The Revenge USD: Currency stays firm after Trade Balance Report.

The key indicator for the 12-nation currency, Germany's trade surplus fell to 11.2 bln eur in April from 14.4 bln in March and 12.7 bln a year earlier, according to provisional figures from the Federal Statistics Office. The expected consensus was 12.3 bln and was already expected lower than previous month. The industrial production fell below consensus as well. Meanwhile French's Trade Balance deficit widens more than expected together with Industrial Production and Manufacturing production was equally down as well. What was reported is definately not a good report for the currency... bad day for the Euro.

Trade balance for the US has widened as expected due to the high oil prices BUT the widen was much than expected which means their exports were more tha imports for the month of May. The price were contained at 1.2630 level for EUR/USD and USD/CHF traded slightly lower from the opening prices of the day. USD failed to rally today may be due to the increase of oil prices again after Iraqi oil officials were kidnapped after Al-Qaeda Leader Zarqawi was killed yesterday. Zarqawi's death will show more stability in Iraq. However, the kidnap of the oil official is to send a message " There's more of us who'll continue without Zarqawi. " This has spurred the oil back to $ 74 per barrel from $70 after the news is announced.

I'll be expecting to continue to take profit on my USD/CHF. One of them would be one of the initial trades I made using only 3% leverage at 1.2380. I'll be taking profit for 3 trades in USD/CHF @ 1.2430. Bringing me into slow recovery of my loss in gold. I will continue to persue EUR/USD trade and I will seek to buy the pair around 1.25 level. While ZAR raised interest rates, I doubt it would mean anything against the USD. What a pain in the ass currency. I will try to take profit at a level with a slight profit and will not touch that pair ever again. I will probably trade USD/MXN or NZD/USD for carry trades. With gold still on the downtrend channel, chances for AUS/USD and NZD/USD to gain against dollar would be pretty slim as both of these countries are well related with gold. I will expect gold to have further losses to $600 per ounce before resume the hike to $635.

-58 pips: Euro Tumbles. ECB raises 25 bps in interest rates with dovish speech from Trichet.

The day I've been waiting for weeks came and left with so less action of which I've anticipated for weeks. Today is definately the USD bull day with market still favoring them despite the hike of rates from the ECB. Normally this doesn't happen and what happened is the abnormality. Normally when a certain Central Bank raises the nation's interest rates, it would spur the currency up high.... but for yesterday I was a long red candle. The consensus of 50 bps killed the currency. Accompanied the rate hike was a speech given by the ECB President Jean-Claude ' Van Damn " Trichet which was later interpreted as dovish as market was expecting hawkish remarks by him due to the overall excellent Euro-zone data reports. Adding wood to fire, the euro currency burnt faster than ever.

It was really amazing when the timing is just right for everything to come in place to support the currency. The news of the leader of Iraqi insurgency and one of the top men in the al-Queda hierarchy - Abu Musab al-Zarqawi - has been killed in a joint US and Iraqi military raid north of Baghdad has overshadowed the ECB rate hike decision. The news immediately sent the oil futures below the $70 dollar handle as traders celebrated the possibility of an increase in the flow of crude from Iraq which has been severely compromised by insurgent sabotage. Whether Mr. al-Zarqawi’s death marks a turning point in the Iraq conflict remains to be seen, but it certainly buoys the near term prospects for the dollar for several reasons. It curtails, if only for a short time, the geo-political tensions that have roiled the region and it will likely eliminate some of the “terror” risk embedded into the oil market leading to lower crude prices. Lower energy costs, of course, would be beneficial to the US economy in a variety of ways. First by compressing the US Trade deficit which will be released tomorrow, a progressively large part of which has been due to higher import costs of crude and secondly by serving as a “de facto” tax cut for the US consumer and thus offsetting the depressive effects of higher interest rate hikes planned by the Fed.

Another leading factor that just happens is the initial jobless claims fell 35'000 this month making the lowest jobless claim for the past 8 months. This sparks off the rally of USD against the major crosses in the currencies and commodities even before our ECB president action superstar 'Van Damn'.

How could this NOT be a perfect day for the USD to bull. There's no reason why it should go down... Unless the ECB rate hike was 50 bps then this blog would have a different thing to say. I've now hooked up with USD/CHF expecting it to reach at least 1.2440 next week. I took profit on a trade in USD/CHF and I took another loss in EUR/USD but I'm glad that I took the loss because with the current situation going on, I'm not expecting EUR/USD to come back anytime soon, at least for next week. Naturally, with US economic slowing and poor economic data released but with a hawkish Bernanke, the dollar would mostly rally but with an excellent Euro-zone but a dovish ECB president... Euro will reign again as the market again will prove Trichet wrong. As what happened previously for the Euro hike without any speculation in the interest hike.

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Closed/Completed Trades
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Long USD/CHF @ 1.2280, TP @ 1.2330 ( +50 pips )

Long EUR/USD @ 1.2785, Closed @ 1.2676 ( -109 pips )

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Existing Trades
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Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Long USD/CHF @ 1.2220

Long USD/CHF @ 1.2270

Long USD/CHF @ 1.2320

Long USD/CHF @ 1.2380

Short USD/ZAR @ 6.7000

Short USD/ZAR @ 6.5800

Short USD/ZAR @ 6.0500

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Trades I'm Waiting For
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Long USD/CHF @ 1.2370

I loss some money today but I felt it was a wise move and safe as well. With some small losses, I could manage my margin better with one less negative to handle.

+126 pips: USD bulls before ECB rate hike.

The long waited ECB rate hike is finally here today. From yesterday, market has been still in USD bull as it's still unsure of the rate hike by the ECB would be 25 bps or 50 bps. More excellent Euro-zone data was released yesterday as Eurozone Retail PMI and Eurozone Retail Sales were reported higher than consensus. Even with continuous strong supporting data to the ECB failed to rally Euro yesterday as USD continue to bull following by the speculation and the expectations from the Federal Reserve to raise interest rates. I closed my USD/CHF trades early yesterday before the hike to 1.2240 level because I wasn't expecting further hike in the pair. As for gold, further drop in prices were spotted as gold continue to make new lows in the down trend channel to a low of 616.95. I've decided not to take anymore trades in gold as it's really not suitable for my account margin to sustain more damage, I guess 2 is enough. I shall resume my gold trade when my USD/CHF trades is able to equilibrate my trade in gold in case it turns bad.

I'm preparing trades for the ECB rate hike. I will buy EUR/USD @ 1.2785 which is the close of yesterday and USD/CHF @ 1.2220. Both currency pairs are now trading below the closing price of yesterday. I'm all well hoping for ECB to hike 50 bps. If it's this way, I could clear my long time pain in the ass USD/ZAR trades and EUR/USD would bring me some profitable trades and close my 1.2960 trade which I've held for a long time.

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Closed/Completed Trades
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Long USD/CHF @ 1.2150, TP @ 1.2200 ( +50 pips )

Long USD/CHF @ 1.2100, Closed @ 1.2176 ( +76 pips )

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Existing Trades
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Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Long USD/CHF @ 1.2280

Long USD/CHF @ 1.2380

Short USD/ZAR @ 6.7000

Short USD/ZAR @ 6.5800

Short USD/ZAR @ 6.0500

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Trades I'm Waiting For
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Long EUR/USD @ 1.2785

Long USD/CHF @ 1.2220

-1725 pips: Another bad trade in gold.

I have to say I hate Ben Bernanke alot... not only he stirred the whole market sentiment in forex to the other way, I also hate him for crashing my trading account with FXCM about 2 months ago when he made his 'irresponsible' comments to the CNBC reporter. Today is rather a bull USD day than suppose to be Euro bull day. Ben Bernanke knows about the slower economic growth and he doesn't give a damn about it. Inflations is the only focus he's suppose to pay attention to as he claims himself the inflation-curb warriror.

Alright, anger time is over.Reminder to myself that I need to get my emotional detached from trading. From my possible view of analysis after Federal Reserve Chairman Ben Bernanke made his speech yesterday in Washington, Here's my analysis,

He knows about the slower economic growth and the weak dollar at the moment. Of course, he knows that raising interest rates at these time will totally incapacitate the US economy but why does he still sound hawkish? It's because he's got no choice. As a Federal Reserve chairman, he has several responsibilities and issues in several aspects to consider, the currency value and the economic growth, which in the other hand means inflation/deflation issue. The speech were made hawkish by Ben Bernanke is because, firstly, to prevent furher losses in the currency. If he'd made dovish statements, I have absolutely no doubts that EUR/USD would break 1.3000 level before NY session closed yesterday. Secondly, he did mentioned to keep the Federal Reserve as transparent as possible meaning the economic reports will directly influence the decisions made by the Federal Reserve. In this case, we will see plenty more of USD economy reports released before the June 29 FOMC meeting. IF we see weak CPI numbers for the month of May, or core-GDP for instances, then I would believe that he would have a reason to go back on his words made yesterday at Washington and suggest a rate pause afterall. But on the other hand, if the core CPI or GDP prices is reported as high as it's expected or above his 'comfort zone' for the inflation, then he would just go as initially planned. The main outlook, according to my views, is that Ben Bernanke is just delaying the drop in the greenback to a later date in the month. I would say no harm being hawkish at this point and he still has chances to go back on his words if the inflation is contained. Not that I like him being hawkish though...

I've closed 2 of my position trades in EUR/USD after the big drop and took profit with 155 pips, leaving me with 1 EUR/USD trade at 1.2960 seeking to take profit where mostly every traders are targetting, 1.3010. My gold position is terrible and it continued to drop today, I realised that I couldn't afford another big negative in my account as I haven't fully recovered from traumatic blow of $ -25 from my previous gold trade too. I've decided to place a stop loss for my gold trade at 630 expecting the worse of $ -18.80... and indeed it was closed. Another traumatic blow to my account and again, in gold. Failing in my initial 2 trades in gold, I'm starting to convince myself that I'm not suppose to trade gold before my account reaches a sum of amount where I can make the similar amount of money on EUR/USD or USD/CHF with gold. This blow will bring me another 1 month back in my equity curve totalling up to 2 months lag.

As for the overall currency views, I do not expect USD to maintain it's bullishness for long as the ECB rate hike is around the corner and everone's anticipating 50 bps hike, a 25 bps hike would need a great speech from Trichet to signal that 'vigilance' will be needed in the upcoming months. That would be great for the Euro as well. A hike of 25 bps without these statement will spell doom for the euro which will lead to aggresive drop in the EUR/USD despite the hike in interest rates.

I've put purchased 2 long USD/CHF trades at 1.2100 and 1.2150 as I do not want to miss any leg up for USD if it decides to be extremely bullish. I'm looking to purchase EUR/USD @ 1.2820 level. I'm still considering deeply on whether I should be making a new gold trade...

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Closed/Completed Trades
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Long EUR/USD @ 1.2800 , Stop loss @ 1.2900 ( +100 pips )

Long EUR/USD @ 1.2860, Closed @ 1.2915 ( +55 pips )

Long XAU/USD @ 648.80, Stop loss @ 630 ( -1880 pips )

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Existing Trades
============

Long EUR/USD @ 1.2960

Long USD/CHF @ 1.2100

Long USD/CHF @ 1.2150

Long USD/CHF @ 1.2280

Long USD/CHF @ 1.2380

Short USD/ZAR @ 6.7000

Short USD/ZAR @ 6.5800

Short USD/ZAR @ 6.0500

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Trades I'm Waiting For
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Long EUR/USD @ 1.2820

Hopefully the Eurozone retail PMI and retail zales with German Factory orders would spur the interest back into the ECB rate hike instead of the Fed's interest issue. It's still weeks to go...

+50 pips: Euro Bulls!!

Everyone is expecting Euro to bull or just about anything that exchanges with the greenback. Because hopes are starting to diminish due to more poor USD data report signalling slower economic growth. But surprisingly the Euro is still facing some pressures from rising as the growth as very much less than expected today. My analysis for this brand new month would be Euro bull. Much is this is based on the possible Federal Reserve pause in hiking interest rates in June 29 FOMC meeting while I'm expecting the ECB will continue to persue 'stronger vigilance' in the Eurozone as most of the data reported were shown that economic growth in eurozone in strong and sufficient interest rates will be needed to curb inflation. Of course~ the event of the year matters... World Cup 2006 in Germany, in Eurozone of course. This is one of the important event that will cause Euro to increase as supporters from all over the world will be visiting Germany just to be in part of the event. Euro will be in demand and needless to say, it'll surge.

From Washington DC, Ben Bernanke managed to cause the dollar to gain some grounds against the major crossing with his more hawkish than expected speech. Even though the once barreling U.S. economy is now slowing down, Federal Reserve Chairman Ben Bernanke on Monday called recent increases in inflation unwelcome and pledged to make sure surging energy prices don't make things worse. In deciding the Federal Reserve's next rate move in late June, Bernanke said the inflation outlook 'will receive particular scrutiny.' Fed policy-makers 'will be vigilant' to ensure that the recent pattern of higher readings in core inflation, which excludes food and energy prices, 'is not sustained,' he said in remarks prepared for an international monetary conference here. Bernanke offered his most extensive assessment of current economic conditions and the challenges facing Fed policy-makers.

'With the economy now evidently in a period of transition, monetary policy must be conducted with great care and with close attention to the evolution of the economic outlook,' Bernanke said

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Somehow he's more interest in curbing inflation and strongly beleive the market is undergoing a cooling moderate economy. The Fed Futures shown now at a HIGH of 74% that the Fed will raise interest rates in June. What a tough talk from that Ben ' Bearded Beast ' Bernanke . Hopefully the action super star or ECB President Jean Claude ' Van Damn ' Trichet will be hawkish in being consistent of increasing interest rates in the following months to come. This speech has caused drops in stock markets and the US Treasuries. I'll expecting this drop will influence the major markets tomorrow starting from Tokyo.

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Closed/Completed Trades
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Long EUR/USD @ 1.2910, TP @ 1.2960 ( +50 pips )

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Existing Trades
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Long EUR/USD @ 1.2800

Long EUR/USD @ 1.2860

Long EUR/USD @ 1.2960

Long USD/CHF @ 1.2280

Long USD/CHF @ 1.2380

Short USD/ZAR @ 6.7000

Short USD/ZAR @ 6.5800

Short USD/ZAR @ 6.0500

Long XAU/USD @ 648.80

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Trades I'm Waiting For
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Long EUR/USD @ 1.3010

Long XAU/USD @ 666.00

I'm expecting EUR/USD to be traded more aggresively tomorrow as it gets nearer to the ECB rate hike which is almost certain plus Ben Bernake's Hawkish speech at Washinton. What's left on the guessing board will be, the hike would be 25 bps or 50 bps and will the Fed raise interest rates?