Irish crisis – step by step

Market Leader informed

 

Finally it happened. After resisting for sometime Ireland eventually decided to compromise and accept the financial aid from the European Union to the sum of dozens of billions (EUR) to support its banking system.

The world community breathed with relief.

The Irish prime minister’s speech at the end of the last week was met with general approval as until the last minute the Irish authorities had been trying to convince everybody that they didn’t need any external help.

It is quite explainable because over the last 10 years the Irish economy has been a role model in terms of how to build the economy in the EU countries. Yet, they do not want to “come back to earth”. The fact that the financially stable country suddenly went broke certainly needs considering as the situation is really critical.

One of the reasons for it was the rapid decline in the housing market, which undermined the banking system making numerous Irish banks fall into the debt abyss. The government allocated 50B euro to help the banking system, which led to the budget deficit growth.

Taking into account Ireland’s reputation and the service it rendered to the EU in terms of forming a favorable image, numerous analysts  are inclined to consider Ireland to be the main threat to Euro.

Irish crisis – step by step

Market Leader informed

 

Finally it happened. After resisting for sometime Ireland eventually decided to compromise and accept the financial aid from the European Union to the sum of dozens of billions (EUR) to support its banking system.

The world community breathed with relief.

The Irish prime minister’s speech at the end of the last week was met with general approval as until the last minute the Irish authorities had been trying to convince everybody that they didn’t need any external help.

It is quite explainable because over the last 10 years the Irish economy has been a role model in terms of how to build the economy in the EU countries. Yet, they do not want to “come back to earth”. The fact that the financially stable country suddenly went broke certainly needs considering as the situation is really critical.

One of the reasons for it was the rapid decline in the housing market, which undermined the banking system making numerous Irish banks fall into the debt abyss. The government allocated 50B euro to help the banking system, which led to the budget deficit growth.

Taking into account Ireland’s reputation and the service it rendered to the EU in terms of forming a favorable image, numerous analysts  are inclined to consider Ireland to be the main threat to Euro.

Fed Reserve to announce receivers of $3.3B financial aid

Market Leader informed

On the order of the US Congress the Fed reserve is to announce the receivers of financial aid to the sum of $3.3B. The legislators urged the Fed Res publish the info after it adopted the financial-aid plan, which reduced the size of the 700B governmental program of supporting risky assets.

So, the info should be published at the Fed Res internet site at noon as provided by the Dodd-Frank Act. The report mentions 6 programs of lending through implementing currency swaps with other central banks and trough obtaining mortgage bonds and investing in Bear Stearns and American International Group.

The data say the Fed Res supports Bank of America and General Electric as previously the collapse of Lehman Brothers became the reason for a considerable increase in spending connected with lending to individuals.

Such actions are expected to intensify the criticism against the US central bank’s actions, especially if to take into account the reaction to the decision made by it on Nov 3^rd 2010 about pouring $600B into the national economy. The Republicans opposed the decision saying such measures might end up with inflation growth and unjustified increase in the value of numerous assets.

Howard Friend, chief economist for MigBank, says that all these attacks are aimed at making political capital. Yet the political criticism is not expressed through deeds while any decision made by the Federal Reserve is always discussed very actively.

Experts of the Department of studying Masterforex-V trading system made their forecast on the further movement of the USD index in the article called “Europe isn’t satisfied with the US monetary policy. What will be the USD currency rate?”

Crude Oil: what will be the price on “black gold”?

Market Leader informed

The news releases reporting that the debt crisis in the EU will be solved have a positive impact on crude oil prices.

Despite that, comments made by the People’s Bank of China on the monetary policies aimed at reducing the inflation, may significantly lower the demand for oil, which will affect its price.

On Wednesday the published reports on crude oil inventories had almost no impact on the market as this week’s inventories has been the biggest since 1987, which testifies to strong bullish sentiments.

The technical analysis of the crude oil chart also indicates the bullish sentiments however the significant growth of the last few days cannot prove that there will be any upswing today. That is why we expect the price to move sideways within the 86-87.5 range.

What impact do economic data from USA and China have on metal markets?

Market Leader informed

Strong economic data from the US and China provided the markets of industrial metals with solid support yesterday.

Today, after the 3 days of growth, the market of metals will probably stay flat waiting for tomorrow’s monthly unemployment rate.

This week gold has been supported by positive economic data and uncertainty at currency markets. The closest resistance level at the market of gold is 1400 while the support is located in the 1365-1375 area.

 

Market overview and trading recommendations in case New Year rally takes place

Market Leader informed

Last week markets were neutral. On Thursday and Friday there the US celebrated Thanksgiving Day, so the stock market volume was low.

The last week was also noticeable for the worsening of the sovereign ratings in Europe. The treasury-bond yield of Spain, Portugal and Ireland exceeded the levels of the corporate emitters of the CIS states. For example, the current interest rate for 10-year treasury bonds is 9% in EUR. Such yields are unlikely to be offered even by the local banks.

One more negative cause was the situation around the inter-Korean conflict.

Out of some positive “drivers” we can single out the data on the initial jobless claims which came out better than expected. The latest value is 407.000, which is the minimal level over the last 2 years in terms of average estimation.

Swiss economy is out of danger

Market Leader informed

Switzerland can sleep soundly despite the fact that most of its neighbors are concerned about the existing sovereign debts. The Economiesuisse (a Swiss corporate union) and the Chamber-of-Commerce representative of a Neuchâtel canton report that nothing threatens the Swiss economy due to the sound fiscal competition, which raises disputes in the parliaments of numerous cantons and is criticized by socialists.

The main conclusion made at the meeting of the Economiesuisse and the Chamber of Commerce is that preserving the sovereignty of cantons in terms of tax policies will lead to prosperity in the future.

In the meantime at Forex USDCHF continues its uptrend in the form of wave C on D1 within the framework of retracement against the bearish wave of Monthly level (1.1730-0.9461).

Experts from the department of studying Masterforex-V trading system suppose that the bullish movement of the currency pair will hold true until the price gets over the defensive MF pivot at 0.9848 and comes out of the MF sloping channel, which will terminate the bullish wave started at 0.9554 while the price will start forming a new MF reference point.

The next important resistance level will be 1.0089

Australian GDP declines in the 3rd quarter

Market Leader informed

According to the results of the 3^rd quarter, the economic growth of Australia slowed down. The reason is the considerable strengthening of the Australian Dollar versus other major currencies.

The Australian GDP growth in July-August was just 0.2%, while in the 2^nd quarter its value was 1.1%.

However, Sydney expects an increase in the global demand for Australian products, which can make the GDP growth more solid in the 4^th quarter.

At the same time some experts consider the economic data of the country to be unsatisfactory over the last period. They believe that the Australian economy still cannot reach an acceptable value.

It should be noted that thanks to the high demand for minerals around the world Australia managed to avoid the negative consequences of the global crisis (2008-2009).

Rio Tinto group, which is one of the major Australian iron-ore producers, announced on Wednesday about extra investments in iron-ore mining in the west of the country to the sum of $1.2B.

According to the Department of studying Masterforex-V trading system , after making a rebound from the support level at 0,9540 (138,2% AD1), AUDUSD is currently forming a bullish wave, which may terminate the downward movement in case it gets over the pivot at 0.9540 and the sloping channel.

China: Is Rapid Development of this Country’s Economy as Dangerous as Believed in the USA?

Market Leader informed

People’s Republic of China is a powerful agrarian and industrial country that develops such traditional sectors of industry as textiles, coalmining, ferrous metallurgy, phosphorus and faience production and has created new sectors such as oil refining, gas, chemical, aviation, space, electronic, machine building, instrument-making. China holds a leading position in the world in terms of coal production, manufacture of cement, mineral fertilizers, steel, power. It has developed modern means of transport. Major seaports include Shanghai, Tianjin with Xingang, Dalian, Guangzhou with Huangpu, Zhanjiang, Qinhuangdao, Qingdao. The country has about 500 domestic and 60 international airlines.

 

Is the West afraid of China?

 

No doubt. But this feeling can be characterized rather as anxiety and mounting concern caused by this country’s might. America and Europe have been afraid of Russians alone for the past sixty years (meaning the USSR and, later, the Russian Federation) but those phobias were based on a risk of war. The PRC, on the contrary, scares them with the success of its strategic course that resulted in economic growth and, as a consequence, political influence in the world. What does China have that irritates many advocates of “the western way of thinking”? Experts of the Masterforex-V Trading Academy have pointed to the following factors:

Why do gasoline prices differ so much around the world?

Market Leader informed

The prices on the same products always differ in various parts of the world depending on the producer’s expenditures and revenues.

As a rule competition reduces the difference in the prices on the same products to a minimum. Yet, there is some special product in the world. It is gasoline (or petrol as the British call it). The difference in gasoline prices around the world is shocking.

Nowadays an automobile is not an attribute of luxury but a vehicle. Auto manufacturers try to cater for all the social levels, producing both super expensive and super cheap cars. However, after buying an auto the owner has to pay for the fuel to ride it. Fuel is one of the main factors determining the future of the motor industry and the quality of life in a specific country.

So what are the prices on gasoline (petrol) around the world? Experts from various International Associations of Traders and Investors under Masterforex-V Academy have made up the following comparison table of the retail prices on gasoline/petrol:

Manufacturing PMI in Great Britain gains 58.0

Market Leader informed

Today, on Dec 1^st 2010 at 9.30 GMT Great Britain released its Manufacturing PMI data for November.

Current value 58.0 Previous value 54.9 Forecast 54.9

The Manufacturing Purchasing Managers Index (PMI) is an indicator reflecting the sentiments of purchasing managers in manufacturing economic sector.

The report includes the current situation in manufacturing industry (the purchase prices, the effectiveness of using the available production capacity, the reliability of the suppliers and contractors etc.) and a short-term forecast.

The adequate reaction of the business sector to various changes in the business climate makes it possible to consider a Manufacturing PMInews release as an important event for currency markets experts.

It is supposed that an increase in the value of the index makes the GBP currency rate grow.

Who is Trying to Shoulder the Blame on the Euro… for the Global Crisis and Why?

Market Leader informed

The crisis in Europe (Greece, Ireland, Portugal and other EU nations) pushed analysts and experts to seek the party guilty of the crisis. Analysts’ conclusions shocked Europe. A number of analysts said that the crisis was initiated other than by banks, financiers, industrialists or stockbrokers. The crisis was allegedly initiated by… the Euro, the European Union’s national currency. What arguments did the people that called the Euro the culprit have? What do such statements hold for owners of the Euro deposited in banks?

 

What are the arguments of the Euro’s opponents?

 

• If the afflicted countries (Greece and Ireland) hadn’t shifted to the European currency in due time they could have devalued their national monetary unit (like it was done, for example, by Great Britain) and survived the crisis with minimal losses. Athens might have had to ‘drop’ its drachma by about 40%, which would have saved Greek economy, however. But now it has to find a way out by using taxpayers’ money transferred from other countries of the currency union.
• During the economic boom of 2007 – early 2008 there were no restrictions on capital inflow from European countries that had a budget surplus (Germany, France) to such nations as Greece, Spain, Portugal, Ireland. This caused quite a dangerous misbalance that manifested itself during the crisis quickly enough.

6ECONT and EURUSD heading for new lows

Мarket Leader informed

The downward dynamics still has considerable potential. Yesterday EURUSD updated another low at 1.3060.

According to leading analysts, numerous investors are concerned about the paying capacity of some Euro states, which is another factor pressing Euro.

The impact of the US macroeconomic data, which are to be released today, may be noticed from 11.00 to 12.00GMT (including consumer confidence).

Nov 30^th 2010. The Department of Volume Analysis, Masterforex-V Academy,  has defined the following dynamics:

The mid-term dynamics is downward

The short-term dynamics of 6ECONT (EURUSD):

The key reference point of today’s trading sessions is 1.3095, the level of yesterday’s max volume (over 9000 lots).

If the market succeeds in settling above the level then the downfall will be suspended, probably giving way to an upward dynamics.

Volatility forecast for GBPUSD. Nov 30th 2010.

Market Leader informed

The decline of GBPUSD makes it possible to test the lows of early August 2010.

Currently GBPUSD is close to the optional barrier at 1.5500. Getting over it will allow us to expect further decline down to the optional levels 1.5400 and 1.5300. The positive dynamics recovery of the currency pair may be considered only after the price gets over the 1.5700 optional barrier and settles above it while restoring the interest in buying the British Pound.

The last day of November 2010 is not expected to carry any significant news on the British economy, so the volatility of GBPUSD will probably stay the same. However, it can be increased by the Eurozone news at 10.00GMT, including Unemployment Rate and CPI Flash Estimate, as well as Unemployment Change in Germany (8.55GMT). The volatility can also be influenced by Chicago PMI (14.45GMT) and CB Consumer Confidence (18.00GMT).

Provided by the Department of Options, Masterforex-V Academy

 

There are no grounds for Reserve Bank of Australia to increase interest rates yet

Market Leader informed

According to Glenn Robert Stevens, Governor of the Reserve Bank of Australia, the market sentiments over gradual toughening the credit and monetary policies are generally right.

During his speech in front of the legislators in Canberra Mr. Stevens said that at this stage one should expect only gradual increases in the interest rates, which are distant from each other in time. According to him, the central bank has no functions to rescue a risky business bank. Such decisions should be made by the government.

Mr. Stevens assures that the Reserve Bank of Australia will always be offering liquidity on security. He also notes that threshold level of guarantees for government deposits needs considering. As of today the size doesn’t exceed 1 million Australian dollars. In late 2011 the guarantees will expire.

Thereby, Glenn Stevens confirmed the market participants’ opinion that the existing size of the main interest rate in Australia is reasonable as the gradual growth of the AUD currency rate helps to restrain the inflation.

Against the background of all the above-mentioned AUDUSD keeps declining at Forex.

So, one shouldn’t expect any changes over the short term. According to experts, the next reconsidering of the interest rate will take place in Feb 2011.

Experts of the Department of studying Masterforex-V trading system note that AUDUSD continues its downward movement started at 1.0181 and at the moment it is forming wave C on D1. The tendency will hold true until there is a breakout of the MF pivot and sloping channel.

 

 

 

Resistance levels:

1.0181 AD1 base

0,9952 СD1 base

0,9845 MF pivot

0,9631 the current price

Support levels:

0,9550 138,2% AD1

0.9442 161.8% AD1

0.9378 61.8% AW1

 

Tuition-free School of Trading

 

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

Trading Forex and other exchange markets: back-breaking labor rather than easy made billions

Market Leader informed

After the phenomenal success of the “Wall Street 2” movie the amount of those beginning traders who instantly wanted to become rich at Forex or stock exchange started growing rapidly around the world. What will come of it? What the future has in store for the would-be “Soroses” and “Buffets”?

97% of them will definitely lose their real-money deposits instead of earning millions and billions of dollars within a couple of months as it was done so easily by the characters of Wall Street 2, our experts explained. They are professional traders of Masterforex-V Academy, which became Europe’s best Forex training projects 2 times in a row. Statistics is an objective thing, which gives us the full picture of any phenomenon. So, for most traders around the world the statistics looks oppressive: only 3% of beginners become successful Forex traders while 97% lose.

How to prevent a novice trader from losing at Forex or other exchange market?  At the tuition-free School for beginners the professional traders introduced a few lessons which should be learned by any beginner to become a “predator”, not “prey”. It means the following:

Gold is retracing. What will be its price in the future?

Market Leader informed

The data obtained from exchange markets say that USD is getting stronger.

Experts suppose it is happening because traders do not believe that Ireland will be able to cope with the crisis even with the financial aid from the EU.

During today’s trading session at COMEX (New York) gold reached $1374.2 per troy ounce.

Howard Friend, one of the leading strategists for MigBank (a Forex broker), says gold gains in value because the EU is expected to help two more countries – Portugal and Spain.  Financiers are sure that 85B euro of financial aid to Ireland is just the beginning as the Irish economy will need more funds. So traders decided to secure their capital by investing in gold, Mr. Friend explains.

It should be reminded that gold has already been gaining in value for 10 years (it is a 100-year record). Only this year its price has increased by 25%. It is connected with the financial and economic crisis in the world. Investors prefer precious metals to unstable currencies and stocks.

Having analyzed the situation on the daily chart of gold Andrei Mikhalets, an analyst for the Department of Market Sentiments, Masterofrex-V Academy,

India: Leader in the Global Gold Market

Market Leader informed

The 2010 Q3 report prepared by the World Gold Council (WGC) suggests that India holds an invariably leading position in the consumer market of gold jewelry. Total world demand for gold was 922 tons in 2010 Q3, or 12% more than in the respective period of 2009. India, China, Russia and Turkey are responsible for about 63% of gold demand globally.

 

WGC experts believe India to be the most promising market for jewelers. Gold has long been cherished in India as a symbol of success, health and wellbeing. Popular tradition requires use of a variety of gold products in everyday life and much more during holidays, especially wedding ceremonies. The season of weddings and autumnal religious festivals always stimulates unusual demand for gold items among the Indian population.
About 75% of the country’s total demand in 2009 involved jewelry, 23% - investments and 2% - industrial needs. In 2009 India imported $19 bn worth of gold or 15% of the total global demand. India’s annual demand for gold imports has been growing on an average of 13% over the past ten years coming almost 6% ahead of GDP real growth rates.

 

In Q3 this year India imported 214 tons of gold (as compared to 176 in Q3 2009) and 629 tons over the nine months of 2010 which has already exceeded the figure for the entire 2009 during which the country purchased 552 tons.
Demand for gold jewelry in July-September 2010 amounted to 184.5 tons (as compared to 135.2 tons for the same period in 2009) demonstrating a QoQ growth of 36%.

 

Net Lending to Individuals gains £1.3B

Market Leader informed

Today, on Nov 29^th 2010 at 9.30GMT Great Britain released the data on Net Lending to Individuals in October 2010.

Previous value: 0.4B Forecast: 0.8B

Net Lending to Individuals is the total sum allocated for lending to individuals. The provided data serve as info basis for calculating 2 other indicators: consumer spending and consumer confidence.

An increase in the volume of private lending is an indirect proof of the borrowers’ current financial stability, and whish is also important, with satisfactory guarantees of preserving the situation in the near future.

As a rule the indicator has a medium degree of impact on the currency market. When the data come out positive it is advised to stick to long positions when trading GBP.

This week’s volatility forecast for GBPUSD. Nov 29th- Dec 3rd.

Market Leader informed

For the current trading week (Nov 29^th- Dec 3^rd)the news background is expected to be almost neutral.

Nov 29^th 2010

9.30GMT GBP - Final Mortgage Approvals. It is a fairly strong anticipatory indicator, which is expected to show a 3K increase this week. Consequently, the Department of Options, Masterforex-V Academy, expects a possible increase in the volatility during the news release. In its turn, it will affect the value of both the option and the asset.

Annual Pre-Budget Release is also expected during the day. As there is no specific time of the release, the increased volatility may be seen any time within the trading session.

Nov 30^th 2010

00:01GMT GBR - GfK Consumer Confidence. Analysts believe the value is not changing this week. The index has a weak impact on the market because of the respondents’ subjectivity towards the current economic situation. No volatility increase is expected.

Dec 1^st 2010

07:00 GBR - Nationwide House Price Index (HPI). The indicator shows changes in the average housing price in GB. Analysts expect the index to decline by 0.3%

The indicator is important in terms of general housing market condition. However, it doesn’t have a great impact on market volatility as it has an impact on currency and stock markets only in mid and long-term perspective.

09:30     GBR - Manufacturing PMI. We suppose that this week the indicator will show some weakness, bringing no volatility boom. But if the data come out much better than the previous value and than it is expected, the volatility may grow significantly.

So, the current week have no considerable volatility potential. However we think that Mortgage Approvals, Nationwide HPI and Manufacturing PMI are worth paying attention to. Taking into account their mid-term impact on the overall economic situation they may provoke either growth or decline of some other indicators.

War is a force majeure for investments. What the inter-Korean conflict is leading to?

Market Leader informed

A war is a nightmare for business and investments. That is why the conflict between North and South Korea has already provoked downtrends at the world markets.

The futures contracts of the US and European companies are currently declining in value. Asian markets are seeing downfall. MSCI Asia Pacific index indicating the quote dynamics of Asian-Pacific enterprises (except Japan) has lost 1.9%. On the contrary, USD is strengthening versus major currencies as the US currency rate initially takes into account the risks connected with the region. Thereby, before the armed conflict USDJPY was around 83.28. Instantly after the exchange of fire at the border between North and South Korea USDJPY reached 83.72. USD has also recovered against the Australian Dollar. Previously AUDUSD was traded at 0.986. Now it has reached 0.97. The South Korean Won has suffered most of all. Over the time of the conflict USD has gone from 1125 up to 1180 won per 1USD. Experts warn that any aggravation of the conflict may have a catastrophic impact on the rating of South Korea.

Once again the world is on the verge of a serious disaster, which may directly affect exchange rates. Some journalists even start expressing concerns over a possibility of World War III. Of course, it is the worst possible and undesired for everyone and consequently the least probable scenario. However, if the situation goes down to some serious armed conflict the entire world will wish it had never happened.

The JPY index: