Singapore dollar: after the flood

Market Leader informed

Earlier this week heavy rains lead to serious floods in Indonesia, Malaysia and Vietnam, which caused a crop failure and consequently a price boom, on rubber in particular.

In the meantime, USD continues declining versus the Singapore Dollar (SGD) at Forex.

This week the price keeps shaping the 5^th subwave inside wave C on D1. Its constituents: wave A of level H8, a retracement for wave B, and wave a (C ) or C, which is currently being developed and has a 5-wave structure with H2 waves acting as its subwaves.

Thereby,  the Department of studying  Masterforex-V trading system expects one of the following scenarios of the USDSGD price movement to take place:

·continuation of wave A/5 of level H2

·appearance of the upward MF Reference Point, with breaking through the MF pivots at 1.2854 and 1.2893 and coming out of the MF Sloping Channel, which will signify the end of wave a(C )/C of level H8

·elongation of wave a(C )/C on h8 through “the Hound of the Baskervilles by Elder MF”

Nov 5^th. Forthcoming news (GMT):

Why is the US interested in Russia's accession to the WTO?

Market Leader informed

According to Michael Froman, who is deputy assistant to the president and deputy national security adviser for international economic affairs, the United States will be promoting the Russian Federation’s accession to the World Trading Organization.

 

Barak Obama also speaks in favor of the process

. In particular, during the recent phone call to Dmitry Medvedev he said that they might consider the bilateral talks on Russia's accession to the WTO to be practically over. During the latest briefing Froman stated that the US was currently holding talks with the EU and the WTO on the matter.

We should remind you that Russia has been trying to join the World Trading Organization since 1993. Basing on the experience of the neighboring countries (Ukraine, Turkmenistan, Kyrgyzstan) it can be said that on average the talks last from 5 to 7 years. The standard procedure of accepting new members takes from 6 to 12 months more. According to Mr. Kudrin, Minister of Finance and Deputy Prime Minister of the Russian Federation, Russia will be ready to start to the procedure of entering the WTO only in 4 months. Consequently, we should expect Russia to join the organization not earlier than in a year.

Lawrence Summers, Director of the White House National Economic Council for President Barack Obama, confirmed the information during one of his latest speeches. According to him, all the necessary talks will last for several months, so Russia will have become a full member of the WTO by the end of 2010. The thorniest question and the obstacle on the way is the Customs Union (CU) of Belarus, Russia and Kazakhstan. According to Mr. Summers, as a result of the talks with the Russian Deputy Prime Minister Igor Shuvalov, they have reached an agreement according to which the Russian Federation will be joining the WTO separately from the other members of the CU.

G20 summit in Seoul: will the world change after it?

Market Leader informed

The world has stood still waiting for the G20 summit, which is to take place in Seoul on Nov 10^th -11^th 2010. The financial circles start expressing concerns which may turn into panic if not dealt with in time. 

 

The problem is that:

·Various members of G20 see completely different ways out of the crisis, which have already been announced to the citizens of the corresponding countries.

·Each member of G20 is trying to solve its own problems at the expense of the others.

Fortunately, the world hasn’t yet come down to the principle: “The worse the neighbor feels the better it is for me” (as it was on the verge of the Great Depression in the USA). However every country has been taking care of its own interests for al long time.

The mixed plan of coming out of the crisis through the eyes of the major G20 participants.

This is the way the experts of Masterforex-V Academy see the G20 members’ current plans of coming out of the crisis, which are going to be introduced in Seoul:

1.European states (Germany, France) promote austerity measures (budget reductions, pension reforms etc.) as the key means of economic recovery of the entire world and every single state in particular.

2.The US Fed Reserve System is planning to use G20 summit to implement the currency stimulation program while openly hinting at the possibility of devaluing USD even though the G20 finance ministers haveurged the governments to not devalue their national currencies so as to stop the trading wars (as the devaluation of the national currency provides the domestic exporters with extra favorable conditions)

3.The US government urges its partners to lower the global disproportions between export and import. In other words, with the help of G20 the US government wants to put into practice such conditions that would eliminate its negative balance in trading with China, other Asian counties (South Korea, Singapore, Taiwan) and Germany.

4.The world’s biggest corporations keep accumulating cash while the governments of numerous states, including the US, are trying to “deprive the billionaires of their money” in order to solve their own problems at the expense of the latter

5.The counties with big earnings (China, South Korea, Singapore) do the same that the corporations do:

·At the G20 summit they want to secure the favorable conditions for external trade, first of all with the US… and to continue earning profits.

·They accumulate gold and currency reserves. For example, China’s currency reserve is estimated at $2.6 trillion, which is the main reason for the global trade imbalance, EU representatives say.

Oil Coming Out of Range

Market Leader informed

The WTI futures price at New York Commodities Exchange (NYMEX) created Wave 5/A(c) within its range on 3 November 10, having previously reached retracement target levels for Wave 4 at 38.2% ($79.91).

 

Experts of the Faculty for Studying the Masterforex-V Trading System emphasize that the medium-term bullish trend remains intact. However, there are no conditions for secure medium-term buying of the futures so far as the current wave is short and a pullback is necessary. A protective bullish pivot at $79.74 should be broken and a Fractal-Zigzag Reversal (FZR) should emerge to change the trend.

How Can Russia Benefit from Wheat Futures from Chicago Mercantile Exchange?

Market Leader informed

October 2010 ended with unexpected growth of wheat prices by 1.1%-1.4% on American exchanges which was, nevertheless, immediately set off as early as during the first days of November with a 2%-3% fall and a continuing tendency for depreciation.

 

In the meantime, as reported by The Times on 1 November, Chicago Mercantile Exchange Group headed by CME CEO Craig Donohue visited Moscow and negotiated with Victor Zubkov, the Russian Vice-Prime-Minister for the agricultural sector of the Russian economy.

 

Negotiations were aimed at introducing wheat futures in Russia. According to expert forecasts, this step will be mutually beneficial.

In this way CME Group would be able to expand its trading floors by cooperation (possibly, based on the Globex platform that already in place at Chicago Exchange) with leaders of the agrarian sector of Russia, Ukraine and Kazakhstan. The Times observers believe that it will inevitably cooperate with RTS which currently trades futures for Urals and Brent oil and gold.

 

On the other hand, tools offered by Chicago Board of Trade (CBOT), a trading floor that has traditionally been an international indicator of prices for exported and imported grain crops for decades will be rather useful for Russian producers

British Pound keeps getting stronger

Market Leader informed

According to its new accommodation policy, the US Fed Reserve is going to buy the treasuries to the sum of $600B.

The Fed Reserve reports that it is going to spend $75B every month to purchase the long-term treasury bonds. Such a measure may have a negative impact on the creditworthiness of the United States.

 

At the same time the Fed Reserves keeps devaluing USD.

In such a situation the British Pound currency rate at Forex is demonstrating positive dynamics.

Having broken through the high, the GBPUSD rate keeps on growing while developing short wave a (C ) /C.

Should the downward retracement come out of the MF Sloping Channel and break through the MF pivot at 1.6051, the wave started at 1.5961 will be completed. The pivot at 1.5961 is now defending the whole wave from 1.5651.

Today’s news (Nov 4^th  - GMT):

12:00     GBR - Bank of England Rate Decision

12:30     USA - Jobless claims, Nonfarm Productivity, Unit Labor Costs

12:45     EU - European Central Bank Rate Decision

13:30     EU - ECB Press Conference

European banks to increase reserves

Market Leader informed

Over the near term the European Commission will look into the proposal made by the Basel Committee on Banking Supervision to reconsider the rates of reserve accumulation during economic uprising in favor of increasing them.

Such a measure is aimed at restraining the excessive volume of bank lending, which leads to a financial crisis. Besides, more solid bank reserves will soften the losses of the financial institutions under recession.

These proposals of the committee have been the toughest ones over the whole period of the common banking regulation in Europe since 1974. In their turn, the representatives of the European Banking Federation suppose that such an increase in the rates of reserve accumulation will deteriorate the situation in the banking sector.

Yesterday during the news release on the Fed Reserve interest rate decision, which remained intact at 0.25%, the European currency updated its mid-term high at 1.4157, showing that the uptrend was still strong.

Representatives of the Department of studying Masterforex-V trading system assume that currently the EURUSD currency pair is shaping a short wave of the senior timeframe, the “MF Moment of Truth” for which will indicate the direction of the EUR mid-term trend.

If the MF pivot at 1.4010 and the MF Sloping Channel are broken through, the wave started at 1.3734 will be completed. If the price keeps declining and getting over the MF pivot at 1.3734, it will terminate the entire wave started at 1.2587. Otherwise the bullish wave will be elongated.

EURUSD: Forex stands still waiting...

Market Leader informed

Europe showed a positive start of the current trading session as the news data came out better than expected, which resulted in EUR growing against USD.

At Forex EURUSD is currently moving within the flat range formed in mid October. So most investors do not see any need to buy or sell the Euro currency.

An M15 wave (1.4057 - 1.4022) is acting as the reference point for the downward scenario while the price is currently forming a wave of level H2 from 1.3731.

Today’s news (Oct 3^rd - GMT):

11:00 USA - MBA Mortgage Applications

12:15 USA - ADP Employment Change

14:00 USA- ISM Non-Manuf. Composite

14:00 USA - Factory orders

14:30 USA - Crude Oil Inventories

18:15 USA - Federal Open Market Committee Rate Decision

Will the Dollar Lose 20% of its Worth in the Years to Come?

Market Leader informed

This will happen after the US Federal Reserve System (the FED) continues its effort aimed at loosening up its credit and monetary policies, according to influential American financial analyst Bill Gross. He believes that emission of trillions of dollars will push the dollar’s worth down worldwide. This will result not only in a larger amount of dollars but also in lower yields for investors. Consequently, foreign investors might wind up their dollar-denominated assets.

 

Experts and investors are expecting the outcome of the meeting of the Federal Open Market Committee scheduled for 2-3 November.

Experts believe that this meeting will make a resolution to commence the second stage of currency stimulation that involves a buyback of governmental bonds and other assets worth from 500 billion to 2 trillion dollars from the market. A quick note: in late 2008 the FED made an assignment of 1.7 trillion dollars for purchase of treasury bonds and mortgage-backed securities during the wave of the financial crisis that struck the US. Now everyone is expecting a new monetary emission in the US economy that FED President Ben Bernanke made a rather broad hint at.

 These measures justify a number of negative signals. To start with, it is the unemployment rate that has stopped at the mark of 9.6%. Also notably, US Q3 GDP forecast has been lowered to maximum 2%. Basic personal spending has also increased by 0.8%. Emission is expected to last a couple of months. The FED will allegedly spend about 80-100 billion dollars each month for purchase of securities. In the meantime, experts will be monitoring the market to make sure that this program really has a positive effect. Unfortunately, the US economy has no alternative way out.

6ECONT and EURUSD: hard way up

Market Leader informed

Yesterday the common European currency managed to update its local high, getting close to 1.4060. However the movement looks weak. Even though from the technical point of view GBPUSD shows uptrend, in practice it looks like everything may rapidly change in the short run.

Nevertheless, most investors tend to express positive sentiments, noting that EUR has reached its max value since Oct 25

^th

. It happened in spite of the fact that the yield spreads of the Spanish and Irish treasury bonds had grown against the German bond yield spreads. Such an ambiguous situation makes EURUSD look uncertain in the mid-term perspective, increasing risky sentiments.

Today’s macroeconomic data may turn out to be a significant market accelerator as there are many important news releases expected for today:

8.00GMT   - EU news block

09:30GMT - PMI Services (GB)

USA news

12:15 GMT - ADP Employment Change

14:00 GMT - ISM Non-Manufacturing Composite, Factory orders

14:30 GMT - Crude Oil Inventories

18:15 GMT - Federal Open Market Committee Rate Decision