FOREXYARD: Forex News Blog

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• The Interesting Case of a Short-Selling Ban
• US Retail Sales Rising
• Euro Zone Industrial Production Dips
• Euro Slides on French GDP
• Japanese Government Comments and Market Positioning Hint at Additional JPY Intervention
• US Employment Data Continues Bullish
• Trade Balances in North America Show Widening Deficits
• Australian Unemployment Rate Climbs to 5.1%
• European Financial Woes Keeps the Euro on its Back Foot
• Ruble Recovers after Fed Rate Statement
• Chinese Trade Surplus Soars

The Interesting Case of a Short-Selling Ban Posted: 12 Aug 2011 06:48 AM PDT Today's ban of short-selling on certain stocks in several European nations presents an interesting case worth studying for forex traders. The move to ban short-selling is intended to boost confidence in the region by preventing a massive loss of value for certain companies and banks. These moves have worked temporarily in the past, albeit with mixed success rates, but investors should look to the forex market if they wish to see true market adjustments. The forex market, as volatile as it is, possesses no such framework through which to ban any behavior. Assets may be bought or sold freely, or taken off the market. The ability to impose a ban on certain behavior in the stock market simply does not exist in the forex market. This largely explains why many large investors turn to forex during times of market uncertainty: there is simply less official stipulations about what can and can't be done. This makes currencies and commodities move more naturally (even if they appear erratic). If you want to trade in a market which has fewer rules imposed on you, forex is where you should turn. Plain and simple. Read more forex trading news on our forex blog.

US Retail Sales Rising Posted: 12 Aug 2011 06:36 AM PDT The afternoon reports on nominal and core retail sales in the United States adds to recent notions of an economy not entering a second recession, as many pundits had expected. Employment data these past few weeks have shown the US economy adding jobs in greater numbers this summer; today's retail sales data bolsters this data by showing consumers boosting their spending levels, despite frantic expectations of economic turmoil. The news has helped the US dollar (USD) hold value where it may have plummeted instead. Swings in stock market values this week have made forex trading more interesting, given the heightened volatility that springs forth during a period of flight into Treasuries and Gold. Today's data strengthens the idea that US Treasuries will rise, likely pushing the USD higher in today's late trading. Read more forex trading news on our forex blog.

Euro Zone Industrial Production Dips Posted: 12 Aug 2011 06:30 AM PDT A report issued at 10:00 GMT this morning by the agency Eurostat revealed a moderate downturn in industrial production levels across the euro zone. While many analysts had anticipated a very weak growth of only 0.1%, the 0.7% decline was hardly expected. Though analysts see the weakness as a result of rampant declines globally, the EUR has been struggling to hold its value in these times of risk flight. Data released by France this week has also unsettled several investors. The nation's gross domestic product (GDP) was expected to rise by approximately 0.3%, but saw zero growth in the second quarter instead. These reports point to a period of stagnation in Europe as its major economies struggle to fend off the market bears. Read more forex trading news on our forex blog.

Euro Slides on French GDP Posted: 12 Aug 2011 04:35 AM PDT Markets have turned their attention from the periphery to central Europe as France posted a slower than expected GDP in Q2. The negative data has the euro slightly higher versus the dollar but down in most of the crosses. The lone exception is the Swiss franc which continues to strengthen as traders unwind long CHF positions. The EUR is up a touch on the dollar after trading as low as 1.4150 earlier this morning following 0% growth from France in Q2. Economists were expecting French GDP to come in near 0.3%. The weak data comes at an inconvenient time as fixed income traders have begun to take a second look if France is worthy of its AAA credit rating. While the rating agencies affirmed France's rating earlier this week the pressure earlier did arouse a response from President Sarkozy in an attempt to convince markets that France was serious about getting its budget deficits in-line. The WSJ reported German Chancellor Angela Merkel and French President Nicolas Sarkozy will meet next Tuesday to plan how to solidify European governance and voice their opposition to Eurobonds. The two will also focus on aligning fiscal and budget policies across the EU. While the euro is lower versus the JPY and the GBP it is stronger versus a tumbling Swiss franc as the CHF has fallen for the second day following a potential peg to the EUR. The EUR/CHF has a 61% retracement target at near 1.1200 from the July 22nd high to the low this month. The EUR/USD continues to range trade between 1.4400 and 1.4150. The pair is currently being supported by gains in European equities with most major European bourses up by almost 1.5%. The EUR/USD could seek some buying action should US equities trade higher. Equity markets have been trading under extreme levels of volatility this week and FX traders should be taking their cues from the US equity markets' reaction to this afternoon's US retail sales and consumer confidence survey. Read more forex trading news on our forex blog.

Japanese Government Comments and Market Positioning Hint at Additional JPY Intervention Posted: 11 Aug 2011 06:48 AM PDT Tough talk from Japanese officials continues to spark speculation of additional intervention in the FX markets to weaken the yen. Market positioning is also overextended and a move higher in the USD/JPY could be sharp and quick. Overnight comments from Japanese Finance Minister Yoshihiko Noda hint at potential intervention by the Ministry of Finance. Noda says he is keeping an extremely close watch on moves in the forex trading markets and will work with other nations to preserve market stability. Prime Minister Naoto Kan said the government will do what is necessary to address the one way moves in the value of the JPY. Earlier today the USD/JPY slumped to its lowest level since August 1st as weak US fundamentals and heightened risk aversion bring about an increase in safe haven inflows to the yen to weigh on the pair. The EUR/JPY has also moved to its lowest level since the March intervention. CFTC International Monetary Market data shows speculators currently hold the largest long yen position since August 2010. While the CFCT data was taken prior to last Thursday's round of intervention, given the declines in global equity values this week it is a fair assumption that the JPY has received increased safe haven inflows. The sharp one way price action and market positioning could be enough reason to bring on another bout of FX intervention by the MoF to weaken the yen and cause some pain to the hedge funds and other FX speculators who have driven the value of the yen higher. Read more forex trading news on our forex blog.

US Employment Data Continues Bullish Posted: 11 Aug 2011 06:31 AM PDT Despite recent calls of an American economy in sharp decline, employment data from the past few weeks has surprised many with bullishness. July's ADP and NFP employment reports, released last week, both showed drastic increases in job creation, with ADP's private sector data showing 14 consecutive months of growth. Today's weekly unemployment claims figure seems to be continuing this trend with only 395,000 people filing for unemployment benefits, beating forecasts by approximately 10,000 claims. The release of the US Unemployment Claims report does not tend to generate much interest to longer-term traders given its weekly frequency and murky correlation to currency strength. But the overall trend of job creation in the US these past few weeks has transformed these reports into a beacon of hope among market analysts who see nothing but bears approaching. Read more forex trading news on our forex blog.

Trade Balances in North America Show Widening Deficits Posted: 11 Aug 2011 06:23 AM PDT The trade balance data from both the United States and Canada this morning is beginning to confirm fears that investors are turning away from North American goods and services. The trade balance measures the difference between imports and exports and tends to generate a direct impact on currency strengths due to its direct correlation with currency demand. Canada's trade deficit grew 1.6B this past month, as the spike in oil prices through July dragged on the country's exporting ability. The housing surge in Canada could eventually offset this data as more investors turn up for Canadian assets, but for now the nation appears a little worse for wear. The US trade balance revealed an even deeper gap. The deficit there rose 53.1B when it was forecast by economists to increase by only 47.9B. What impact this will have on the embattled US dollar (USD) is not yet known. Read more forex trading news on our forex blog.

Australian Unemployment Rate Climbs to 5.1% Posted: 11 Aug 2011 06:18 AM PDT Some of the worst news to strike the Australian economy this month was released this morning at 2:30 GMT. The Australian Bureau of Statistics published two significant reports on employment today, each highlighting a sharp downturn in job growth and increasing numbers of unemployed. The Employment Change figure showed a net loss of approximately 100 jobs in July, the first contraction in job growth since April. The official unemployment rate in Australia also climbed 0.2% to 5.1% this month, the highest it has been since December 2010. The bearish news from Australia's housing and jobs sectors are generating significant pressure on the value of the Australian dollar (AUD) this week, and doesn't appear to be abating anytime soon. Read more forex trading news on our forex blog.

European Financial Woes Keeps the Euro on its Back Foot Posted: 11 Aug 2011 06:05 AM PDT The euro is lower going into the US open as volatility is currently at extreme levels while many forex traders continue to take a cautious stance buying safe haven currencies. Speculation that France would be the next AAA to lose its top rating proved false but the denial by the rating agencies has not spared the French banking sector and this continues to push the euro lower below the 1.42 level. The CHF has come off of its lows but it may be at the expense of the Japanese yen which is trading near pre-intervention levels. The euro continues be out of favor today versus the USD and the JPY but is up against the Swiss franc. The major rating agencies denied France is on the verge of losing its AAA rating though the market reports were enough to cause President Sarkozy to recall ministers from vacations and issue a statement affirming France's commitment to reducing its budget deficit. Despite the French response French banks in particular are hardest hit with the European Stoxx 600 Bank down 2.1% today after falling 7% yesterday to trade at its lowest level since April 2009. The ECB is reportedly purchasing both Spanish and Italian bonds in the secondary market and have so far succeeded in keeping sovereign yields below 6% in the 10-year bonds. As a result of the European financial pressures the EUR/USD is testing yesterday's lows near 1. 4120. A break here and forex traders will target the 1.4050 level. The rising trend line from the June 2010 looks to be the line in the sand for the pair and comes in at 1.3860. Resistance is found at 1.4275. Concern of further action by the SNB to weaken the CHF has the USD/CHF trading at a two day high. To weaken the CHF the SNB is weighting options from as aggressive as a peg to the euro or a 1% tax on Swiss deposits. The EUR/CHF is holding its own near the 1.0500 level despite the overall euro weakness. However, any gains in the CHF will likely offer forex traders better levels at which to enter into the long term trend of a strengthening CHF. Read more forex trading news on our forex blog.

Ruble Recovers after Fed Rate Statement Posted: 11 Aug 2011 01:59 AM PDT Though seen in sharp decline earlier this week, the Russian ruble (RUS) has been paring much of its losses in exchange for growth as stock markets rebound on statements made by the US Federal Reserve on Tuesday. The crash of global stock markets, brought about by the ratings downgrade of US debt by S&P's ratings agency, had also pulled heavily down on the value of the ruble versus its major currency counterparts. A sharp downturn saw the RUS hit a 6-month low against the US dollar (USD), with similar losses felt against the euro (EUR). The announcement that US interest rates would likely be held near historic lows for the next two years, however, has helped stocks rebound strongly, with the ruble trailing not far behind. Russia's financial stability was called into question these past few weeks as surveys showed large domestic investors looking away from Russian assets for the bulk of their trading portfolios. As the price of oil and gas tumbled over the last two weeks, income earned by Russia's chief exports also dipped, weighing heavily on the nation's budget. The rebound in global stocks should help shore up some of this siphoned strength, but recouping the loss of confidence may take more time. Read more forex trading news on our forex blog.

Chinese Trade Surplus Soars Posted: 11 Aug 2011 01:55 AM PDT China published its latest trade balance figures this morning, revealing large growth in the nation's trade surplus. Trade balance data tends to have a heavy impact on currency values since export demand is directly linked with currency demand. China's yuan (CNY) is therefore expected to undergo upward fluctuations this week, though world news may counteract any positive benefits of such valuation. The data, released by the Customs General Administration of China (CGAC), showed solid growth from last month's reading of a 22.3B surplus to this month's 31.5B surplus. Forecasts had called for only moderate growth towards 27.3B. The news, as mentioned above, should help the CNY grow in this week's forex market. Read more forex trading news on our forex blog.

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