Euro consolidation period, US falls deeper.

EUR/USD managed to establish a support over 1.2680 after USD continues to fall further on speculation that the Fed might be pausing rates in early August despite the higher than expected core-CPI plus PPI numbers showing inflation is still around. Mr. Bernanke faded the hopes and dreams of these traders by giving dovish comments since he's focusing alot on the cooling real estate industry. I'm expecting EUR/USD to breach 1.2700 level as early as Monday. My trades has reached a higher level of profit now and I expect to gain a little more before I settle it for a profit. This is a very satisfying Friday with a desirable ending.

Dovish Bernanke, Weaker Dollar spotted.

No traders care how many important officials did Hezbollah killed or did he bombed any buildings over the Middle East conflict which was then the major focus of the traders from all over the world. No one cared knew if Indonesia was hit with the 10th tsunami with 100 metres wave. The highlight WAS on the geopolitical instabilities until our US Superman Ben "S" Bernanke stepped in and took the spotlight.

Starting with higher PPI raising expectations that the Fed might increase interest rates after-all in early August. Then then higher core-CPI signalled inflation while CPI showed 0.2% for consecutive 6 months showed no sign of slowdown in inflation. The Big "S" Ben Bernanke stepped in and made changed on the overall sentiment, saving the world's largest economy by showing concern on slower growth and real estate industry that might hurt the economy.

Today's second round for Ben Bernanke, this time testifies before the House Panel again on the topic of interest, Monetary Policy. He repeats the dovish statements stating concerns on several important issues such as real estate slowdown, economic transition phase and particularly saying that inflation is contained but the Federal Reserve will maintain it's vigilant on inflation. Non supportive data came out with Manufacturing in the Philadelphia area expanded at a slower pace this month as costs increased and new orders slowed. The Federal Reserve Bank of Philadelphia's general economic index fell to 6.0 in July from 13.1 in June. The gauge averaged 12.4 in 2005. Readings above zero signal expansion. Businesses may be growing reluctant to step up production amid signs that consumer demand is cooling as interest rates rise. The report reinforces expectations of slower economic growth that may herald a pause in the Fed's series of interest- rate increases. However, US Leading Indicators Index in June rose 0.1% from -0.6% the previous month but the data released is lower than consensus. This index is boosted by higher consumer confidence and improvement in the labor market that will keep the economy from faltering.

The unsupportive dollar data and specifically dovish Bernanke has taken the dollar for a dive in the deep blue sea extending their losses against the euro on speculation Federal Reserve policy makers are approaching the end of their more than two-year cycle of interest-rate increases. Gold jumped more than 2 percent Wednesday as the dollar fell after comments from Federal Reserve Chairman Ben Bernanke that suggested U.S. interest rates may be held steady at the Fed's next policy meeting.

No change of trades since yesterday except the ones in the demo account where I took the loss in the negative trades and let the profit ones gain. I'll judge on it tomorrow and see if I should take profit on it since it's reached 17% profit/ $17000 profit. Things are doing very good now.

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".

"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.

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Existing Trades
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Long EUR/USD @ 1.2575

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Demo Account Existing Trades
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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!

Dollar Continue To Bull Through Resistance...

The dollar yet rise for another day while tension in Middle East has yet to subside and fundamentals are showing that the Fed might signal for a hike in interest rates in early August. The German ZEW Economic Sentiment Survey fell 15.1 from 37.8 in June. Economists expected a decline to 35, the median of 44 estimates in a Bloomberg News survey showed. The measure's fallen every month since it reached a two-year high in January. This fall is heavily dependant due to high oil price that is ruining the investor's confidence despite the strong economic growth.

For the dollar, Producer Price Index for the month of June rises to 0.5% vs 0.3% and Core-PPI Up 0.2% matching consensus. Prices paid to U.S. producers rose at a faster rate in June on higher costs for food, energy and automobiles, adding to the risk that inflation may accelerate. The 0.5 percent increase in producer prices followed a 0.2 percent rise in May, the Labor Department said today in Washington. The core rate, which excludes food and energy, rose 0.2 percent and was up 1.9 percent from the same month last year. While another dollar supporting data, overseas investors purchased a net 69.6 billion dollars of U.S. securities in May, up by 36 percent from the foreign net purchases in April, the Treasury Department reported on Tuesday. The department also said that the foreign net purchases of U.S. securities in April totaled 51.1 billion dollars, compared with the previously reported figure of 46.7 billion dollars.

As for the CPI and core-CPI which will key inflation indicator that will mostly determine on whether the Fed will either raise interest rates early next month or not. From the current view of economic data release in the US, there's still chances that the Fed might choose to pause under certain circumstances. I'll be expecting higher than consensus CPI but a lower core-CPI versus the previous month mainly because higher oil prices are just making everything in life more expensive. Therefore, the situation again stands and up to Fed Chairman Ben Bernanke to make a tough decision on whether to continue raise interest rates or not. FXCM Kathy Lien said that there are clear signs that the economy is beginning to weaken and should the Fed persist with their interest rate hikes, they will at the same time raise the possibility of a recession. Bernanke has quite a task before him and one that we can only hope he handles well.

For my trades, I've accidentally triggered my stops for USD/CHF at a price where I shouldn't have since the USD/CHF has again reached a new higher ground. I've closed all of my USD/CHF trades and took 1 gold trade. Hopefully I'm on the right track of seeing gold at this price is an acceptable long term trade unless I get a margin call. I'm expecting USD to continue it's bullishness today since speculations have been spreading around that Bernanke might be signalling the interest rate hike tomorrow at 14:00 GMT or 10:00 EST. For me, I'm expecting him to be slightly dovish if he considers that the core-cpi and core-ppi is the main key of inflation level without the food and energy prices.

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Existing Trades
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Long EUR/USD @ 1.2750

Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Long XAU/USD @ 641.80

Gold has extended it's losses on the speculation of U.S. Will Raise Interest Rates to Curb Inflation. Gold in New York tumbled 3.4 percent to close at a one-week low on Tuesday, as speculative selling sparked mainly by a stronger dollar slammed the market below $630 an ounce. Gold is expecting to trade in range trading until the CPI data is release and after Ben Bernanke's speech to determine a direction.

Geopolitical Tension Escalates... So does the Big Ben.

In the midst of growing violence in the Middle East may lead to war, slowing economic growth and incresing all prices are definately pain in the ass for everyone. The conflict in Lebanon stretched into a seventh day with Israeli forces attacking Hezbollah's Beirut headquarters and other targets as dozens of Hezbollah rockets hit northern Israel, including Haifa, the country's third-largest city. Plus, another small factor that tried to include itself to this 'massacre of the currency' is an earthquake of magnitude 7.7 struck south of Indonesia's Java island, triggering a tsunami and killing at least five people. India, which had yet to recover from the Mumbai bombing crisis has issued a local tsunami warning for the nation's Andaman and Nicobar Islands. How I really love this world is if just 1 bad thing happened, it's just like a rope tying all those events together and if 1 is triggered, others will happen as well, continuously. For this, it had to be the Iran Nuclear Crisis, North Korea Missle Launch, followed by Isreal attacking Lebanon, and then this quake.

For the data, Euro-zone CPI in June slowed as expected to 0.1% from 0.3% in May, while the annual figure remained at 2.5%. Core CPI in June also met estimates, coming in at 1.4% year over year, a notch above May’s reading of 1.4%. Industrial production numbers were a bit more impressive, beating the predicted 1.4% gain in May by hitting 1.6%, up from a downwardly revised reading of -0.7% in April. Meanwhile, Empire State Manufacturing index fell to 15.6 points in July after surging to 29 in June. It is the lowest reading since last October. The decrease was larger than expected as economists had expecting the July reading to fall back to 20.7 and the
key measure of inflationary pressures, Capacity utilization rose to 82.4%, the highest level in six years. Manufacturing and utility output each rose 0.7% in June, while the output of mines rose 1.2%. Production of consumer goods increased 0.8%. Production of business equipment increased 0.7%. Production of industrial supplies increased 0.6%. From the Eurozone CPI, which failed to show an impressive report continues the slide down of EUR/USD BUT Empire State Manufacturing did not able to push the dollar down even a bit, while the industrial production pushed the USD higher... This is where the fundamentals are useless when trader's are expecting war in Middle East especially when Isreali are accusing Iran of supplying the Lebanese the weapons and the nuke crisis is not over yet.

I've learnt a lesson on how the war factors could possibly ruin every trader's life. I've been through 'near-war' periods and USD was acting safe haven and gold escalates as well. What happened to Swiss Franc? I've learnt to switch my trades to USD when geo-political tensions arise such as the North Korea and the Iran issue. I closed 1 EUR/USD with a slight loss and took USD/CHF with all my available margin just to balance out my EUR/USD trades. Currently, things are looking well balanced for me in the mean time but I will not take profit on USD unless the Middle East eases out because as the war is still going on, no one would divert their cash from the 'safe haven' and I don't want to be a contrarian this time... NO WAY.

Gold prices reached the highest level in 2 weeks in early London session until the conflict in the Middle East has been regarded as excessively exaggerated by the rumours spreading around. It may be a profit taking session for traders before launching a second wave up, as what I've called it a 'healthy' grow of prices. A small retracement is always good as it accumulates 'energy' to move up to a new prices.

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Trades Closed/Completed
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Long EUR/USD @ 1.2650, Stopped @ 1.2602

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Existing Trades
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Long EUR/USD @ 1.2750

Long EUR/USD @ 1.2820

Long EUR/USD @ 1.2960

Long USD/CHF @ 1.2500

Long USD/CHF @ 1.2580

Long USD/CHF @ 1.2601

Long USD/CHF @ 1.2620


Euro traders, will have a hard time trading this week with war issues still going on and natural disasters reporting in. Heatwave in US is approaching fast... so quick install an air conditioner or something to cool yourself down.