend at the beginning of the current week?
Moreover there is a retracement of at least level H4 against the mentioned H8 wave. During Friday’s Asian session USDSGD completed an upward h1 wave. Currently the price is forming a hidden H1 FZR*.

6ECONT and EURUSD are still uncertain about further trend

Market Leader informed

The common European currency keeps staying flat within the 1.4020 – 1.3920 range without indicating any specific tendency.
Investors remain uncertain as well as there is a huge information flow which needs reasoning – spending in GB, China’s interest rate increase, perspectives of further market intervention by the Bank of Japan, the probability of QE2, ambiguity of the released macroeconomic data. No wonder that it is difficult to make any investment decision or forecast, even though most factors speak in favor of USD weakness. There are few news releases expected for today: the

Golden fever won’t last long… Is it time to take profit?

 Market Leader informed

Nothing can last forever, especially a natural economic process… This is a law. That is why, considering the urgency of the current investments in gold, we strongly recommend: “Don’t be risky. Don’t invest in gold”.

The weak US dollar has allowed gold to become less expensive for those investors who use other currencies than USD, stimulating the demand for gold for a long time. However it is impossible to deceive the law of demand and supply. Owing to the growth of gold delivery volume from gold-mining companies and secondary sources, the market has become saturated. The considerable decline in demand for gold by jewelry manufacturers and other final consumers makes the gold market retrace as well.

That is why gold is very likely to get cheaper in the short run. How considerable is the fall going to be? It depends on investors’ purchasing power and their desire to close the “long” positions.

If the market of gold doesn’t face major Chinese or Indian market interventions, the price will be gradually falling down to $1300 per ounce. After the price reaches the level the investors will start taking profit. If any intervention occurs the $1350 level will become

What US banks gained biggest profit?

Market Leader informed

In the 3rd quarter the major US banks gained the biggest profits from investment banking while retail banking was loss-making.
Thereby, Bank of America, the leading bank in terms of retail banking, lost more than $10B. It happened as there were some commission limitations. At the same time the Investment Banking Division of Goldman Sachs earned $1.899B of net profit.

On Monday Citigroup released its quarterly report indicating $2,2B profit. The data exceeded all the analytic forecasts, which made the analysts expect that the reports of other banks would also be positive.

Retail Sales in Britain gain 0.5%

Market Leader informed

On October 21st 2010 Office for National Statistics (ONS) published Retail Sales for September.


Previous value: - 0.5%. Forecast: 0.4%.


Retail Sales are some kind of a key to determining the level of consumer spending. The indicator defines the economic activity of the entire country.

The retail sales of products with various price dynamics serve as the calculation basis, which sometimes leads to divergence between forecasts and actual data. However the released data allow market participants (including Forex) to make certain conclusions.

Will British Pound get stronger?

Market Leader informed

The British government takes more serious austerity measures.
The austerity wave has even affected the British “holy of holies” – the navy. Britain’s only aircraft carrier is going to be decommissioned. According to the government’s regulation, it is planned to reduce the military personnel of the British air forces and navy by 5000 people. Nevertheless, politicians say the army’s fighting efficiency won’t be harmed.

In 3 days GBP has lost its ground and is currently being traded at 1.5700 –the level of early September.
According to the new tech analysis by Masterforex-V, yesterday the price came out of the MF Sloping Channel, showing that the wave 1.4228-1.6205 might be competed. The breakout of the MF pivot 1.5298 will confirm the supposition.

At the moment, according to the analysts of the Department of studying Masterforex-V trading system , there is a bearish wave formed on H4/H8 chart. GBPUSD is being traded within an H2 flat, going out of which will determine the direction of the forthcoming trend:

For investors: Apple earns record-breaking profits

Market Leader informed

The 4th quarter of the financial year is over while Apple Inc is proud to announce its profit – $20,34B! (for comparison sake – $12,2B for the last year).

The company’s employees say it was due to the successful sales of Apple products. The biggest share of profit was brought by new products – iPhones and iPads. In 2010 Macs were 27% more popular with consumers while the sales volume of iPhones increased by 91% as compared to 2009. Only iPads didn’t come up to the company’s expectations – only 4.2M iPads were sold (with 4.8M expected)

In terms of capital value Apple can compete with such giants as Microsoft. In May 2010 investors priced Apple at $222B while Microsoft was valued at $219B. By now Microsoft has regained its position of the leader, yet the difference is not considerable.

How much more expensive will sugar be in the short run and why?

 Market Leader informed

People around the world feel how sugar and other staple foods are getting more expensive: Moldova, Ukraine, Belarus, Kazakhstan, Germany, Switzerland and other countries. World mass media vie with each other in telling people about constantly changing prices. Yet they forget do the key thing, i.e. to perform an analysis of the situation instead of simply stating facts, so that people could understand:
• why the sugar price suddenly started to grow
• how much it will increase in the near future
• what will be the short-term consequences of the governmental measures around the world to restrain the price growth

According to our expert Ivan Kurapov, the head of the Department of Market Sentiment Analysis, Masterforex-V Academy, originally the swift increase in food prices is caused not by speculators (which are blamed for the situation), but by the rapid growth of the sugar futures index at all the exchange markets around the world resulted from:

6ECONT and EURUSD indicate no clear perspectives

Market Leader informed

This week the common European currency has been moving in both directions within a widening flat, the range of which is 400pts. At the moment EURUSD is moving towards the upper border of the flat. EUR is currently growing because numerous investors have decided to sell USD. Some of them have done it for the 2nd time after taking profit from the price movement caused by China’s interest-rate increase. The market shows a decline in risky sentiments while USD indicates overall weakness.
Today’s significant news releases are to come out at 8.00GMT (EU), 8.30GMT (GB) and 14.00GMT (US).

The Department of Volume Analysis, Masteforex-V Academy, has defined the following market dynamics for today, Oct 21st 2010:
The mid-term dynamics is flattish
The short-term dynamics of 6ECONT:

1.3920 may become a crucial point at the current trading session. The level has a volume of more than 38 lots. If the price tests the level, breaks through it and consolidates above it, this will be a good bullish sign. A downward movement from the level will confirm the continuation of the flat.



You are free to discuss this article here:   forum for traders and investors

Key indexes at European marketplaces grow again

Market Leader informed

Yesterday Europe’s leading indexes rose once again.
One of the reasons for it is good news released by the Bank of England. The opening of the American trading session was favorable as well.
The overall stock market strength affected EUR at Forex.
According to the calculations made by the Department of studying Masterforex-V trading system , EURUSD has gained strength, having formed a bullish wave of, probably, wave level H2. The upward tendency is likely to continue. An H8 FZR* is possible as an alternative scenario.

The SNB managed to reduce pressure on franc

The Swiss National Bank (SNB) reduced on September 16 its 3-year inflation outlook. This news eased the pressure on the Switzerland’s currency and helped franc lose 2.3% versus euro. Inflation rate expected in 2011 was diminished from 1% according to June estimate to 0.3% and in 2012 – from 2.2% to 1.2%. The pace of inflation won’t exceed the limit set by the central bank at 2% at least until the second half of 2013 года that’s a year later than anticipated before.
An analyst of the FBS brokerage company Elizabeth Belugina notes that the revision played the role of the verbal intervention. As a result, it’s possible to assume that inflation forecasts of the country central bank may be a much more

Great Britain to save on science

The British government plans to reduce the spending on a range of domestic economic sectors.
Besides the much-talked-of reduction of the Ministry-of-Defense budget the austerity measures will concern scientific research programs.
Meanwhile the British Pound currency rate keeps on declining at Forex.

There is downward wave C of level H3 currently being formed, the analysts of the Department of studying Masterforex-V TS report.

Bank of Canada leaves Overnight Rate as it is

Oct 9th 2010 at 17.00GMT the Bank of Canada released the Overnight Rate data, which stayed the same at 1.0%.


Previous value 1.0%. Forecast 1.0%.


Overnight Rate is generally the rate that large banks use to borrow and lend from one another on the overnight market. In some countries (Canada, for example), the overnight rate may be the rate targeted by the central bank to influence monetary policy (Wikipedia).
In Canada it is the main interest rate. If it is raised it declines the interest in consumer lending, which in its turn stimulates savings and slows down the pace of economic growth. However the growth of the interest rate attracts foreign investors, which supports the Canadian Dollar (CAD) in mid-term perspective. However it depends on whether the growth of the interest rate is

Do experts’ opinions and statistics coincide on the question about the end of the global economic crisis?

These days people are constantly saying that the global economic crisis is over. According to Paul Krugman, a Nobel-prize winner, one cannot say that there is some global economic recovery in the world, as many experts do. The statistic data provided by numerous countries do not allow us to say it. Czech analysts give their own way to define whether economic situation is really getting better. They suggest doing it with the help of 8 simple indicators.

The 1st and major indicator is employment. Without it any economy is, at best, in the state close to the absence of development. When there is no opportunity to find a job it says that the economy is suffering a severe crisis. Unemployment leads to a range of social problems. It is such a heavy problem that unemployment rate comes to an acceptable level only at the very end of economic recovery through the society’s incredible efforts.

The United States, which stated the global economic crisis, proves that the unemployment phenomenon is extremely difficult to struggle with. The US unemployment rate is some 9.6%. Obama’s administration has failed to reduce it even a little bit in spite of allocating billions of dollars for that reason. Paul Krugman gives the following comparison of economic growth and unemployment rate decline: economic growth of 2.5% gives an opportunity only to restrain unemployment; far bigger pace of economic growth is needed to reduce it.
The US economic indicators for the 1st quarter grew 2.5%, which gave an opportunity to stop the unemployment growth. But now the indicators fell down to 1.6%.
The economic data for the EU do not afford ground for positive rating. The total unemployment in the EU is 9.6%. The GDP growth of the EU

USA: Building permits decline 30.000 in August

On October 19th 2010 at 12.30GMT the US released the Building Permits data.


Previous value 0.57M. Forecast 0.58M.

BUILDING PERMITS is the number of newly-authorized construction projects. The data are used as an anticipatory indicator for activity in the housing market because getting a Building Permit is the 1st step in the construction process.

The final figures of the indicator are used to make a report revealing the situation at the housing market. The data include seasonal changes.


The indicator is rather changeable because of the housing market specifics. As a rule it instantly reacts to changes in interest rates as the 1st step implies lending.


The more building permits the opponents get the stronger the economy and the national currency of the given state is.


In the US it is published by the Department of Commerce.

Full article is posted here: USA: Building permits decline 30.000 in August
You are free to discuss this article here:   forum for traders and investors

The greenback managed to strengthen a bit

US dollar strengthened for the third day in a row. It happened as traders keep taking profits on gains in other currencies.

Elizabeth Belugina, an analyst of FBS brokerage company thinks that the greenback was helped by US Treasury Secretary Timothy Geithner’s announcement who for the first time since February said that the country’s government wants dollar to be strong. It’s necessary to note

6ECONT and EURUSD: the movement is restrained

As Market Leader reported, previously the common European currency failed to come out of the range formed by the local extremes at 1.4160 and 1.3770. The movement was flattish. During the Asian session EUR was falling while at the American session it almost regained its position. Currently most traders expect EURUSD to decline in the short run. The recent decrease in the USD currency rate has turned out to be excessive. Investors’ sentiments have been stabilized, allowing USD to recover a little. According to some well-known info agency, there are fears that

James Quigley speaks about the 2nd wave of the crisis

James Quigley, Chief Executive Officer of Deloitte (USA), which is among the 4 biggest auditing service companies in the world, thinks that auditors doesn’t have anything in common with the global recession started in 2008 despite that fact that auditing activities may affect major financial and business institutions.

According to him, the crisis was caused by the downfall of the US mortgage market started as financiers had been too busy “playing” with the availability of credits. Moreover numerous fake financial operations of secondary level, including the “securitization” of credits, also added fuel to the flames and increased the volume of the “financial soap bubble”, which finally burst. To his mind, auditors in their turn are responsible only for validating the operations performed by the management. It is management who is responsible for the final results of the company’s financial activities. However these words can be considered a little bit skeptically as Deloitte is engaged in consulting activity, which influences the strategic decision-making of top-level management.

According to James Quigley, the 2nd wave of the crisis is

Market volatility in advance of G20 meeting

Market volatility in advance of G20 meeting.

18 October 09:33 AM

If an option trader wants to be a professional, first of all before starting another trading session he/she should check the potential volatility. In order to do that it is necessary to have a good command of fundamental analysis, or at least to be able to analyze macroeconomic indicators. So, what to expect from the market this week?

Oct 18th, 2010 (GMT)
14:00 USD - ТICS (Тreasury Intеrnational Capital System). TIC Long-Term Purchases.

Oct 19th, 2010 (GMT)
12:30 USD - Building Permits
18:50 GBP - BOE Gov King Speaks

Oct 20th, 2010 (GMT)
08:30 GBP - МPC Мeeting Мinutes
08:30 GBP - Public Sector Net Borrowing

Oct 21st, 2010 (GMT)
08:30 GBP - Retail Sales
Tentative GBP - Inflation Report Hearings
09:15 GBP - МPC Мember Posen Speaks
12:30 USD - Unemplоyment Сlaims
14:00 USD - Philly Fed Manufacturing Index

Oct 22nd -23rd, 2010
G20 Meetings

S&P500 forms the wave of the senior timeframe

According to the results of Friday’s trading sessions, S&P500 remains faithful to its bullish sentiment:
The price has finished forming wave a (C ) 1180.54-1126.88. According to the Department of studying Masterforex-V trading system , after the S&P500 retraces against the mentioned wave, there will be 2 variants of further movement:
1. Trend continuation in the form of “the Hound by Elder/MF”
2. Trend reversal (from bullish to bearish), which needs the following conditions to be fulfilled: the breakout of the defensive MF pivot, MF SC*, “the Moment of Truth/Test”, settlement below the volume of clusters and a FZR* of the same wave level.

Resistance levels:
1215.31-1210.44=100.0%W1+150.0%AD1+161.8%a(С) Н6-8
1190,78-1192.78=88,2%W1+123.6%а(С)Н6-8

Support levels:
1162,03=SC + pivot
1127,48= pivot

This week’s key news that can influence the market dynamics (GMT):

Oct 18th
13:00 USA - Net Long-term TIC Flows
13:15 USA - Industrial Production

Oct 19th
12:30 USA - Building Permits
12:30 USA - Housing Starts

Oct 20th
18:00 USA - Fed’s Beige Book

Oct 21st
12:30 USA - Jobless claims
14:00 USA - Philadelphia Fed Manufacturing Index
--

FZR = Fractal-Zigzag Reversal
MF SC = Sloping Channel by Masterforex-V

Full version of article You can find here: S&P500 forms the wave of the senior timeframe
You are free to discuss this article here: forum for traders and investors

Dollar index is rebounding

The greenback managed today to improve its position versus the basket of currencies – the dollar index recovered from 10-month minimum at 76.144 late on Friday gaining 0.1%.

TechnicElizabeth Belugina, an analyst of the FBS brokerage company says that it’s necessary to mention, that dollar’s upside move correlated with Friday’s increase in longer-term US Treasury yields that occurred after comments from Federal Reserve Chairman Ben Bernanke that assured the market of further monetary easing conducted by the Fed.


Elizabeth Belugina, an analyst of the FBS brokerage company says that it’s necessary to mention, that dollar’s upside move correlated with Friday’s increase in longer-term US Treasury yields that occurred after comments from Federal Reserve Chairman Ben Bernanke that assured the market of further monetary easing conducted by the Fed.

EUR/USD lowered from 8-month maximum at 1.4157 returning to 1.3900 area. AUD/USD decreased from 28-year maximum at 1.0002 to 0.9865 zone.


Full version of article You can find here: Dollar index is rebounding  
You are free to discuss this article here: forum for traders and investors