Mixed market reaction to FED

One of the most anticipated market events came today and market’s reactions were mixed. As expected Federal Reserve kept interest rates unchanged. Dollar initially fell, then rose and then dropped again. This kind of reaction must have cost a lot of market participants a lot of money. Those that tried to trade in both directions must have lost money. Of course, these kinds of things do happen. One has to be very patient and not to give in to despair when a streak of losses occur. It is far more important to follow your system and trade with discipline. 

Two key events are in the horizon. One is Bank of England rate decision that is due tomorrow at 11:00 GMT. I have intentions trading British Pound against one of commodities, possibly New Zealand currency. The same can be said about the other event: European Central Bank interest rate decision coming at 11:45 GMT. I will probably be looking at eur/nzd pair to make a long or a short trade. Non Farm payrolls will surely be the last risk event this week. I see gold as of particular interest for this event. It has risen quite a bit in the last month and will probably correct itself to make new lows in the coming weeks. Let us see what happens tomorrow though. Do not overtrade!


I also suggest you reading my post: http://forex-news-trading.blogspot.com/2013/08/ultimate-guide-to-successful-day-trading.html

Week of Central Banks

This week is probably the most important from the financial point of view in the month. I hope you know why. Three major banks are going to release their interest rate decisions. It starts with Federal Reserve tomorrow at 18:00 GMT and goes on to Thursday with Bank of England at 11:00 GMT, followed by European Central Bank at 11:45 GMT. Markets could start moving sharply even before the FED as Gross Domestic Product of US will be announced on Wednesday at 12:30 GMT. However, do not be too much involved in that. I would recommend closing your positions before FED announcement. It may reverse anything.

It could be the key event of the week as ECB will not have press conference meeting following its’ announcement this time (it usually has). And again, the next day the picture might change again when Bank of England and ECB will publish their decisions. So, have light positions or even close them tomorrow. It is very risky to head into these kinds of events fully loaded. I experienced it myself on a number of occasions and do not want to repeat the same mistakes again and again. It is good to learn to take advantage of these kinds of events, not to lose money on them. Hope that helped!

Yen and Dollar to strengthen next week?

The longer term picture for Japanese Yen and US dollar are quite bullish. You hopefully noticed that the most recent strength in US dollar index was basically due to the fact that Yen was weak. You could actually see dollar weakening in most pairs and strengthening on the Yen and dollar index strengthening at the same time. This has been changing lately. You can see how dollar weakened this weak across most currency pairs, not necessarily Yen, and dollar index collapsed. Anyway, we have very rich week upcoming. Major economies will announce their interest rates decision: US, Europe and UK. I do hope to see some ‘fireworks’. 

On the one hand aud/usd and nzd/usd displaying clear technical bullish patterns. On the other US dollar index is close to its’ support. What does that mean? Being a technician I am ready to go either way. Commodity currencies look bullish against most other currency pairs too: Euro, British Pound and Swiss Franc. I am thinking about going long in aud/usd and shorting gbp/aud, gbp/nzd as well as eur/nzd and eur/aud. It looks like major time for correction in these pairs has come. And the timing for that seems to strike next week. Get ready and do your own analysis over the weekend.

Grossl Domestic Product of GB

We had some nice volatility yesterday when Australia’s CPI was released. Australian dollar took a hit and the weakness will probably continue till the end of the week. Canadian Retail Sales numbers were a surprise as they were much bigger than predicted and ‘the loonie’ soared as a result. We are coming to the key event of the week: UK Gross Domestic Product. Neither you, nor me know where the Pound will go and whether the real data matches the expectations of the market. Economists have given us pretty bullish figure to expect, which is not very likely to be met. But who knows, maybe it will be better than expected too.

So, I am getting ready for a trade of British GDP, which is coming in half an hour. I am preparing a buy stop in gbp/cad and a sell stop in gbp/nzd. If market is not taken by surprise I will remove my orders and wait for other currency pairs or commodities to move. S&P500 seems to have corrected nicely and may take another try to take its’ all time highs of 1700. Oil is also stabilizing after a fall and sitting on 200 simple moving average on 2 hour chart. I bet the end of the week will be pretty interesting.

Forex news this week

I haven’t written a post for a few days. It is time to write one. Unfortunately, there isn’t much what to say from the fundamental point of view. This week isn’t very rich in important Forex news. However, there is some and let us look at it right now. 

Tuesday

Canada: Retail Sales (coming at 15:30 GMT). I do not expect strong moves. Maybe gbp/cad could be taken higher, but nothing else. 

Wednesday

Australia: Consumer Price Index (coming at 01:30 GMT). Isn’t it time for Australian dollar to strengthen? Let us wait and see. 

New Zealand: Reserve Bank of New Zealand Rate Decision (coming at 21:00 GMT). 

Thursday

United Kingdom: Gross Domestic Product (coming at 08:30). This could be a key point in deciding on the nearest direction of Pound pairs. Pound may peak against most pairs. 

USA: Durable Goods Orders (coming at 12:30 GMT). 

Japan: National Consumer Price Index (coming at 23:30 GMT). 

Friday is pretty clean this time as no important news is scheduled on the day. So, we may expect major moves by the end of the week (probably in the middle of it). I will concentrate on British Pound this week. There is slight possibility for strengthening of commodity currencies: Australian and New Zealand dollars.