Dollar Ends with 8-Week-High. Long Awaited FOMC is just a week away...

Another day of USD rally which was ignited by the Italian bad data from higher-than-consensus trade deficit to lower than expected italian consumer confidence. The sentiment switched to USD so quickly and stirred the major crosses against the greenback in the currency market. Weaker than expected Leading indicator and higher than expected inital jobless claims failed to turn the sentiment around as traders are placing a bet on 2 more hikes this year. So, that means a minimum of 5.5% to 5.75%..... It's all but certain the central bank's policy-makers will raise their short-term rate target for the 17th straight time next Thursday by a quarter of a percentage point, to 5.25 percent. Some traders are even laying small odds - about a 10 percent chance - that the Fed will raise rates half a point next week. Do I hear anyone shouting "Ridiculous?!!". Sure did.

Today's U.S.-made durable goods order excluding transportation equipment rose 0.7 percent in May, easing concern that the economy is cooling too quickly after two years of interest rate increases. This was due to the increased appetite for machinery, metals and communications gear. Companies, encouraged by rising profits, are purchasing new equipment to improve efficiency and help make up for fuel costs that remain near record highs. A boost from business investment will prevent the economy from faltering as consumer spending and the housing market slow. THIS, however doesn't change my outlook analysis on the slower economic growth that WILL fall on US economy. The problem rise again... when?

With nothing good to support Euro and bad Italian data to actually adding fuel to fire, ECB's Weber gets up and is being hawkish at ZEW earlier. Weber signals that the European Central Bank's monetary policy remains very accommodative despite the June 8 interest rate increase.

'The monetary policy of the Eurosystem remains very accommodative even after that.' said Bundesbank President Axel Weber

Indicators show that the euro zone economic recovery is gaining 'breadth an durability', with the latest economic projections signalling the speed of economic recovery would match the potential rate of growth in the medium-term. The Fed will pause and the ECB will continue to hike. At this point, it doesn't need me to say about the future currency market.

This is the toughest month in the fx market as the sentiments of the major markets remain unsure and uncertain of how far would the Fed go. Barrage of questions very questioned by traders from worldwide regarding this question. I made another box trading of $20 earlier today and I missed it by 8 pips... Yeah, so indirectly I'm saying I lost $20 bucks from box trading. This is where my problems arise, imbalances of my margin starts to occur as I don't have any margin left to make new trades to balance my EUR/USD. I was forced to make another tough decision in trading as I decides to close ALL of my USD/ZAR trades with HEAVY LOSSES. 3 trades accumulated costs me $52.34. You think that's the end? I wish... I wasn't left with ANY margin even with these 3 trades closed. Even with heavy losses, I felt so much better to get the prick out of my ass after it's been stuck for so long. I closed another 3 of my EUR/USD trades which cost me another of $12.49. Total losses? I $-84.83. What a day... I took 2 USD/CHF trades to balance my trade from EUR/USD and finally took another EUR/USD trade at a lower price. Because I'm seeing that the Fed's hike is fully priced in and might cause a temporary drop instead of a hike but the main event would be Bernanke's speaks after the FOMC Rate decision where he'll signal for higher interest rates, or not. A pause or dovish speech from him will totally reverse the USD sentiment.

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Trades Completed/Closed
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Short USD/ZAR X 3

Long EUR/USD X 2

Adding both up would be $-84.83, I wouldn't want to use pips this time because the number would be frightening. I would say at least a negative of 5-figure pips.

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Existing Trades
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Long USD/CHF @ 1.2501

Long USD/CHF @ 1.2520

Long EUR/USD @ 1.2523

Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

I'll try scalping the market with high leverage aiming for 15 pips per trade on range trading days hoping to slightly compensate my huge losses today. I have made these painful decisions in order to trade another day. Hopefully I'm able to recover from this painful experience. It just sucks to be where I am now...

Greenback pushed backed up by worldwide crisis.

The EUR/USD is back to the 1.24 zone after a retracement to 1.2320 low reached earlier in the Asian Session. Fundamentally, the dollar is supported by several factors including geo-political issues from North Korea.

The dollar gained against the yen and the euro after North Korea accused the U.S. of sending spy planes into its air space, raising concerns about increased military tension in the region. Japan's currency fell to a record low against the euro on June 19 on reports North Korea was preparing to fire a long-range missile. The U.S. and China are pressing North Korea to call off a possible missile test. The dollar has also gained in the past month as traders added to bets the Federal Reserve, which meets again next week, will raise interest rates twice more this year.

``The ceaseless illegal intrusion of the planes has created a grave danger of military conflict in the air above the region,'' North Korea's government said in a statement carried today on its official Korea Central News Agency. ``Such grave military provocations only precipitate its self-destruction,'' the statement said, referring to the U.S.

From the economic releases from the US, intial jobless claims from last week has rise from the 4-month low BUT it's still below the original consensus. So it was interpreted by the market as a dollar positive data. However, USD rally is contained once again with the leading indicators for the month of May fell to 9-month low to -0.6% vs -0.1% from the prior month. The consensus was however -0.4% but it's -0.2% lower than expected, once again signalling the robust pace of growth earlier this year will give way to a slower expansion.

``It looks like this is going to be another soft patch,'' said Haseeb Ahmed, an economist at JPMorgan Chase Bank in New York. ``The Fed is going to get exactly what it was hoping for, but unfortunately the inflation numbers are just not helping.''

Finally as for the British Currency, The pound fell the most in two weeks against the dollar, and futures traders trimmed bets of higher interest rates, after the Bank of England said policy maker David Walton unexpectedly died yesterday following a short illness.

For my own point of view, fundamentally, the dollar will suffer from the long term economic slowdown as the effect from the high interest rates, cooling housing data, low unemployment, and several issues that once was not a problem will soon surface. For this week, I'll be seeing USD will be lower for the Asian session often due to Friday sell offs. From techinical views, it's just range trading for this week of 100 pips.

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Trades Completed/Closed
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Box Trading for USD/CHF Profit $11.63

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Existing Trades
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Long EUR/USD @ 1.2583

Long EUR/USD @ 1.2637

Long EUR/USD @ 1.2650

Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Short USD/ZAR @ 6.0500

Short USD/ZAR @ 6.5800

Short USD/ZAR @ 6.7000

News of higher deficit from the South Africa account balance really upsets me as it is pushing the rand currency to 7.4 high today. It's getting crazy... The rand has fallen 13.8 percent to 7.3 per dollar since May 12, the day gold touched a 26-year high. Gold, which has lost about 18 percent since then, accounts for 13 percent of exports of Africa's biggest economy.

I'm looking forward to close at least 2 of my EUR/USD to minimize my weekend profit loss of interest rate. Not being stingy but at such a small amount in my account right now, I should be wasting every single cents in it. Demo test of my new system looks great and very convincing, I will be be attempting to trade with high leverage and looking for just 10 pips per trade. Still testing on demo and results will be posted here. My overall bias remains Euro bullish to reach and break 1.3 zone as I'm pretty sure that the whole world is waiting for it.

Hawkish remarks boosts Euro... Signals more interest hike in Eurozone.

What goes up, will definately come back down....Nope, this is not the law of gravity in physics. It does happen in forex as well. The higher it goes without a drop, but when it happens, it's gonna be major. This is what happened in EUR/USD when market was ignoring good US data back in April and continue the hike until a high of 1.2970 last month. After that the EUR/USD continues to drop endlessly and now, it's reached 1.2530 low.

Thanks to Trichet today, and his hawkish remarks during his speak to the EU Parliament regarding higher than expected French Consumer Spending where he signals to persue vigilance on current Euro inflation. This has lead the EUR/USD back to 1.26 zone and USD/CHF almost back down to where it started this week. Definately not a good sign for USD at this point. According to my view, this push is due to the interest rate expectations hike from the ECB and a pause from the Fed. I'm expecting the EUR/USD to break in August or sooner as slower growth and a pause by the Fed will lead to heavy selling of the greenback.

``We are not satisfied with what we are observing with regard to inflation in our own area,'' Trichet said in a speech to a European Parliament committee in Brussels. ``We'll continue to do all that's necessary to counter inflationary risks and anchor inflationary expectations.''

The recent oil crisis from Iran that possible shortage of oil supply from Iran might occur has caused the oil price to maintain in a range of $68 - $71 per barrel. Price will not be expected to move around much until the crisis is over. North Korea missile launch has been dismissed as a 'misunderstanding' that they'll be lauching satellites instead.

I'm expecting to close 3 of my EUR/USD trades before the weekend to avoid paying extra interest rates since I'm not holding any USD/CHF to balance it. Updates of trades will be update tomorrow.

Housing Starts Higher Than Expected, German PPI Reported Highest In 24 years... but does it change anything?

Another quiet day in the forex market since not much of fundamentals are released today. Highlight for the day would be the German PPI and the USD Housing Starts which directly influence the real estate industry in the United States. Home construction rose in May from a 13-month low as builders worked on backlogs of unfilled orders and used incentives to win new business in a slowing market. Housing starts rose a greater-than-expected 5 percent to an annual rate of 1.957 million from 1.863 million in April. Building permits, a sign of future construction, fell 2.1 percent to an annual rate of 1.932 million, the Commerce Department said today in Washington.

``This increase is a dead-cat bounce,'' Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc., said before the report. ``It doesn't signal any change in trend. Housing's still got a long way to fall before it gets back to earth.''

Rising borrowing costs are discouraging potential home- buyers. The average rate on a 30-year fixed mortgage hit a four- year high of 6.67 percent in the week ended June 2, according to McLean, Virginia-based Freddie Mac, the second-biggest purchaser of U.S. mortgages.Mortgage rates are likely to rise further as the Federal Reserve lifts the nation's benchmark lending rate to keep a lid on inflation. Policymakers will increase the federal funds target rate to 5.25 percent when they meet June 28-29, according to the median forecast in a Bloomberg News survey of economists."Given the slowing conditions in the housing market, spending for the construction of new housing is unlikely to be an important direct source of overall GDP growth this year, after having contributed close to one half a percentage point last year," Federal Reserve Governor Susan Bies said in a June 14 speech.

On the other side for the Euro zone... Producer price inflation in Germany, Europe's largest economy, last month accelerated to the fastest in almost 24 years, mainly led by higher energy costs. Goods from plastics to newsprint were 6.2 percent more expensive in May than a year earlier, compared with 6.1 percent more in April, the Federal Statistics Office in Wiesbaden said today. That's the most since June 1982. Economists expected a gain of 6.4 percent, according to the median of 34 forecasts in a Bloomberg News survey. From April, prices rose 0.1 percent. Higher costs are hurting retailers' margins. The Bloomberg Retail Purchasing Managers Index showed June 7 that an index measuring prices paid for goods intended for resale rose in May and margins fell to the lowest level for three months, ``which many attributed to higher purchasing costs,'' according to economic research firm NTC Economics Ltd., which did the survey.

I'm expecting the Fed to pause on interest rates after this month and totally contrary on the ECB where I'm expecting them to raise interest rates to at least 3% before the end of the year. The way of the ECB hiking the interest rates are not frequent-monthly based like the Fed. Most likely I'll be expecting another rate hike from the ECB in August or September. The market today is practically trading in 60 pips range where EUR/USD move in range of 1.2600 - 1.2540 and USD/CHF in 1.2440 - 1.2380. It's highly possible for the NY session today to end with a cross. I'm expecting a break very soon but the direction is highly uncertain. As for my analysis till for the Fed rate decision, I'm seeing that the Fed raising rates this month will not cause a great stir in the forex market, particularly in EUR/USD because everyone's expecting and it's fully priced in. Another 25 bps hike from the Fed from my view will cause the dollar to be sold due to the expected burden it will do to the current slow US economy. This reaction is based on the core CPI and CPI reports on the other day where the market reaction is negative on the dollar. Bernanke's speech after the hike would be crucial as he might signal a pause or being hawkish again on the interest rate. Either of this will mostly be viewed as bearish dollar. So according to my view, the next coming break will be mostly in the direction of the Euro.

No changes of trades were made today on my live account and I'm still testing out the new system on the demo. Results were unknown yet but I'm looking forward of using the new system as soon as possible. Hopefully it can generate more profit for me. My friend, Greg and I will be providing signal services very soon for all interested forex traders to aid them in trading. Wish us luck and may Forex God bless us...

Euro lost some grounds to USD after EZ Trade Balance Reported Higher Deficit than consensus.

Forex trading is back more to range trading like the previous month. However the strong USD data took me by surprise that the Michigan Confidence and the Current Account Balance shown USD positive data. These economic data are a clear sentiment indicator for the USD bull traders as it is interpreted by the Fed that the economic is robust enough the sustain more upcoming interest rates hike. Possibly to 5.5% by August this year.

The short term sentiment I see are USD bull now due to the expectations of 100% interest rate hike this June 29 FOMC meeting. Long term view is still on bias Euro. Today the Eurozone Trade Balance deficit has widened than the expected consensus. Reported data was -2B while expected consensus is -1.3B. This drop on consensus has caused the EUR/USD to lose some ground in NY Sessions.

I managed to close 2 of my USD/CHF trades which I've held for centuries long. As I'm still seeking for a new adaptable 'holy grail' system... I'm beginning to cut my negs which is currently still holding up 45% of my account balance. It sucks to be in my position now as you can say... Since I'm left with no leftover USD/CHF trades and the trades I started this week with a new system, I was too stupid enough to place a trade too low for it to be taken. which only leaves my EUR/USD trade taken today. I'm expecting to pay interest rates for at least 1 week because I'm holding 5 EUR/USD trades with 9% leverage. USD/ZAR trades are getting suckier day by day and it's a sore to the eye looking at the margin occupied by it...

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Closed/Completed Trades
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Long USD/CHF @ 1.2270, Closed @ 1.2400

Long USD/CHF @ 1.2280, Closed @ 1.2381 ( I closed this trade with only 1 pip because I've been holdin it since the dinosour exist. I'm just glad that I can even close this trade)

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Existing Trades
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Long EUR/USD @ 1.2583

Long EUR/USD @ 1.2637

Long EUR/USD @ 1.2650

Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Long USD/ZAR @ 6.7000

Long USD/ZAR @ 6.5800

Long USD/ZAR @ 6.0500

USD/ZAR is reaching 7.000 making me holding a negative of 10000 pips on that alone. For those who's reading this. Yea, it sucks big time for me. I hope the light will shine on me once again and hopefully this thunderstorm will be over in no time. I'm just looking forward to be alive to trade for my next system. Projects plans were put on hold due to the system were still under planning. We're looking for a great system before we're in the business. Can't wait till then...