Risk Appetite Subdued Ahead Of US GDP- USD Firms

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Asia Pacific markets were lower after a lackluster performance in US equities saw the Dow, the S&P, and the Nasdaq fall by .3%, .4%, and .6% respectively. Disappointing topline revenues and softer guidance reports weighed on sentiment one day before the US is set to release Q2 GDP figures. Remarks made by Federal Reserve Bank of St. Louis President James Bullard also helped subdue risk appetite after he suggested that the US is moving closer to Japanese-style deflation and may need additional quantitative easing measures. The Hang Seng index, the Shanghai SE composite, and the S&P/ASX 200 index were off by .3%, .4%, and .7% respectively. The Nikkei 225 was the worst performer, losing more than 1.6% after a report showed June industrial production had fallen by 1.5% m/m. Consensus estimates had called for an uptick to .2% from .1% a month earlier. Japanese markets have fallen more than 2% in the past three sessions amid ongoing concerns regarding the health of the US recovery and persistent strength in the yen. The dollar slid to a 8 month low versus the yen, as uneasy investors seek haven ahead of today's US data flow.

Commodities were mostly lower, with crude oil paring gains to trade at $77.70per barrel at 10am in London. Gold holds just beneath $1170 per ounce after failing to break through the $1160 support level earlier in the week. Risk-off trades supported the dollar, with the index trading higher by .6% to 81.90. Treasury yields continue to fall, with the 10-year note falling to 2.95% and the 5-year yielding 1.63%.

Euro Retreats After Testing 1.31

The euro reversed yesterday's gains after testing the 1.31 handle early in the US session. Disappointing German retail sales figures accelerated haven flows, pushing the single currency as low as 1.2980. Eurozone unemployment was in line with expectations, with the figure printing at 10.0%. Support is seen at the lower bound trendline of the ascending channel at 1.2960. Downside risk for the euro increases with a break below the 61.8% Fibonacci extension taken from the July 20th and 29th crests, at 1.2920, with targets eyed lower at the 1.28 figure, and 1.2740. Interim resistance stands at 1.3045, backed by the 1.31 handle, and 1.3150.

Euro Gains on Speculation Traders Exiting Bets on Its Decline

The market review blog today news Euro Gains on Speculation Traders Exiting Bets on Its Decline.

The euro climbed to its highest level in a week against the dollar amid speculation investors who bet on its decline amid Europe’s sovereign-debt crisis had to buy back the currency as it strengthened for a third day.

The euro headed for its largest five-day gain in eight months after yesterday rising from its lowest level since 2006 as traders theorized the European Central Bank may intervene to support the currency. German lawmakers today approved their country’s share of a $1 trillion euro-region bailout. The yen swing between gains and losses against the dollar as U.S. stocks gained for the first time in four days.

“There was certainly capitulation,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., world’s largest custodial bank, with more than $20 trillion in assets under administration. “It was scorched earth yesterday and players are on the sideline licking their wounds. It may take weeks, or even months, for risk appetite to return.”

The euro advanced 0.6 percent to $1.2567 at 10:24 a.m. in New York from $1.2487 yesterday, after earlier rising to $1.2672, the strongest since May 13. The currency, which touched a four-year low of $1.2144 on May 19, has gained 1.7 percent versus the greenback this week, the most since the five days ending Sept. 11, 2009.

‘More Decisive’

The shared currency gained 0.9 percent to 113.02 yen from 111.99. It yesterday plunged as much as 3.8 percent to the weakest against the Japan’s currency since November 2001. The yen traded at 89.75 per dollar from 89.68. The Standard & Poor’s 500 Index rose as much as 0.9 percent after earlier falling as much as 1.5 percent that dragged it below its weakest level during the May 6 market rout.

The euro gained before European Union President Herman Van Rompuy hosts a meeting of finance ministers in Brussels today to discuss reforms to economic governance.

“Today’s meeting is an excuse to indulge in some short covering,” said Audrey Childe-Freeman, a senior currency strategist at Brown Brothers Harriman Ltd. in London. “There is little chance of any more big announcements today, but like the rumors of intervention it’s enough to give a little relief to the euro for now.”

Hedge funds and other large speculators on May 11 increased bets on a decline in the euro to 113,890 contracts more than those anticipating a gain, the most ever, according to Commodity Futures Trading Commission data.

Europe’s single currency has dropped 5.9 percent this year against its developed-world counterparts, according to Bloomberg Correlation Weighted Indexes.

Carry Trade

Today’s vote by German lawmakers allayed market concern they would balk at approving a second emergency loan package in as many weeks. The lower house of parliament voted 319 to 73 in favor of contributing as much as 148 billion euros ($184 billion) to indebted European states to backstop the euro; 195 lawmakers abstained. The upper house, or Bundesrat, also passed the measure, sending it on to President Horst Koehler for signature.

Brazil’s real dropped 6.6 percent against the yen this week as price fluctuations remained at elevated levels, sapping demand for carry trades, in which investors buy higher-yielding assets with amounts borrowed in nations with low interest rates. Japan’s benchmark lending rate of 0.1 percent, less than the 9.5 percent in Brazil, has made the yen popular for funding such transactions.

JPMorgan Chase & Co.’s implied-volatility index for six major currencies versus the dollar climbed to as high as 16.95 percent yesterday, the most since April 2009. The index traded at 16.22 percent today.

“The environment is becoming unstable with volatility at very high levels,” said Joseph Capurso, a currency strategist at Commonwealth Bank of Australia in Sydney. “The yen is about the only currency that does really well in this environment.”

‘Extremely Antsy’

Higher volatility suggests a greater risk for carry trades, where gains in the funding currency erode profits from the interest-rate differential, and may cause losses as it becomes more expensive.

The yen fell earlier versus the dollar after comments by Finance Minister Naoto Kan raised speculation Japanese authorities may act to weaken the currency. The yen surged more than 2 percent against the greenback yesterday.

“We must closely monitor the situation to make sure this won’t cause excessive yen appreciation,” he said.

A stronger yen reduces the competitiveness of Japanese goods overseas. Japan’s large manufacturers expect the currency to average 91 per dollar this fiscal year, according to a recent Bank of Japan Tankan survey.

“Yen below 90 is already an expensive yen,” Steven Englander, head of Group of 10 currency strategy at Citigroup in New York said in a Bloomberg Radio interview today. “There is an opportunity to short the yen at 90.”

‘Elevated Threat’

There is an “elevated threat” the central banks of Europe, the U.S. and Japan will intervene in currency markets though the threshold has not yet been reached, according to Morgan Stanley.

The chance of joint intervention by the Group of Three has increased to 30 percent, above the long-term average of 12 percent, Sophia Drossos, co-head of global foreign-exchange strategy at the U.S. investment bank, wrote in a note to clients. The probability is based on a model that takes into account factors such exchange-rate momentum and market positioning.

“The strongest warning signals in our model have been coming from the pace of euro decline rather than the direction of the move itself,” New York-based Drossos wrote in the note yesterday. “Other indicators in our model suggest euro weakness does not appear out of line with fundamentals or policy preferences.”

Euro Sales Extend as Morgan Stanley Mulls EU Breakup

This is forex times ... April 29 (Bloomberg)- Investors are abandoning the euro at a rate not seen since the collapse of Lehman Brothers Holdings Inc. as Europe’s worsening fiscal crisis threatens to splinter the 16-nation currency union.

Pension funds and banks sold euros this month at the fastest pace since the second half of 2008, when the currency tumbled more than 25 percent against the dollar between mid-July and the end of October, according to Bank of New York Mellon Corp., the world’s biggest custodian of financial assets with $23 trillion. Demand for options giving the right to sell the euro against the dollar versus those allowing for purchases rose yesterday to the highest level since November 2008.

“The assumptions that went into the makeup of the euro- zone, and hence the euro, are now being brought into question and revalued,” said Eric Busay, a manager of currencies and international bonds in Sacramento at the California Public Employees’ Retirement System, the largest U.S. public pension, with $202 billion under management. “There are differences, and screaming differences, that have now been shown between the regions of the euro-zone.”

While the euro became a rival to the dollar after the common currency’s inception in 1999, the debt crisis that began in Greece shows how it is being shaken by one country comprising 2.6 percent of the region’s economy. The euro’s 11 percent decline in the past six months made it the worst performer among its 16 most-traded peers. Standard & Poor’s cut the credit ratings on Greece, Portugal and Spain in the last two days.

Central-Bank Holdings

Credit-default swaps on the debt of Greece, Portugal and Spain climbed to record highs as the 16 nations making up the euro failed to bridge economic and political differences fast enough for traders.

The euro fell to a one-year low of $1.3115 yesterday in New York, down from 2009’s high of $1.5144 on Nov. 25, as German Chancellor Angela Merkel said in Berlin the “stability of the euro zone” was at stake if a 45 billion-euro ($59 billion) loan package for Greece orchestrated by the International Monetary Fund can’t be delivered soon.

Currency strategists are having a hard time keeping up with the decline. The median average of 32 forecasts compiled by Bloomberg is for the currency to end the year at $1.32. In February, the estimate was $1.43. The euro was at $1.3236 at 3:25 p.m. in London today.

Dumping Bonds

Bank of New York Mellon’s chief currency strategist, Simon Derrick in London, said the euro may tumble to $1.10 by the end of 2011. Morgan Stanley predicts it will trade at $1.24 by year- end. Without central bank support, the euro’s long-term fair value is $1.20, UBS AG said April 26.

Investors are on course to sell a net 50 billion euros of euro-region bonds this year, compared with purchases of 225 billion euros in 2009, according to a Nomura Holdings Inc. projection.

Central banks reduced the share of euros in their $8.1 trillion of reserves to 27.6 percent in the fourth quarter of 2009 from 28 percent in the previous three months, according to Morgan Stanley calculations based on IMF data. The figure was about 17 percent when the euro was introduced 11 years ago.

“Central bankers and institutional investors have spent 10 years pricing out the likelihood of a euro-zone break-up, and now they have to price it in again,” said Emma Lawson, a currency strategist in London at Morgan Stanley. “The euro will no longer have this additional support going forward.”

‘Shift in Attitudes’

The euro’s one-month option risk-reversal rate fell to minus 1.97 percent yesterday, the lowest level since Nov. 4, 2008, and down from minus 0.9 two weeks earlier, signaling a relative increase in demand for puts, which grant traders the right to sell the currency. It was at minus 1.7 percent today.

“Euro weakness is driven by a broad shift in investor attitudes, a shift which goes well beyond shorter-term foreign- exchange position changes within hedge funds,” Nomura foreign- exchange analysts Jennifer Hau in London and Jens Nordvig in New York wrote in an April 20 report to clients.

The euro, introduced on Jan. 1, 1999, at a rate of about $1.17, weakened to 82.30 U.S. cents in 2000 as the region’s economy slumped amid the bursting of the dot-com bubble. It peaked at $1.6038 in July 2008 as the global financial crisis worsened.

While the European Union shares a common monetary policy, members are responsible for their own fiscal decisions. That allowed Greece’s budget deficit to expand to almost 14 percent of its gross domestic product, exceeding the EU’s 3 percent limit without penalty. Germany’s is 3.2 percent of its GDP.

‘Vulnerable Spot’

Greece’s $357 billion economy is 2.6 percent of the euro zone’s $13.6 trillion and compares with $3.65 trillion for Germany, according to data compiled by Bloomberg.

Even though Merkel called for a quick resolution of the aid package for Greece, she has delayed German approval of loans in the face of voter opposition. Almost 60 percent of Germans don’t want to help Greece, the Die Welt newspaper reported this week, citing a survey of 1,009 people.

“The problem with Europe, and people had forgotten about this over the past decade, is that the experiment of monetary union without political union, and without any sort of federalism across the euro-zone, puts them in a very vulnerable spot,” Scott Mather, head of global portfolio management at Pacific Investment Management Co. in Munich, said in a Bloomberg radio interview on April 26.

‘Nationalistic’ Tendencies

“So when push comes to shove and you have these large imbalances that develop between countries, it is very likely that they go back to the old world of being more nationalistic,” said Mather, whose Newport Beach, California- based firm runs the $220 billion Total Return Fund, the world’s biggest bond fund.

The outlook for the euro and the dollar are both poor, according to Kenneth Rogoff, a former IMF chief economist and professor at Harvard University in Cambridge, Massachusetts. President Barack Obama has increased U.S. marketable debt to an unprecedented $7.76 trillion to fund a budget deficit the government predicts will swell to $1.6 trillion in the fiscal year ending Sept. 30.

“There’s a tremendous surge to diversify out of the dollar, and the euro is still the main alternative,” Rogoff said in a telephone interview. “Both the euro and the dollar have their longer-term vulnerabilities.”

Since 2001 the percentage of currency reserves held in dollars has fallen to 62.1 percent from 72.7 percent, according to the IMF in Washington.

‘Great Solution’

Nobel Prize-winning economist Robert Mundell said the Greek crisis is a fiscal issue, not a broader credibility peril for Europe’s common currency.

“It’s not a euro problem; the euro has been a great solution,” Mundell, a professor at Columbia University in New York, said in an interview yesterday on Bloomberg Television. “It’s a deficit and debt problem.”

Mundell said there must be conditions attached to the financing package for Greece with a year-by-year target to reduce the country’s debt and cut its deficit “well below 3 percent” of GDP.

“It could be handled if the Greeks would be able to demonstrate to Germany and the other countries that they will keep the line and do this,” Mundell said. “There has to be that transformation, otherwise the alternative is a big restructuring of the Greek debt.”

Bigger Than TARP

The euro’s weakness may also help Europe’s economy rebound as its exports become more competitive. Bundesbank President Axel Weber said April 26 that Germany’s recovery will gather steam in the second quarter. The nation’s exports rose 5.1 percent in February from the previous month, the most since June 2009, a government report showed on April 9.

To fix the region’s fiscal crisis the EU may need a plan larger than the $700 billion Troubled Asset Relief Program deployed by the U.S. after the collapse of Lehman Brothers, according to Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.

Lower credit ratings on EU nations may force banks to boost the amount of capital they’re required to hold against bets on sovereign debt, said Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC in Greenwich, Connecticut. While bank capital rules give a risk weighting of zero percent for government debt rated AA- or higher, it jumps to 50 percent for debt graded BBB+ to BBB- on the S&P scale and 100 percent for BB+ to B-.

Soaring Yields

Yields on Greek two-year notes soared to a record 26 percent yesterday. Portugal’s jumped to 7.05 percent and Spain’s reached 2.53 percent. S&P lowered its rating on Greece by three steps to BB+, or below investment grade, from BBB+ on April 27, minutes after cutting Portugal to A- from A+. It reduced Spain’s rating one step to AA from AA+ yesterday.

“The euro is not the euro we initially bought into,” said Roddy Macpherson, investment director in Edinburgh at Scottish Widows Investment Partnership Ltd., which manages the equivalent of $216 billion of assets. “The whole confidence in the euro has taken a bit of a bashing. We’re short the euro.”

Pound Rises with Increasing U.K. House Prices

The Great Britain pound gained today, paring its previous losses, after the report about the rising house prices increased the confidence that the economic recovery in the U.K. is strengthening.

These news have brought necessary refreshment to support the sterling’s performance after the concerns about the budget deficit and the uncertainty about the election’s outcome. In fact, the talks began that the Conservatives will win the election and will form the government strong enough to deal with the budget shortage, further strengthening the pound. The resulting optimism let some analysts expect that the pound will rise to 1.56 level against the U.S. dollar.

GBP/USD traded at 1.5472 as of 13:00 GMT today after opening at 1.5384. EUR/GBP traded near 0.8620 down from its opening level of 0.8673.

Canadian Dollar News, He Remains Near Parity

Hi there, how about your forex today? Lets see this Canadian Dollar news today! The Canadian dollar trades near parity with its U.S. counterpart as the traders await the outcome of the 45 billion euro aid package, provided by the European Union and the International Monetary Fund to Greece.

With the clarity about the bailout the global equity markets will be spurred, boosting the commodity currencies. The Loonie, as the Canadian currency commonly nicknamed, can be considered such currency as its performance depends on the moves of the equities and the commodities, like earlier, when the currency dropped after the prices for the oil, the biggest nation’s export, declined.

The experts think that outcome of the Greece’s crisis and the reaction of the markets on it will have significant impact on the Canadian dollar performance. Though, even if the rescue will be considered successful, the optimism for the European economy may be short-lived.

USD/CAD traded near 1.0007 as of 21:37 GMT at its opening rate today. EUR/CAD traded at about 1.3406 after opening at 1.3331.

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Fundamental Outlook at 1400 GMT (EDT + 0400)

This is Fundamental Outlook at 1400 GMT (EDT + 0400) use this for analysys your trading...

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3375 level and was supported around the $1.3200 figure. The common currency retraced some of its intraweek losses after Greece officially requested financial assistance from the European Union and the International Monetary Fund. The European Commission, European Central Bank, and the Eurogroup reported they are “taking note” of Greece’s request to “activate the financial support mechanism,” adding they “will decide upon the activation of this mechanism.” There is market talk that Greece will receive its first funding tranche before 19 May. The speed with which the European Union agrees to rescue Greece will partially be determined by the speed with which German Chancellor Merkel can push the unpopular bailout through the German legislature. Yesterday, Greece’s debt ratings were downgraded by Moody’s Investor Services. The activation of the financial assistance package for Greece will provide the country with a little bit of financial stability but there is talk that Greece will require well in excess of €100 billion in aid from the international community. Additionally, the euro may still continue to probe new multi-month lows because there is a higher threat that contagion will see Greece’s fiscal problems move to other highly-indebted eurozone countries including Portugal and Spain. G-7 and G-20 officials will discuss sovereign credit risk, exchange rates, Greece, global financial reform, and other key topical issues when they convene this weekend in Washington, D.C. Eurozone February industrial new orders were up 1.5% m/m and 12.2% y/y in data released today. Also, the German April Ifo business climate index rallied to 101.6 from 98.2 while the April Ifo current assessment index improved to 99.3 and the April Ifo expectations index rallied to 101.9. Also, French March consumer spending was up 1.2% m/m and 2.5% y/y. In U.S. news, data released today saw March durable goods orders decline 1.3%, a reversal from the revised prior reading of +1.1%, while the ex-transportation component was up 2.8%, up from the revised prior reading of 1.7%. Also, March new home sales were up 26.9% y/y to an annualized 411,000 units, a multi-decade record-setting pace. Press reports suggest Federal Reserve Chairman Bernanke is not convinced about the timing of asset sales to reduce the Fed’s balance sheet. Euro bids are cited around the US$ 1.3175 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.20 level and was supported around the ¥93.30 level. The pair continues to rise as there are increasing signs the U.S. economic recovery is taking root. The Japanese media is reporting Bank of Japan may raise its consumer price index forecast for fiscal year 2011 to near zero per cent growth, up from January’s estimate of -0.2%. Bank of Japan Governor Shirakawa spoke yesterday and reported inflation targets are one cause of asset price bubbles. It is likely that Shirakawa and other BoJ officials will resist the government’s likely call to adopt an inflation target, perhaps as high as 2% per year. Ahead of this weekend’s G-7 and G-20 meetings in Washington, D.C., Shirakawa said exchange rates should not be utilized to resolve trade disputes. Data released in Japan overnight saw the February all-industry activity index decline 2.3% m/m, a reversal from the upwardly revised +3.4% climb in January. The Nikkei 225 stock index lost 0.32% to close at ¥10,914.46. U.S. dollar offers are cited around the ¥96.85 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥125.20 level and was supported around the ¥123.40 level. The British pound moved higher vis-à-vis the yen as sterling tested bids around the ¥144.50 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.30 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8274 in the over-the-counter market, up from CNY 6.8264. Attention will be focused on the G-7 and G-20 meetings in Washington, D.C. this weekend to determine how much multilateral pressure there is on China to revalue its yuan currency. Many China-watchers believe China may allow the yuan to appreciate at any time between now and the end of the quarter. Data released in China overnight saw the March leading index decline to 104.98 from the revised prior reading of 105.11.

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5295 level and was capped around the $1.5400 figure. Data released in the U.K. today saw Q1 gross domestic product up 0.2% q/q and off 0.3% y/y, lower-than-expected on the quarterly basis and stronger-than-expected on the year-over-year basis. Prime Minister Brown will likely note these data suggest the economy is accelerating while his opponents in the 6 May General Election will note that economic growth remains very weak. Many political pundits believe the contest will result in a hung Parliament and some now say the general election is too close to call with Cameron perhaps still holding a slight lead over Brown. Cable bids are cited around the US$ 1.5140 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the £0.8700 figure and was supported around the £0.8605 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0850 level and was supported around the CHF 1.0745 level. Swiss National Bank Chairman Hildebrand said he is “skeptical” of the International Monetary Fund’s G-20 bank tax proposal. Swiss National Bank and Swiss regulators announced new regulations this week that mandate UBS and Credit Suisse to hold larger amounts of reserves to defend against crisis scenarios. Data released in Switzerland today saw the March trade balance expand to CHF 2.01 billion from the prior reading of CHF 1.29 billion while the April ZEW expectations survey fell back to 53.4 from 53.8. Dealers continue to cite talk that Swiss National Bank may be intervening by bidding the euro/ franc cross higher. U.S. dollar offers are cited around the CHF 1.0920 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.4355 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6490 level.

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Easy Learning Money Management

Money management is very important and used in Investment management and deals with the question of how much risk a decision maker should take in situations where uncertainty is present. More precisely what percentage or what part of the decision maker's wealth should be put into risk in order to maximize the decision maker's utility function.

Let's  to learn money management for better earning


Money management gives practical advice among others for gambling and for stock trading as well.

Money management can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Greater money management can be achieved by establishing budgets and analysing costs and income etc.

In stock and futures trading, money management plays an important role in every success of a trading system. This closely related with trading expectancy:

“Expectancy” which is the average amount you can expect to win or lose per dollar at risk. Mathematically:

Expectancy = (Trading system Winning probability * Average Win) – (Trading system losing probability * Average Loss)

So for example even if a trading system has 60% losing probability and only 40% winning of all trades, using money management a trader can set his average win substantially higher compared to his average loss in order to produce a profitable trading system. If he set his average win at around $400 per trade (this can done using proper exit strategy) and managing/limiting the losses to around $100 per trade; the expectancy is around:

Expectancy = (Trading system Winning probability * Average Win) – (Trading system losing probability * Average Loss) Expectancy = (0.4 x 400) - (0.6 x 100)=$160 - $60 = $100 net average profit per trade (of course commissions are not included in the computations).

Therefore the key to successful money management is maximizing every winning trades and minimizing losses (regardless whether you have winning or losing trading system, such as %Loss probability > %Win probability).

Money management is the process of managing money. It is including investment, budgeting, banking and taxes. it is also called investment management.

Money management is a strategic technique employed at making money yield the highest of interest-yielding value for any amount of it spent. Spending money to provide answers to all cravings (regardless of whether they are justifiable or not to be included in budget basket) is a natural human phenomenon. The idea of money management techniques is developed to plummet the amount individual, firm and institutions spends on items that add no significant value to its living standard, long-term portfolios and asset-basins. Warren Buffet, in one of his documentaries, admonished prospective investors to embrace his highly-esteemed "frugality" ideology. This is the basis of every sound money management formulas. The following are powerful techniques that can be employed in making every expense made to be worth it:

1. cutting your budget on social needs
2. avoid any snob-appealing expense
3. always go for the most cost-effective alternative (establishing small quality-variance bench-mark, if any)
4. increase expenses more on interest bearing item than any other thing
5. establish the expected benefits of every desired expense using the canon of plus/minus/nil to standard of living value system.
These techniques are investment-boosting and portfolio-multiplying.