Core PPI signals inflation, Housing Starts signals slower growth... what's next?
The CPI and the core-CPI numbers outshone the geopolitical instabilities and natural disasters as traders naturally shifted their view and judgement after Producer Price Index yesterday reported the Fed might raise interest rates 18th consecutive times next month.
In the Eurozone, Producer price inflation in Germany, Europe's largest economy, was faster than expected last month as the cost of energy and raw materials increased. Goods from plastics to newsprint were 6.1 percent more expensive in June than a year earlier. It was reported that the PPI had a 0.7% increase from March, compared to 0.6% the previous month. In annual terms, the increase reached 4.6%, up 0.4 percentage points from March. Eurozone Trade Balance today showed a widened deficit of -3.2 Bil vs. -1.9 Bil the previous month. These both reports failed to budge the EUR/USD the slightest and the market reacted as if nothing happened. Eyes and ears to the Fed only I presume.
In the US, CPI numbers were reported 0.2% for the consecutive 6 months in a row and core-CPI, costs excluding fuel and food rose more than forecast, suggesting Federal Reserve might keep raising rates afterall. Prices paid by Americans rose 0.2 percent after May's 0.4 percent increase, the Labor Department said in Washington. Excluding food and energy, so-called core prices rose 0.3 percent for a fourth straight month and exceeded the 0.2 percent median estimate in a Bloomberg News survey of economists. Core prices increased 2.6 percent from June 2005, the biggest year-over-year rise since 2002. However U.S. homes resumed their decline in June, as single-family housing starts fell to their slowest pace in 18 months. A number of 5.3% decline to 1.850 million rate in June has triggered worries for homebuilders and politicians that slower economy growth is getting worse each month. Would-be homebuyers are moving to the sidelines, dissuaded by the highest mortgage rates in four years and prices that are still above year-ago levels. Reduced demand and an increase in contract cancellations are leading some builders to lower profit forecasts. Economists expect a slowdown in housing growth will help cool the economy this year. So, what would Mr. Ben Bernanke would most likely choose... inflation of slower economy? Just Toss The Coin Bernanke!
However, in his testimonial before the Senate in Capital Hill earlier, Mr. Ben Bernanke told Senate members that higher energy and other raw material prices could "sustain inflation".
These statements had been interpreted as a dovish tone which pushed dollar underwater the most in two weeks against the euro and yen. Traders had been looking forward to this speech and a pause, well at least I am. I've been analysing of what could be the possibly outcome of the market reaction since the main concentration would be on Ben Bernanke's testimony on monetary policy today. This's what I have to say, housing market has always been the major contributor the the US economy, and a great slowdown of housing market is not really a good idea. Non-farm Payroll fell short from consensus showing incapabilities of consumer spending. Retail Sales dropped, and most of all, the election is coming and how could the public vote for a party that ruins the economy? The Republicans are definately doing something about it if they want to continue take the lead in the US government.
My live account had a margin call today, as I was expecting it anyway. Gold prices reached lower levels on higher interest rates expectations by the market has triggered it. Surprisingly, I'm not sad and in fact I'm quite happy about it. No, I'm not crazy but something in me makes me feel glad that I could finally start over with a new system that was implements months before even with a very very low balance left. I will begin scalping the market as I just took 700 units of Long EUR/USD @ 1.2575. Now it's moving on the right direction. A good start! Maybe I've already mastered my emotions when I'm trading and not feeling happy, sad, excited, greed, and fear. I've been trying very hard ever since I closed my FXCM account.
For my demo account, I decided to start anew with a new account of $ 100'000 only and with a new system I just figured out today. I traded 11 pairs of currencies which is EUR/USD, USD/CHF, XAU/USD, XAG/USD, NZD/USD, GBP/USD, EUR/GBP, USD/ZAR, GBP/JPY, EUR/JPY, and USD/CAD. I used 9% leverage for each of these trades which totals up to my account balance. I took the trade at 00:00 EST, or 16:00 GMT. What I'm aiming is just to earn from the difference of each currencies and hoping for more bullish and bearish in these 11 currency pairs. The more movements it made during the 24 hours period, the more money I'll make... of course bullish only. I'll be closing the negative trades tomorrow and take a new trade for the ones I close while I let the positive trades run. At this time of writing this, the 'difference' I made over the past 14 hours is now running a $11'900 profit. It's a satisfying results for starters. As my new business is starting very soon, I'll be the company's fund manager in forex investment which will held responsible of a large amount of money. Therefore I'm seeking to practice more often with the demo account and with large numbers to get myself used to it. Hopefully I'm able to overcome it.
============
Existing Trades
============
Long EUR/USD @ 1.2575
========================
Demo Account Existing Trades
========================
Long EUR/USD @ 1.2499
Long USD/CHF @ 1.2539
Long XAU/USD (Gold) @ 628.20
Long EUR/GBP @ 0.6842
Long EUR/JPY @ 146.58
Long GBP/JPY @ 214.22
Long GBP/USD @ 1.8271
Long NZD/USD @ 0.6231
Long USD/CAD @ 1.1372
Long USD/ZAR @ 7.1481
Long XAG/USD (Silver) @ 10.6050
Although I had a margin call today, I definately feel more relaxed now in trading as I don't have to continue to practice multiple systems in one account, very stressful way. I'm definately feeling better about tomorrow. Happy Trading!
In the Eurozone, Producer price inflation in Germany, Europe's largest economy, was faster than expected last month as the cost of energy and raw materials increased. Goods from plastics to newsprint were 6.1 percent more expensive in June than a year earlier. It was reported that the PPI had a 0.7% increase from March, compared to 0.6% the previous month. In annual terms, the increase reached 4.6%, up 0.4 percentage points from March. Eurozone Trade Balance today showed a widened deficit of -3.2 Bil vs. -1.9 Bil the previous month. These both reports failed to budge the EUR/USD the slightest and the market reacted as if nothing happened. Eyes and ears to the Fed only I presume.
In the US, CPI numbers were reported 0.2% for the consecutive 6 months in a row and core-CPI, costs excluding fuel and food rose more than forecast, suggesting Federal Reserve might keep raising rates afterall. Prices paid by Americans rose 0.2 percent after May's 0.4 percent increase, the Labor Department said in Washington. Excluding food and energy, so-called core prices rose 0.3 percent for a fourth straight month and exceeded the 0.2 percent median estimate in a Bloomberg News survey of economists. Core prices increased 2.6 percent from June 2005, the biggest year-over-year rise since 2002. However U.S. homes resumed their decline in June, as single-family housing starts fell to their slowest pace in 18 months. A number of 5.3% decline to 1.850 million rate in June has triggered worries for homebuilders and politicians that slower economy growth is getting worse each month. Would-be homebuyers are moving to the sidelines, dissuaded by the highest mortgage rates in four years and prices that are still above year-ago levels. Reduced demand and an increase in contract cancellations are leading some builders to lower profit forecasts. Economists expect a slowdown in housing growth will help cool the economy this year. So, what would Mr. Ben Bernanke would most likely choose... inflation of slower economy? Just Toss The Coin Bernanke!
However, in his testimonial before the Senate in Capital Hill earlier, Mr. Ben Bernanke told Senate members that higher energy and other raw material prices could "sustain inflation".
"We must take account of the possible future effects of previous policy actions -- that is, of policy effects still `in the pipeline," said Mr. Ben Bernanke.
"The extent and timing of any additional firming that may be needed to address inflation risks will depend on the evolution of the outlook for both inflation and economic growth."
These statements had been interpreted as a dovish tone which pushed dollar underwater the most in two weeks against the euro and yen. Traders had been looking forward to this speech and a pause, well at least I am. I've been analysing of what could be the possibly outcome of the market reaction since the main concentration would be on Ben Bernanke's testimony on monetary policy today. This's what I have to say, housing market has always been the major contributor the the US economy, and a great slowdown of housing market is not really a good idea. Non-farm Payroll fell short from consensus showing incapabilities of consumer spending. Retail Sales dropped, and most of all, the election is coming and how could the public vote for a party that ruins the economy? The Republicans are definately doing something about it if they want to continue take the lead in the US government.
My live account had a margin call today, as I was expecting it anyway. Gold prices reached lower levels on higher interest rates expectations by the market has triggered it. Surprisingly, I'm not sad and in fact I'm quite happy about it. No, I'm not crazy but something in me makes me feel glad that I could finally start over with a new system that was implements months before even with a very very low balance left. I will begin scalping the market as I just took 700 units of Long EUR/USD @ 1.2575. Now it's moving on the right direction. A good start! Maybe I've already mastered my emotions when I'm trading and not feeling happy, sad, excited, greed, and fear. I've been trying very hard ever since I closed my FXCM account.
For my demo account, I decided to start anew with a new account of $ 100'000 only and with a new system I just figured out today. I traded 11 pairs of currencies which is EUR/USD, USD/CHF, XAU/USD, XAG/USD, NZD/USD, GBP/USD, EUR/GBP, USD/ZAR, GBP/JPY, EUR/JPY, and USD/CAD. I used 9% leverage for each of these trades which totals up to my account balance. I took the trade at 00:00 EST, or 16:00 GMT. What I'm aiming is just to earn from the difference of each currencies and hoping for more bullish and bearish in these 11 currency pairs. The more movements it made during the 24 hours period, the more money I'll make... of course bullish only. I'll be closing the negative trades tomorrow and take a new trade for the ones I close while I let the positive trades run. At this time of writing this, the 'difference' I made over the past 14 hours is now running a $11'900 profit. It's a satisfying results for starters. As my new business is starting very soon, I'll be the company's fund manager in forex investment which will held responsible of a large amount of money. Therefore I'm seeking to practice more often with the demo account and with large numbers to get myself used to it. Hopefully I'm able to overcome it.
============
Existing Trades
============
Long EUR/USD @ 1.2575
========================
Demo Account Existing Trades
========================
Long EUR/USD @ 1.2499
Long USD/CHF @ 1.2539
Long XAU/USD (Gold) @ 628.20
Long EUR/GBP @ 0.6842
Long EUR/JPY @ 146.58
Long GBP/JPY @ 214.22
Long GBP/USD @ 1.8271
Long NZD/USD @ 0.6231
Long USD/CAD @ 1.1372
Long USD/ZAR @ 7.1481
Long XAG/USD (Silver) @ 10.6050
Although I had a margin call today, I definately feel more relaxed now in trading as I don't have to continue to practice multiple systems in one account, very stressful way. I'm definately feeling better about tomorrow. Happy Trading!
posted by 4xTrader at
12:47 PM
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