Barclay Capital today raised forecasts for the high currency. In particular, the Australian dollar, expecting that the appetite for risky assets, which is observed in the present moment, in the short term will increase the demand for Aoussa. Previously, the three-month forecast of the bank meant the average rate of AUD / USD near 0.80. Now the average rate, according to 3-month forecast raised to 0.8200.
Friday, July 31, 2009
RBS: U.S. GDP may provide support for commodity currencies
According to analysts RBS, if today's U.S. GDP data for the 2 nd quarter (16:30 AM EDT) will be better than forecasts, it will support a pair of dollar / yen, as will demonstrate the restoration of the world economy. In addition, consider a bank, a good indicator of the GDP will also provide a positive impetus to trade currencies like the Australian and Canadian dollars. U.S. GDP is projected at 1.5%.
Data on GDP led to a decline in the Canadian dollar
The Canadian dollar fell after the release of GDP - the GDP of Canada in May fell by 0.5%, which was worse than analysts' forecasts of -0.3%. At the same time, went on the U.S. GDP for the quarter 2 - reduction were lower than expected and amounted to -1.0% (-1.5% forecast) Prior to the publication of the data pair of dollar / Canada fell to 1.0775. TD Securities Analysts note that the flow at the end of the month, likely will support the Canadian currency, although it will increase volatility. At this time, a pair of U.S. / Canada trading near 1.0825 level.
BBH: specifies whether the further course of the U.S. GDP?
The main two events of today are the U.S. GDP for the 2 square. and adjustment of the position against the backdrop of the end of the month. According to analysts BBH, if the forecasts of economists and investors are too optimistic or too pessimistic, it is likely that GDP will be lower than expected. The rate of decline of stocks has fallen, and now the main influence on the GDP has a "change in change" stocks. This figure is difficult to predict, and therefore, there can be quite a surprise. It may surprise net exports. American consumers continue to refuse to loan funds, but given the decline in consumption growth in unemployment leads to a decrease in imports. Even if all of these risks materialize, and the GDP of 2 sq. km. will be lower than expected, it does not further clarify the direction of the U.S. dollar. The latest trend is that the good economic performance meets the weakening dollar, as investors and speculators switched to more risky assets. Yet, taking into account the flow of generally positive news, a pair of Euro / dollar this week is not happy growth, as it says on the possible extinction trend. If you consider that the European currency is in a wide range, then this week it was tested near the lower limit of 1.40, which could prevent further decline in euro / dollar. Short-term indicators signal that both the euro and the pound today, may become stronger against the dollar. Dollar against the yen is stable, but indicators suggest that the set yesterday, a three-week high at 95.88 would be difficult to overcome. Given all this, a correction of the positions in anticipation of the end of the month is now the joker.
RBC Capital Markets predicts decline in euro / pound
According to currency analyst RBC Capital Markets, the European currency may drop to the level of 0.8236 against the pound, if on a daily closing below 0.8509. Yesterday, a pair of Euro / pound closed below initial support at 0.8571 - according to the bank, it is a signal to turn a pair of short-term bear. Such low closing set the stage for testing the key support line of a rising trend from October last year at 0.8509. The daily closing below this level will signal and bear testimony to the fact that the couple is seriously ready for the resumption of the intermediate down trend. The technical picture is also not in favor of the euro - Stochastics in the afternoon schedule gives signals bear divergence, suggesting the possibility of reducing the euro / pound. The daily closing below 0.8509, according to currency strategists RBC Capital Markets, will lead to a reduction in euro / pound to a minimum at 0.84 June, followed by 0.8331 and a minimum mark of 28 November at 0.8236. At this time, a pair of Euro / pound traded at around 0.8542.
All that is growing, sooner or later grows
On the other side of the Atlantic, housing markets have already left the state of free fall. For example, recently published data suggest that the unexpected increase in new construction projects in June, up to seven peaks. Building permits, an indicator to predict activity in the near future, is also rapidly increasing. Meanwhile in Britain, various studies on the level of house prices can also say that the market has recently falling into the abyss, turned 180 degrees. For example, the Nationwide index rising for two consecutive months. In other parts of the world, we are pleased to see how out of piles of worthless arguments derived the theme of disengagement economies. China in the second quarter showed GDP growth at breakneck 7.9% in 2009, which exceeded expectations, which in themselves were quite impressive. In the presence of supporting factors, such indicators may be evidence that the global recession would soon enter into another phase, although a few months ago, it threatened to turn into the Great Depression new incarnation. Nevertheless, there is still a lot of work. Activity in the market is still very low, in addition, those who today in the UK decide to buy their first home, will not easy. On a mortgage loan that covers 100% of the cost of housing can not count. In the long run, this is certainly good, but now this situation depresses activity in the housing market. Activity in the manufacturing sector as the world was not high. Especially in light of recent data on the PMI index in Germany and the United States. Despite the discussion of so-called exit strategy, we still can not be sure what will happen to quantitative easing, when the time comes to raise the stakes.
Such contradictions reflect the peculiarities of the economic crisis. The reason for the crisis, at least, if for reasons of common sense, relates to the excessive vulnerability of the financial sector caused by the nedopustimyh lending policies of sub-borrowers in the U.S. housing market. Sekyuritizatsiya these loans and the apparent loss of confidence in these securities tsenynym led to the collapse of the financial system, unprecedented in the 1930's. Now, some financial companies have arrived again, sometimes even returning the money of taxpayers, which allows you to optimistic conclusions about the conclusion of the crisis. All this is true, but, alas, not the end of history. If someone gave a lot of credit, it means that someone took too much credit. One of the most important lessons of the so-called Japanese "lost decade" is the significance of excessive debts. Even when the banks are on their feet and can lend again, the process is not a dead letter due to a lack of wanting to borrow. In recent times, we only hear about the "sharp start" lending. I'm not sure that it will be very sharp.
To some extent, the problem has masked a lack of borrowers by financial incentives. When the private sector has shown reluctance to take loans, the state intervened in the case. Very well, if the recovery is within reach. But if the cost of private sector will not rise because of excess debt, governments have to face the difficult task of bringing its accounting in order. Politicians still be happy to dance on the thin ice of the debate. The Americans offered to focus on health reform, the British are discussing the advantages and disadvantages of tax increases and cost reductions. We have yet to take tough decisions. For example, in Britain, as far as possible to raise taxes? Do I need to increase VAT? What happens to the cost of education, health and helicopters in Afghanistan? Asceticism is not threatened by the popularity, but apparently this is the fee to be paid for the credit crisis.
Recent economic data makes the glass "half full", but it is possible that at the bottom of a glass crack through which ooze ostensible improvement in demand, not contributing to the stabilization of the economy as a whole. In many countries, business activity continues to be absent for a fact that increases the pressure on prices and wages. Good news ... for those who are close to the idea of flexibility in prices and wages. Supporters of the concept argue that it is better to cut all salaries, than to allow 10% of people lost their jobs. In general, this is so, but this argument slabeet in terms of reducing the interest rate to zero. At this point, further decline in prices and wages bear a heavy burden on those who have debts. People no longer spend, demand falls, and the labor market continues to weaken. Thus, the worst period of the crisis may already be behind us, but we have no reason to expect that we will return to the conditions that dominated prior to the ... at least in the United States and Great Britain.
In other parts of the world picture is somewhat more optimistic. I have already mentioned the rapid growth of China in the second quarter of 2009. My colleagues at HSBC in Hong Kong believe that the annual rate could reach 8%, and in 2010 - 9.5%. In the past China was linked with паразитированием on the American demand, odnoak, now the situation is rapidly changing: the country now relies more on domestic policy. Investment in infrastructure, including the expansion of the railroad, grew by 109% in the first five months of the year - an amazing shift, which entails an increase in demand for steel, cement, construction equipment, and so on. The rate of fall of the profitability of already declining, while beginning to show signs of growth in consumer spending. If you connect the internal power of China with a relatively relaxed monetary conditions outside the country, in regions prone to the impact of the credit crisis, get the recipe for rapid growth in domestic demand in some developing economies. This means that we vozvaschaemsya to the old theme of good separation. It is obvious that in developed countries vuntrenny demand sluggish for the foreseeable future. In fact, and the United Kingdom and the United States are experiencing a demographic crisis and debt, which affect the economy is not the most favorable way. This is illustrated by the example of Japan in the last twenty years. All the fun will be happening in other parts of the world. Some cause for optimism is still there, but this does not mean that the world economy recovered from the shock. Tragically this is to recognize the developed world, but most important, and lush green shoots appear in Asia and other developing countries. But it should be. Anyone who develops, sooner or later becomes developed.
Stephen King
managing director of economics at HSBC
Such contradictions reflect the peculiarities of the economic crisis. The reason for the crisis, at least, if for reasons of common sense, relates to the excessive vulnerability of the financial sector caused by the nedopustimyh lending policies of sub-borrowers in the U.S. housing market. Sekyuritizatsiya these loans and the apparent loss of confidence in these securities tsenynym led to the collapse of the financial system, unprecedented in the 1930's. Now, some financial companies have arrived again, sometimes even returning the money of taxpayers, which allows you to optimistic conclusions about the conclusion of the crisis. All this is true, but, alas, not the end of history. If someone gave a lot of credit, it means that someone took too much credit. One of the most important lessons of the so-called Japanese "lost decade" is the significance of excessive debts. Even when the banks are on their feet and can lend again, the process is not a dead letter due to a lack of wanting to borrow. In recent times, we only hear about the "sharp start" lending. I'm not sure that it will be very sharp.
To some extent, the problem has masked a lack of borrowers by financial incentives. When the private sector has shown reluctance to take loans, the state intervened in the case. Very well, if the recovery is within reach. But if the cost of private sector will not rise because of excess debt, governments have to face the difficult task of bringing its accounting in order. Politicians still be happy to dance on the thin ice of the debate. The Americans offered to focus on health reform, the British are discussing the advantages and disadvantages of tax increases and cost reductions. We have yet to take tough decisions. For example, in Britain, as far as possible to raise taxes? Do I need to increase VAT? What happens to the cost of education, health and helicopters in Afghanistan? Asceticism is not threatened by the popularity, but apparently this is the fee to be paid for the credit crisis.
Recent economic data makes the glass "half full", but it is possible that at the bottom of a glass crack through which ooze ostensible improvement in demand, not contributing to the stabilization of the economy as a whole. In many countries, business activity continues to be absent for a fact that increases the pressure on prices and wages. Good news ... for those who are close to the idea of flexibility in prices and wages. Supporters of the concept argue that it is better to cut all salaries, than to allow 10% of people lost their jobs. In general, this is so, but this argument slabeet in terms of reducing the interest rate to zero. At this point, further decline in prices and wages bear a heavy burden on those who have debts. People no longer spend, demand falls, and the labor market continues to weaken. Thus, the worst period of the crisis may already be behind us, but we have no reason to expect that we will return to the conditions that dominated prior to the ... at least in the United States and Great Britain.
In other parts of the world picture is somewhat more optimistic. I have already mentioned the rapid growth of China in the second quarter of 2009. My colleagues at HSBC in Hong Kong believe that the annual rate could reach 8%, and in 2010 - 9.5%. In the past China was linked with паразитированием on the American demand, odnoak, now the situation is rapidly changing: the country now relies more on domestic policy. Investment in infrastructure, including the expansion of the railroad, grew by 109% in the first five months of the year - an amazing shift, which entails an increase in demand for steel, cement, construction equipment, and so on. The rate of fall of the profitability of already declining, while beginning to show signs of growth in consumer spending. If you connect the internal power of China with a relatively relaxed monetary conditions outside the country, in regions prone to the impact of the credit crisis, get the recipe for rapid growth in domestic demand in some developing economies. This means that we vozvaschaemsya to the old theme of good separation. It is obvious that in developed countries vuntrenny demand sluggish for the foreseeable future. In fact, and the United Kingdom and the United States are experiencing a demographic crisis and debt, which affect the economy is not the most favorable way. This is illustrated by the example of Japan in the last twenty years. All the fun will be happening in other parts of the world. Some cause for optimism is still there, but this does not mean that the world economy recovered from the shock. Tragically this is to recognize the developed world, but most important, and lush green shoots appear in Asia and other developing countries. But it should be. Anyone who develops, sooner or later becomes developed.
Stephen King
managing director of economics at HSBC
Commerzbank recommends a short position on euro / dollar
After the fall with the maximum range of 1.4300/65 pair euro / dollar remains negative mood. According to currency strategists Commerzbank, in the course of the day option to revert to the 1.4120/95 area, but the bank expects that the euro / dollar drops to the base of the channel at 1.3921. Analysts recommend that the Bank open a short position at 1.4250 from 1.4300 at its intensification, stop-loss/razvorot above 1.4390. At this point, a pair of Euro / dollar traded near 1.4111 level.
BoTMU: the dollar might rise to U.S. GDP data
The dollar may rise if the data published today by the U.S. economic growth in the second quarter will be better forecasts, says in his comments, Derek Halpeni, head of currency strategy in Europe of the Bank of Tokyo-Mitsubishi UFJ Ltd. Market participants positively assess the prospects for Fed monetary policy, believing that the U.S. central bank is able to quickly and timely respond to the improving economic situation (approx. ProFinance.ru: a hint at rate increase by the Fed as a reaction), the expert believes.
Thursday, July 30, 2009
RBCCM: reducing trends in care from the risk of ensuring support for the Canadian currency
Canadian dollar continues to recover today, with support from returning investor interest in risky assets and a corresponding pressure on the U.S. currency - as a result of pair dollar / Canada is now traded on the new sessional minima near the 1.0810 mark. According to analysts RBC Capital Markets, the growth of a pair of U.S. / Canada stopped at the level of 1.0900 against the backdrop of the growth of futures on U.S. stocks and commodity prices, resulting in reduction of the trends away from risk. According to the Bank's strategists, a short-term interest in selling resumes near the resistance levels at 1.0888 and 1.0935, which would reduce to a pair of full-time support at 1.0784. A pair of U.S. / Canada at the moment, trading at around 1.0817.
Commerzbank predicts growth in the euro / franc
According to analysts of Commerzbank, the timing of the National Bank of Switzerland for a statement that the leadership of the Central Bank will continue to take measures to prevent the reduction of pair euro / franc, said that the Swiss Central Bank prefers to see the pair at the top of the trading range. Proceeding from this, currency strategists at Commerzbank continues to recommend buying a couple down to the 1.5220/10 area. Moreover, the bank believes that the medium-term euro / franc could rise above the level of 1.55. At this time, a pair of euro / franc was at 1.5320.
Barclays Capital holds a moderately negative prognosis for the pound / dollar
Couple pound / dollar carried rapidly back support at 1.6310 area and the 50-day moving average, however, according to analysts Barclays Capital, a pair of growth will be limited to the upper boundary of the range at 1.6590. Currency strategists Bank have moderate downward projection, with a drop below 1.6310 would lead to further weakening of the pound to levels of 1.6240 and possibly 1.61. Now a pair of pound / dollar was at 1.6489.
Barclays Capital expects a further reduction in euro / dollar
The pair euro / dollar Breaks trend line from April minima. In addition, analysts noted Barclays Capital, for intraday charts pair had completed the formation of a small double top. Bank analysts have warned that such a movement spoke of the possibility of further easing of a pair to a minimum over a wide range of 1.3950/10. As currency strategists believe the bank, if the euro / dollar can not rise above 1.42 by the end of summer, a couple will be at lower levels. Now a pair of Euro / dollar traded at 1.4065.
UniCredit expects the growth of interest in risky assets
The market trends of increasing departure from the risk. However, UniCredit analysts believe that this situation will soon change. The decline on Wall Street still is not too much compared with the growth of this month. The pair dollar / yen has continued to stay close to the level of 95.00, and commodity currencies have not yet surrendered their positions. For all these reasons, currency strategists prefer to use any bank's growth for sales of U.S. dollar in the expectation of a weakening in the medium term. According to analysts the bank, the interest in risky assets continue to grow.
Barclays Capital: the growth of the dollar may continue
No correction in equity markets triggered a wave of strengthening the dollar - According to analysts Barclays Capital, in the short term, this situation will not change. The bank noted that the Shanghai Composite index and the price of gold also served disservice signals, and thus, the period of correction of the July growth 'appetite for risk "is likely to continue.
Pound increases on the positive from the national real estate market
Pound played a two-day decline against the dollar. This has contributed to macroeconomic statistics for the UK. Prices for home grown 3 months in succession, with a positive customized players on the purchase of the British currency. In relation to the euro sterling strengthens its position 4 day in a row. The dynamics of house prices increases the consumer and business confidence in the country. Perhaps now and in the next few days the British currency will continue to grow in value against major competitors.
UBS: mood euro / yen remains positive
Pair of Euro / yen has committed a sharp setback. However, UBS currency analysts believe that until a couple holding above support at 132.10, a constructive trend remains in force. In the bank waiting for a couple to reach the level of 136.89, which is a maximum of 1 July - in the view of analysts UBS, a breakthrough at this level could trigger the development of bull's momentum. At this time, a pair of Euro / yen traded at 133.71.
Wednesday, July 29, 2009
Bank of America - Merrill Lynch has revised forecasts for the euro
Currency strategists Bank of America - Merrill Lynch upgraded the forecast for the European currency against the U.S. dollar and Japanese yen. According to analysts the bank, by September, the euro might rise to the level of 1.45 (compared to before. Predicted 1.32), and by the end of the year to reach 1.50 marks (last forecast of 1.38). With respect to a pair of euro / yen, that by September at the bank expected growth to 145 couples (last forecast of 139), and by December - up to 158 (last forecast of the bank 152). At this time, a pair of Euro / dollar traded at around 1.4141, euro / yen is at a point 134.24.
Citigroup expects the fall to 1.40 euros at first, and then to 1.3830
"Euro is ready to continue to reduce the area of present value of 55-day moving average line of 1.40" - described in the technical comments, Citigroup Inc. Euro / dollar last week was unable to rise above 1.43. The European currency behind the stock market. Index MSCI, which unites the stock markets of developed countries, last week rose by 4.6%. The growth of the euro against the dollar over the same period was 0.7%. "Euro falls when the stock falls, but does not rise when they grow up," - said Tom Fitspatrik, analyst of Citigroup. He believes that the risks of continuing the downward movement in a pair euro / dollar has increased significantly. Couple in the next few days could test 1.3832 or even 1.3748.
UBS: the dynamics of the franc is a reflection of problems in the world economy
According to analysts of UBS, the Swiss franc, the dynamics of signals that the global economy is not all as good as many think. Reducing the volume balance of the Swiss banks, carried out by a sharp reduction in foreign assets, supported the Swiss franc. In addition, the stability of the franc is a reflection of the demand for asset-asylum. The bank believes that it is contrary to the growth in world markets and warned investors that this year is not all indicators of the desire for risk returned to the former position.
Scotia Capital: Canadian dollar took a break
After reaching the 10-month peak against the U.S. currency, Canadian dollar a second straight day falls on a background of declining prices for oil and copper - the main criteria for world economic growth. According to analysts of Scotia Capital, is a good and necessary respite. However, there are some risks - reducing the price of oil and copper has been going on for two days. Tomorrow (16:30 AM EDT) will be published on an index of prices for industrial products and raw materials. July 31, went on the GDP of Canada, in May and U.S. GDP in the 2 nd quarter. The bank believes that the American currency could still rise in relation to the Canadian dollar, but if the fundamentals of economy will be better forecasts, this may lead to a new wave of "appetite for risk." A pair of U.S. / Canada at the moment, trading at 1.0909.
BMO Capital Market: Canadian retailers waiting for a wave of flight buyer
Over a period of less than five months, the Canadian dollar appreciated by 20% against the U.S. currency - as analysts noted BMO Capital Market, it is the most rapid growth in the history of observations. The consolidation had a negative impact not only on industrial and tourism industry but also threatens the retail business in Canada. As the Canadian dollar is moving towards parity against the U.S. dollar, the comparison between the two countries has become one of the favorite occupations of Canadians. Canadian retailers could face another wave of flight of the buyer to a neighboring country, despite the fact that the (estimated Bank) consumer basket in Canada by only 7% more expensive (given the current interest rate) than in the United States, compared with 18% in June 2008.
Yen fell on the news from Japan
Rather sluggish nature of the trading in Asia, has been violated, and the foreign exchange market participants with interest the Japanese yen, which fell sharply against several major currencies and is now continuing to feel the pressure, in particular the Euro / Yen undertook spurt nearly sixty points and now holds about Y133.76, while the pound / yen traded near Y156.16, adding to the price of more than seventy points. Dealers attributed the movement to the report of Ministry of Economy, Trade and Industry of Japan (METI), which reported that the production in June rose by 2.4% m / m, after +5.7% m / m in May, and it is expected that in July the increase was 1.6 % m / m, and in August it reaches 3.3% m / m. This news contributed to a stronger appetite for risk, which was a negative factor for the Japanese currency, which was unfavorable for a bit earlier and published a weekly report on securities transactions. According to the latest, Japanese investors have continued to show interest in foreign assets, net purchases by a week until July 25, amounted to Y71.7 billion, while foreign investors during the reporting period is eliminated from the Japanese asset: its net sales amounted to Y110.9 billion
Tuesday, July 28, 2009
Mizuho prefer short positions on dollar / yen
On Monday, a pair of dollar / yen established a new three-up at 95.46. However, as noted in Mizuho, this increase occurred in the market situation, where the open positions in Futures is at its lowest level since 2003. Bank analysts still see a few signals of the formation of peaks, however, the couple is likely to stop before Fibonacci resistance near 95.40. As a trading strategy at the bank preferred to sell at the best price, reinforcing the position with confidence breakthrough 94.40; goal at 93.25, stop above 95.40. Now a pair of dollar / yen is at around 94.62.
Barclays Capital: the probability of growth of AUD / USD could rise
A pair AUD / USD today set a new 10-month high at 0.8337 level. According to currency strategists Barclays Capital, if the pair AUD / USD will be able today to close above its previous maximum of 0.8265, the positive mood will increase, and increase the probability of growth to the level of a pair of 0.8430 and 0.8570. At this time, a pair AUD / USD traded at around 0.8313.
UniCredit recommends buying euro / dollar
According to analysts of UniCredit, the failure of pair euro / dollar to overcome the level of 1.43, perhaps, said the reluctance of investors to open long positions in anticipation of the publication of the U.S. GDP for the second quarter this Friday (16:30 AM EDT) and a report on the labor market next week . Nevertheless, the desire to risk remains the dominant theme in the markets, so banks prefer to buy a pair of lower level of 1.4175. Now a pair of Euro / dollar was at 1.4271.
Barclays Capital: the pound / dollar could again test the annual maximums
According to analysts Barclays Capital, taking into account the recent rise in commodity and stock markets, increasing the likelihood that a pair of pound / dollar annual re-test up to a maximum of 1.6660 and 1.6740. However, the Bank believes that this path will not be easy - the long-term resistance levels are up to the level of 1.6950. In the case of reducing a pair of runs in support of 1.6380/1.6310. At this time, a pair of pound / dollar trading at around 1.6521.
UBS: the dollar / franc shows negative mood
According to analysts UBS, the technical indicators for the dollar / franc bear lodge signals, prevails the pressure below the level of 1.0817. Now all the focus on recent wage 1.0624 - if the couple would not be able to hold above this level, the possibility of further reduction of key support and a minimum of 2009 at 1.0591. Now a pair of dollar / franc was at around 1.0665.
Commerzbank: the demand for secure assets contributed to the growth of yen
Today is the first time in four days the Japanese currency strengthened against the euro. This contributed to the decline in American stock markets, which prompted Japanese investors to wait to purchase high-yield foreign assets. According to analysts of Commerzbank, the only economically reasonable explanation of the motives of Japanese investors repatriate funds to reduce currency risk is that the Japanese Yen has always been considered the safest haven in times of crisis. The pair euro / yen at the moment is traded at 133.93 compared with 135.48 on Monday.
UBS expects weakening dollar in the next month
According to analysts of UBS, during the next month, the U.S. dollar may decline against the backdrop of recovery of interest in risky assets. The bank had a negative prognosis for the U.S. currency in the short term. With regard to the period of three months, here at UBS believes it is likely the return of the trends away from the risk and, consequently, the strengthening U.S. dollar. The pair euro / dollar at the moment trading at around 1.4170.
Commerzbank: index of consumer confidence is unlikely to support the dollar
Good data on the U.S. economy are beginning to have a positive impact on the U.S. currency. According to analysts Commerzbank, the U.S. dollar rose on Monday after the publication of data on sales of new homes in the United States, which were higher than forecasts. The bank called it an indication that the market reaction to the data on the U.S. no longer corresponds to the traditional model, according to which good American economy led to a weakening U.S. currency. Nevertheless, caution in Commerzbank, despite the fact that in the coming months as the U.S. economic recovery, this trend can have more good data on the index of consumer confidence is unlikely to provide support for the U.S. currency.
Westpac: the Australian currency could continue to rise
The optimistic comments Governor Reserve Bank of Australia that the Australian economy may well emerge from the economic downturn earlier than most other countries, have strengthened the currency of Australia. In addition, pay attention to analysts Westpac, given the overall trends in currency markets, the pair AUD / USD in the near future is likely to test the 0.8400 level. The pair have already reached the 10-month maximum. The breakthrough level of 1.43 in pair euro / dollar may provide a new impetus to the Australian currency. The bank believes that the Australian currency could greatly influence the events of next week, the RBA meeting and the publication of quarterly forecasts. At this time, a pair AUD / USD traded at around 0.8300.
UBS: the demand for safe assets-remains
According to analysts of UBS, the continued strengthening of the Swiss franc is an indication that the markets remains buoyant demand for the currency of refuge. At UBS calls attention to the dynamics of the currency of Switzerland - despite massive intervention by the Swiss National Bank, currency exchange rate hardly declined. Thus, even with the recent growth of global markets, Europe remains a demand for safe assets-such as the Swiss Franc. At this time, a pair of dollar / franc traded at 1.0690, euro / franc was at around 1.5225.
Sunday, July 26, 2009
Lots of noise around the central banks
Remove me from this chair! Perhaps it is about the dreams of the British Prime Minister Gordon Brown, when he heard another sharp observation of the Bank of England. For the English King Henry II (12 century), a source of problems was Thomas Beckett, Archbishop of Canterbury appointed. To Mr. Brown - is Mervyn King, which he re-appointed to high office. The parallel is obvious: The heads of central banks - Cardinal, bow before the financial stability. Becket was murdered. Mr. King ugotovana different fate. However, later, King led the Church of England archbishops and obey. Will the bank the same fate?
In fact, as a result of the crisis, central bank independence is threatened, and this happens not only in the UK. This is due to several reasons: in terms of near-zero interest rates, the boundary between the monetary and financial policies is erased, the state supports the large financial deficits, especially the United Kingdom and the United States, threatening monetary stability and, lately, the people responsible for the crisis, wants to shift the blame on the other. Indeed, Mr. King - not only the head of the Central Bank, have been subjected to attack. U.S. lawmakers attacked the Fed chairman Ben Bernanke is due to the merger of Merrill Lynch and Bank of America. Surprisingly, German Chancellor Angela Merkel has publicly criticized unconventional policy measures, including actions taken by the ECB. Violent times breed troubled heads of central banks and cause volatility in the central banks themselves. Questions, particularly in the UK - must act as leaders in the conditions to restrict the independence of central banks, unrest among the politicians and such a heavy time? In my opinion, it is necessary to act cautiously.
Mr. King criticized the government on four aspects: first, the opinion of the Ministry of Finance, if the banks are too great to prevent their collapse, then... They are too big ", and second, the Bank of England has a" new powers to financial stability ... [But] it is not clear how the Bank can take on new responsibilities, if all that we can - to read sermons and to organize the funeral "in the third, it is not advised on what financial services will be included in the white paper, and, finally, he told the Committee, Ministry of Finance in the House of Commons: "If the economy is restored on the road, which include projections for GDP, by budget, I think, the time during which the need to reduce deficits should be end up faster than the forecast of [budget]. "
To start the simple question: whether the rights in this case the chairman? Answer: Yes, yes and yes again. It is necessary not only to bring the powers into line with the responsibilities, but also take into account that the Bank of England, a body whose activities are focused on the economy as a whole, is best suited to carry out the reasonable control of the financial system at the macro level. Besides, if this is true, it seems incredible that with the President of the Bank is not advised in the White Paper. Indeed, only Mr. Brown and his inner circle to deny the obvious: the financial situation with the deficit in 14% of the GDP forecast for 2010. Made by the Organization for Economic Cooperation and Development, is totally unacceptable. Significant cost reductions and increasing taxes relative to GDP is inevitable. So the question is whether the competence of public expression of their views, especially about issues as related to politics. Does he speak the truth or make ambiguous statements? In the current terrible conditions, of course, it is better to speak openly about disagreements than to hide them.
Yes, the politicization of the independent central bank is of particular potential threat. The Bank can do to lose, and so of limited independence. Moreover, the interaction between the authorities of the need to address the emergence of confusion can itself destroy the trust. Nevertheless, a responsible government official must decide whether a particular issue has become so important that his release - the only thing that might make a patriot. Given the financial position of Britain - of course, yes. We are not talking about moderate deficits, but the yawning abyss, which can absorb the financial stability. In addition, Britain is no longer reliable financial rules and procedures, while the prime minister has denied the implications of financial forecasts of their own government. Given such an irresponsible behavior, the chairman should have the right to vote. Perhaps the Prime Minister hates the irrepressible chairman of the central bank. But the country - not the property of politicians. Heads of central banks should always be treated with caution. But that does not mean that they must keep quiet all the time. Today, they simply must speak.
In fact, as a result of the crisis, central bank independence is threatened, and this happens not only in the UK. This is due to several reasons: in terms of near-zero interest rates, the boundary between the monetary and financial policies is erased, the state supports the large financial deficits, especially the United Kingdom and the United States, threatening monetary stability and, lately, the people responsible for the crisis, wants to shift the blame on the other. Indeed, Mr. King - not only the head of the Central Bank, have been subjected to attack. U.S. lawmakers attacked the Fed chairman Ben Bernanke is due to the merger of Merrill Lynch and Bank of America. Surprisingly, German Chancellor Angela Merkel has publicly criticized unconventional policy measures, including actions taken by the ECB. Violent times breed troubled heads of central banks and cause volatility in the central banks themselves. Questions, particularly in the UK - must act as leaders in the conditions to restrict the independence of central banks, unrest among the politicians and such a heavy time? In my opinion, it is necessary to act cautiously.
Mr. King criticized the government on four aspects: first, the opinion of the Ministry of Finance, if the banks are too great to prevent their collapse, then... They are too big ", and second, the Bank of England has a" new powers to financial stability ... [But] it is not clear how the Bank can take on new responsibilities, if all that we can - to read sermons and to organize the funeral "in the third, it is not advised on what financial services will be included in the white paper, and, finally, he told the Committee, Ministry of Finance in the House of Commons: "If the economy is restored on the road, which include projections for GDP, by budget, I think, the time during which the need to reduce deficits should be end up faster than the forecast of [budget]. "
To start the simple question: whether the rights in this case the chairman? Answer: Yes, yes and yes again. It is necessary not only to bring the powers into line with the responsibilities, but also take into account that the Bank of England, a body whose activities are focused on the economy as a whole, is best suited to carry out the reasonable control of the financial system at the macro level. Besides, if this is true, it seems incredible that with the President of the Bank is not advised in the White Paper. Indeed, only Mr. Brown and his inner circle to deny the obvious: the financial situation with the deficit in 14% of the GDP forecast for 2010. Made by the Organization for Economic Cooperation and Development, is totally unacceptable. Significant cost reductions and increasing taxes relative to GDP is inevitable. So the question is whether the competence of public expression of their views, especially about issues as related to politics. Does he speak the truth or make ambiguous statements? In the current terrible conditions, of course, it is better to speak openly about disagreements than to hide them.
Yes, the politicization of the independent central bank is of particular potential threat. The Bank can do to lose, and so of limited independence. Moreover, the interaction between the authorities of the need to address the emergence of confusion can itself destroy the trust. Nevertheless, a responsible government official must decide whether a particular issue has become so important that his release - the only thing that might make a patriot. Given the financial position of Britain - of course, yes. We are not talking about moderate deficits, but the yawning abyss, which can absorb the financial stability. In addition, Britain is no longer reliable financial rules and procedures, while the prime minister has denied the implications of financial forecasts of their own government. Given such an irresponsible behavior, the chairman should have the right to vote. Perhaps the Prime Minister hates the irrepressible chairman of the central bank. But the country - not the property of politicians. Heads of central banks should always be treated with caution. But that does not mean that they must keep quiet all the time. Today, they simply must speak.
From The Financial Times
Saturday, July 25, 2009
When Comrade agreement not to rehash the case would not
Why economists are not able to predict the global economic crisis - and why their support is still important for recovery
Most economists are not able to predict the worst economic crisis, since he 1930h. Now they can not agree about its permission. People begin to wonder: does how well you worked as an economist? One columnist recently wrote in a blog on the housing sector, economists forecast that the housing market were worse than the assumptions of their parents, have no special education. "If you, as an economist, did not notice the approximation of crisis, it is worth thinking seriously about the value of education, and perhaps do something more useful for society, for example, the collection of vegetables," - he writes. "Think about it, egghead! Go and sprygnite with the curve!
For the sake of justice is worth noting that the hope for is any kind of accurate prediction of the economic future of a priori futile. World too complex designed for this purpose. But thanks to the joint efforts of the economists should be able to warn of imminent danger. And if a disaster happens, they should know what to do. In fact, people pay attention to economists at the time just because of that, they believe, they know how to avoid a repeat of the Great Depression. However, after 70 years after the Depression, the economists have not agreed on what lessons should be learned. In recent weeks the controversy only increased. To combat the economic slowdown the Fed head Ben Bernanke, Finance Minister Timothy F. Gaytner and the head of the National Council for the Economic Development of Lawrence Summers provide an unprecedented package of financial incentives and take special measures in the field of monetary policy. If this will be achieved through sustainable recovery - and already there are some encouraging signs - they look like heroes. Nevertheless, at this point they have taken many policy measures are concerned, because of its size and scope, they transcend the limits of what has recently been trained, or intended to teach economists.
Economists blame that they are too cocky, far from reality and overly focused on politics. They claim to accuracy, but none of their original data or their knowledge can not guarantee anything like it. Too many people think that people act like the mythical man economically sensible "(homo economicus), rational thinking and all-knowing. And they are parties to the dispute, which only lock the research process. Those few who defy the traditional knowledge, simply ignored. Critics yazvyat. Nassim Nicholas Taleb, devoted to the study of random events, the author of "nicely left happenstance" (Fooled by Randomness) and "Black Swan" (The Black Swan) says: "There is a need to create a society independent of economists forecasts idiots." Financial expert Paul Uilmott, said: "The current economic models are awful. They do not take into account such important phenomena as the human factor." Yaruyu take into account the above criticisms, I would like not to pay attention to the profession. But do not go. First, in order to get out of this scrape and try to prevent a recurrence of the crisis, it is necessary to attract the best minds of generations. Macroeconomists, that is Those who specialize in studying business cycles and economic growth - are making a significant contribution. For example, a study in the 1970s, has helped many countries to get rid of chronic high inflation, stressing the need to establish a credible and independent central banks.
Even now, the vision of progress. Scientists of all stripes with a late try to accelerate the development of modern financial industry. Because they were taught to believe in the efficiency of financial markets, many economists have been unable to recognize the threat posed by poorly controlled mortgage lending, mired in debt and financial institutions to obscure the complex derivative instruments. "There was a good time for new ideas, as well as in the 1930h and the 1970s", - said Roger EA Farmer of the University of California, Los Angeles. Moreover, even if you doubt the importance of economists, they can not be discounted. Here's why: Any idea about this crisis is based on some assumptions about the mechanisms of the world. Realize you have it or not, but all these assumptions are made by a School of Economics. According to British economist John Maynard Keynes, "the practice, which sees itself as a nepodverzhennymi intellectual influences, are usually the slaves of an economist." Therefore, it is better to hope that one will make the job of economists to act together. Will not be easy, since the crisis sypet salt on old wounds. With his offensive resumed talks on a disputed macroeconomic issue, namely the ability of the public deficit spending (ie fiscal policy) to stimulate demand and to return people to work.
In January, a dispute broke out among the public about the financial policies following the statement made by Barack Obama: "There is no doubt that our government should take steps to develop a recovery plan, which will help to boost the economy." Some time later, about 250 economists, conservatives in the open letter published in leading newspapers, wrote: "With all respect to you, Mr. President, this is not true." David Kolander, an economist from the College Middelberi, which is also suspicious of the package of incentives, said: "This is a reasonable argument. Unwisely that we started it now, rather than tens of years ago. The most grievous sin of economists - arrogance. In the 1960s, free-market economist Milton Friedman has convinced virtually all of the profession that the Great Depression was the result of the actions of the Fed. Perhaps, it is understood that when a more effective policy of the Fed, led by economists, it would avoid a repetition. Bernanke then described in his speech on the ninetieth Friedman, the role of the Fed in the coming Depression. He told Friedman: "You are right, this is our fault. We are very sorry. But you do not happen again." Famous words.
Confident in the power of the Fed, economists for the most part, stopped the study in the use of fiscal policy to fight recession or depression. Moreover, the recession attacked less and were not so deep - the so-called "great calm" (Great Moderation). So who needs a boost? Javier Gabaiks, an economist from New York University, said: "A year ago, if you're talking about the optimal financial policy, your views would call obsolete." The commitment of leading economists established traditions are also reflected in their unwillingness to see bubbles in the housing market and stock markets. Former Fed Chairman Alan Greenspan denied any possibility of a bubble in the housing market because housing was not a unified market. He also shrugged off the inventions such as the Wall Street derivatives. Only last year, he admitted that was wrong. He told the Senate that he was shocked to discover "crack" in his ideology, and added: "For 40 years I was completely sure that it works just perfectly."
Politicians have exacerbated the difficulties. To get started, you can divide the macroeconomists into account their concerns about economic instability. One group, committed to the ideas of Keynes, concerned about the endless recession, after which the economy is on the bottom. In doing so, it is impossible to avoid such a collapse. Members of this group argue that the Government needed to break the downward spiral, taking tough measures, such as those that exist in the United States now - lower interest rates and increased government spending. The group includes Paul Krugman, an economist at Princeton University and Nobel laureate; Nuriel Rubin of New York University, predicted onset of a deep recession, and Robert J. Shiller, the predicted collapse of the housing market and the collapse of stock sektora.Drugie technological economists more sure that the economy is stabilizing. In their view, the low interest rates and deficit spending does not yield the desired result and lead to the formation enormous debt. These include Robert Barro of Harvard, Robert E. Lucas Jr., of Chicago, Edward Prescott of the University of Arizona, Patrick J. Kehou from the University of Minnesota, and VV Chari. Not surprisingly, the Republicans hold the teachings of the "balance", while the Democrats were in favor of intervention. Before the crisis, it seemed that economists will be able to resolve their differences. In the first edition of the textbook "Macroeconomics" (2006), Krugman wrote that "little secret of modern macroeconomics is that, whether economists reach agreement over the past 70 years."
Today, much worse. On the one hand, Krugman says: "Really a shame that we have to lose precious months, returning to the disputes that were resolved 70 years ago." On the other hand, John H. Kokreyn from the University of Chicago Keynes denies the proposed incentives, arguing: "The professional economists, the guys with whom I socialize and enjoy the ideas of ancient keynsianstva no more than the physics of the teachings of Aristotle, if they can not understand how fast the universe is increasing." There are those who took an intermediate position, such as Michael Vudford of Columbia University, and argue that macroeconomists use a methodology to ask questions. But even Vudford agrees that "the controversy is not very conducive to the association."
The most mild criticism of the macroeconomists is the fact that they were not able to predict the recession, despite many warnings. According to a study by Blue Chip Economic Indicators, in early September 2008. average forecast for growth in the fourth quarter was 0.2%. In fact, the productivity of the economy for the year fell by 6.3%. It was not a wing, and from the Fed. In July of 2008. Central Bank officials had planned that in the fourth quarter of 2008. the unemployment rate will reach 5.5 - 5.8%. In fact, it was 6.9%. Their forecast for the fourth quarter of 2008. Prepared, at the same time, amounted to 5.2 - 6.1%. Today, unemployment stands at 8.5%, and according to most forecasts by the end of 2009. it has reached two-point. Now that the financial policy of re-discuss, economists argue about the extent of the wave effect - or "multiplier" - from increasing government spending. Economists-intervention supporters think that the factors are increasing, decreasing performance when the economy - that is now happening. According to the report dated April 15, the Fed does not use a third of the production capacity of manufacturing, the highest level since 1948.
Obama Administration believes that the fiscal policy on track. As the head of the National Council on Economic Development Summers Maria Bartiromo, the program will allow the introduction of incentives "to make consumers more active." "A few months ago there were no positive signs." Christina D. Romer, chief economic adviser to Obama and the researcher of Depression, in March said that "at some point in time recovery will happen by itself." Until that time, she said, the government must show the utmost attention "to ensure the stabilization of the private sector." Other economists say that increased public spending may in fact exacerbate the situation surrounding employment in the private sector. In a March 30 meeting of the Council on Foreign Relations Lucas (Chicago) called the policy of multiplying "a kind of shock the economy." The point is that even supporters of the package of incentives can not be sure it will work. After World War II, many economists feared that because of reduced military spending growth will stop. Sivel Averi, head of Montgomery Ward, was so alarmed by the postwar depression, which refused to open new stores. Economists are still not sure why he was not human, so they can not exactly say whether the package will put an end to the financial incentives that a recession or just suspend it. "Can increasing funding to ensure sustainable recovery, or are you just trying to buy time?" - Asked Krugman, who advocated the introduction of financial incentives coupled with decisive action to restore the banks. How can we move forward? Once the crisis is overcome, macroeconomists will need to rebuild the vitality of the economy - enough to cope with the errors of future politicians, bankers and economists. Taleb, studying the impossibility of forecasting, said that the vitality of nature is achieved through redundancy, which economists thought would be useless: two hands, two eyes, etc. Blake LeBaron of the University of Brendis proposes to prevent major crises, allowing for minor variations, the same way that the foresters use controlled burning to avoid the growth of flammable undergrowth. Perhaps from the ashes left after the collapse, will be more qualified representatives of the macroeconomic profession.
Peter Koym
By The Business Week
Most economists are not able to predict the worst economic crisis, since he 1930h. Now they can not agree about its permission. People begin to wonder: does how well you worked as an economist? One columnist recently wrote in a blog on the housing sector, economists forecast that the housing market were worse than the assumptions of their parents, have no special education. "If you, as an economist, did not notice the approximation of crisis, it is worth thinking seriously about the value of education, and perhaps do something more useful for society, for example, the collection of vegetables," - he writes. "Think about it, egghead! Go and sprygnite with the curve!
For the sake of justice is worth noting that the hope for is any kind of accurate prediction of the economic future of a priori futile. World too complex designed for this purpose. But thanks to the joint efforts of the economists should be able to warn of imminent danger. And if a disaster happens, they should know what to do. In fact, people pay attention to economists at the time just because of that, they believe, they know how to avoid a repeat of the Great Depression. However, after 70 years after the Depression, the economists have not agreed on what lessons should be learned. In recent weeks the controversy only increased. To combat the economic slowdown the Fed head Ben Bernanke, Finance Minister Timothy F. Gaytner and the head of the National Council for the Economic Development of Lawrence Summers provide an unprecedented package of financial incentives and take special measures in the field of monetary policy. If this will be achieved through sustainable recovery - and already there are some encouraging signs - they look like heroes. Nevertheless, at this point they have taken many policy measures are concerned, because of its size and scope, they transcend the limits of what has recently been trained, or intended to teach economists.
Economists blame that they are too cocky, far from reality and overly focused on politics. They claim to accuracy, but none of their original data or their knowledge can not guarantee anything like it. Too many people think that people act like the mythical man economically sensible "(homo economicus), rational thinking and all-knowing. And they are parties to the dispute, which only lock the research process. Those few who defy the traditional knowledge, simply ignored. Critics yazvyat. Nassim Nicholas Taleb, devoted to the study of random events, the author of "nicely left happenstance" (Fooled by Randomness) and "Black Swan" (The Black Swan) says: "There is a need to create a society independent of economists forecasts idiots." Financial expert Paul Uilmott, said: "The current economic models are awful. They do not take into account such important phenomena as the human factor." Yaruyu take into account the above criticisms, I would like not to pay attention to the profession. But do not go. First, in order to get out of this scrape and try to prevent a recurrence of the crisis, it is necessary to attract the best minds of generations. Macroeconomists, that is Those who specialize in studying business cycles and economic growth - are making a significant contribution. For example, a study in the 1970s, has helped many countries to get rid of chronic high inflation, stressing the need to establish a credible and independent central banks.
Even now, the vision of progress. Scientists of all stripes with a late try to accelerate the development of modern financial industry. Because they were taught to believe in the efficiency of financial markets, many economists have been unable to recognize the threat posed by poorly controlled mortgage lending, mired in debt and financial institutions to obscure the complex derivative instruments. "There was a good time for new ideas, as well as in the 1930h and the 1970s", - said Roger EA Farmer of the University of California, Los Angeles. Moreover, even if you doubt the importance of economists, they can not be discounted. Here's why: Any idea about this crisis is based on some assumptions about the mechanisms of the world. Realize you have it or not, but all these assumptions are made by a School of Economics. According to British economist John Maynard Keynes, "the practice, which sees itself as a nepodverzhennymi intellectual influences, are usually the slaves of an economist." Therefore, it is better to hope that one will make the job of economists to act together. Will not be easy, since the crisis sypet salt on old wounds. With his offensive resumed talks on a disputed macroeconomic issue, namely the ability of the public deficit spending (ie fiscal policy) to stimulate demand and to return people to work.
In January, a dispute broke out among the public about the financial policies following the statement made by Barack Obama: "There is no doubt that our government should take steps to develop a recovery plan, which will help to boost the economy." Some time later, about 250 economists, conservatives in the open letter published in leading newspapers, wrote: "With all respect to you, Mr. President, this is not true." David Kolander, an economist from the College Middelberi, which is also suspicious of the package of incentives, said: "This is a reasonable argument. Unwisely that we started it now, rather than tens of years ago. The most grievous sin of economists - arrogance. In the 1960s, free-market economist Milton Friedman has convinced virtually all of the profession that the Great Depression was the result of the actions of the Fed. Perhaps, it is understood that when a more effective policy of the Fed, led by economists, it would avoid a repetition. Bernanke then described in his speech on the ninetieth Friedman, the role of the Fed in the coming Depression. He told Friedman: "You are right, this is our fault. We are very sorry. But you do not happen again." Famous words.
Confident in the power of the Fed, economists for the most part, stopped the study in the use of fiscal policy to fight recession or depression. Moreover, the recession attacked less and were not so deep - the so-called "great calm" (Great Moderation). So who needs a boost? Javier Gabaiks, an economist from New York University, said: "A year ago, if you're talking about the optimal financial policy, your views would call obsolete." The commitment of leading economists established traditions are also reflected in their unwillingness to see bubbles in the housing market and stock markets. Former Fed Chairman Alan Greenspan denied any possibility of a bubble in the housing market because housing was not a unified market. He also shrugged off the inventions such as the Wall Street derivatives. Only last year, he admitted that was wrong. He told the Senate that he was shocked to discover "crack" in his ideology, and added: "For 40 years I was completely sure that it works just perfectly."
Politicians have exacerbated the difficulties. To get started, you can divide the macroeconomists into account their concerns about economic instability. One group, committed to the ideas of Keynes, concerned about the endless recession, after which the economy is on the bottom. In doing so, it is impossible to avoid such a collapse. Members of this group argue that the Government needed to break the downward spiral, taking tough measures, such as those that exist in the United States now - lower interest rates and increased government spending. The group includes Paul Krugman, an economist at Princeton University and Nobel laureate; Nuriel Rubin of New York University, predicted onset of a deep recession, and Robert J. Shiller, the predicted collapse of the housing market and the collapse of stock sektora.Drugie technological economists more sure that the economy is stabilizing. In their view, the low interest rates and deficit spending does not yield the desired result and lead to the formation enormous debt. These include Robert Barro of Harvard, Robert E. Lucas Jr., of Chicago, Edward Prescott of the University of Arizona, Patrick J. Kehou from the University of Minnesota, and VV Chari. Not surprisingly, the Republicans hold the teachings of the "balance", while the Democrats were in favor of intervention. Before the crisis, it seemed that economists will be able to resolve their differences. In the first edition of the textbook "Macroeconomics" (2006), Krugman wrote that "little secret of modern macroeconomics is that, whether economists reach agreement over the past 70 years."
Today, much worse. On the one hand, Krugman says: "Really a shame that we have to lose precious months, returning to the disputes that were resolved 70 years ago." On the other hand, John H. Kokreyn from the University of Chicago Keynes denies the proposed incentives, arguing: "The professional economists, the guys with whom I socialize and enjoy the ideas of ancient keynsianstva no more than the physics of the teachings of Aristotle, if they can not understand how fast the universe is increasing." There are those who took an intermediate position, such as Michael Vudford of Columbia University, and argue that macroeconomists use a methodology to ask questions. But even Vudford agrees that "the controversy is not very conducive to the association."
The most mild criticism of the macroeconomists is the fact that they were not able to predict the recession, despite many warnings. According to a study by Blue Chip Economic Indicators, in early September 2008. average forecast for growth in the fourth quarter was 0.2%. In fact, the productivity of the economy for the year fell by 6.3%. It was not a wing, and from the Fed. In July of 2008. Central Bank officials had planned that in the fourth quarter of 2008. the unemployment rate will reach 5.5 - 5.8%. In fact, it was 6.9%. Their forecast for the fourth quarter of 2008. Prepared, at the same time, amounted to 5.2 - 6.1%. Today, unemployment stands at 8.5%, and according to most forecasts by the end of 2009. it has reached two-point. Now that the financial policy of re-discuss, economists argue about the extent of the wave effect - or "multiplier" - from increasing government spending. Economists-intervention supporters think that the factors are increasing, decreasing performance when the economy - that is now happening. According to the report dated April 15, the Fed does not use a third of the production capacity of manufacturing, the highest level since 1948.
Obama Administration believes that the fiscal policy on track. As the head of the National Council on Economic Development Summers Maria Bartiromo, the program will allow the introduction of incentives "to make consumers more active." "A few months ago there were no positive signs." Christina D. Romer, chief economic adviser to Obama and the researcher of Depression, in March said that "at some point in time recovery will happen by itself." Until that time, she said, the government must show the utmost attention "to ensure the stabilization of the private sector." Other economists say that increased public spending may in fact exacerbate the situation surrounding employment in the private sector. In a March 30 meeting of the Council on Foreign Relations Lucas (Chicago) called the policy of multiplying "a kind of shock the economy." The point is that even supporters of the package of incentives can not be sure it will work. After World War II, many economists feared that because of reduced military spending growth will stop. Sivel Averi, head of Montgomery Ward, was so alarmed by the postwar depression, which refused to open new stores. Economists are still not sure why he was not human, so they can not exactly say whether the package will put an end to the financial incentives that a recession or just suspend it. "Can increasing funding to ensure sustainable recovery, or are you just trying to buy time?" - Asked Krugman, who advocated the introduction of financial incentives coupled with decisive action to restore the banks. How can we move forward? Once the crisis is overcome, macroeconomists will need to rebuild the vitality of the economy - enough to cope with the errors of future politicians, bankers and economists. Taleb, studying the impossibility of forecasting, said that the vitality of nature is achieved through redundancy, which economists thought would be useless: two hands, two eyes, etc. Blake LeBaron of the University of Brendis proposes to prevent major crises, allowing for minor variations, the same way that the foresters use controlled burning to avoid the growth of flammable undergrowth. Perhaps from the ashes left after the collapse, will be more qualified representatives of the macroeconomic profession.
Peter Koym
By The Business Week
Big Mac ... parity of the consumer price ... and euro
If you have to travel outside their country and want to dine in the cafe McDonalds, but you pay for the Big Mac - more or less? Well, it depends on the circumstances ... However, the difference will certainly be. This difference is mainly dependent on the value of local currency against the currency of your country. For example, a Big Mac in the United States would cost the buyer to 3.50 dollars. If you go to Germany, then pay for a sandwich around 3.42 euros. Thus, if the current rate of exchange in Germany, a sandwich will cost 4.82 dollars, which is 37% more expensive than in America. What conclusion can be drawn from this analysis of the current value of the euro? The conclusion is that the euro is overvalued. However, there are other factors which should be taken into account when comparing the cost of Big Mack in different countries: the cost of labor, the cost of your purchase / rental of real estate, cost of transportation, trade costs, the assessment of product quality and other variables that are important for doing business in different countries. The practical result: the contents of McDonalds cafe in the city Omaha (Nebraska, USA) and Moscow will be different. Nevertheless, the analysis is fast and useful ... From a scientific point of view, the parity of the purchase price (or purchasing power parity (PPP)) is a measure of the value of identical baskets of goods and services. This statistic is the Organization for Economic Cooperation and Development (OECD). And Big Mac index, and OECD data represent the common tools for assessing the relative purchasing power of currencies. However, in general, the analysis of PPP is a long-term tool. It does not take into account many of the short-term influences which may lead to changes in currency values. Yet, this analysis actually suggests as a benchmark the equilibrium exchange rate, which includes a reasonable amount of assumptions and can be used for the normalization of the value of a product in different countries.
So that at the time of the PPP said the most re-world currencies?
The following chart you can see some of the most re-rate according to the Big Mac index and the OECD PPP data. The vertical axis shows how much the course of the currency is overvalued relative to the equilibrium exchange rate shown on the basis of purchasing power parity. Both indicators suggest that the Swiss franc is overvalued. Strengthening franc currency intervention has led to the National Bank of Switzerland, designed to stop the growth of the national currency against the euro and U.S. dollar. Due to the strengthening of the Swiss franc, exports to the rest of Europe, which is more than a quarter of the country's GDP, is experiencing a very difficult period. At the same time, Switzerland's economy is in a phase of deflation, as the core for the country's banking industry because of the non-credit borrowers in eastern and central Europe came the bad times. Moreover, ... the world initiative to reduce the number of people refuse to pay taxes, represents a threat to the country a model of bank secrecy. In addition to the foregoing, the Swiss franc in recent times returns a status of the traditional currency of refuge in times of crisis. All this has led to an increase in the currency of Switzerland by 10% against the euro, and about as much against the American dollar since the beginning of the global financial crisis. Nevertheless, despite the fact that in comparison with the Swiss franc Euro underestimated, relative to virtually all other currencies of course the European currency is overvalued.
Since 2002 the European currency has set historical minimums against the U.S. dollar, its value has almost doubled in the past year, reaching the highest level. Now the euro against the dollar was still at 70% above the minimum 2002. Meanwhile, the fundamentals do not support a significant strengthening. It is projected that this year's slowdown in growth the euro will be 4.8%, compared with the previous forecast of 4.1%. At the same time, it is expected that among the Big Seven is a small decrease in growth rate, namely 2.8%, will show the U.S. economy. In addition, the OECD has recently increased the forecast of world economic recovery, based on expectations that the revival of the U.S. economy will lead to positive economic growth in the world. However, regarding the forecast of OECD Europe has been more grim ... The reaction of the authorities to the crisis in the euro area was not as intense as compared with other countries, the interest rate here is still much higher than in the United States, Britain, Japan, Switzerland and Canada. In fact, among the members of the European Central Bank raised considerable disagreement about setting the lower limit of the interest rate at 1 percent. Analysis of the euro area economy has forced the OECD recommend that the ECB quickly reach the lower limit of the discount rate. Probably, the ECB has already taken steps to counter the alarming forecasts - at the beginning of this month, it was decided that $ 600 billion infusion into the European banking system to increase the flow of credit.
And what about the undervalued currency ...?
The currencies of major export-oriented Asian economies dominate the most undervalued currencies in accordance with the purchasing price parity. Among them are the Malaysian ringgit, Thai baht, South Korean won and, not surprisingly, the Chinese yuan. Even after the transition four years ago from the pegged rate controlled swimming in which the Central Bank of China adjusts the value of the yuan against a basket of currencies, national currency continues to remain heavily undervalued. As mentioned earlier, the Big Mac index and the OECD PPP are not long-term trading instruments. However, when used in conjunction with fundamental and technical analysis, as well as analysis of market sentiment, he suggested that a further assessment of future prospects. If you take into account the challenges facing the euro area, these estimates represent an additional reason to convince you that until such time as will overcome the largest in the history of the global economic slowdown, the European currency would be under pressure again.
Brian Rich
By Money and Markets
So that at the time of the PPP said the most re-world currencies?
The following chart you can see some of the most re-rate according to the Big Mac index and the OECD PPP data. The vertical axis shows how much the course of the currency is overvalued relative to the equilibrium exchange rate shown on the basis of purchasing power parity. Both indicators suggest that the Swiss franc is overvalued. Strengthening franc currency intervention has led to the National Bank of Switzerland, designed to stop the growth of the national currency against the euro and U.S. dollar. Due to the strengthening of the Swiss franc, exports to the rest of Europe, which is more than a quarter of the country's GDP, is experiencing a very difficult period. At the same time, Switzerland's economy is in a phase of deflation, as the core for the country's banking industry because of the non-credit borrowers in eastern and central Europe came the bad times. Moreover, ... the world initiative to reduce the number of people refuse to pay taxes, represents a threat to the country a model of bank secrecy. In addition to the foregoing, the Swiss franc in recent times returns a status of the traditional currency of refuge in times of crisis. All this has led to an increase in the currency of Switzerland by 10% against the euro, and about as much against the American dollar since the beginning of the global financial crisis. Nevertheless, despite the fact that in comparison with the Swiss franc Euro underestimated, relative to virtually all other currencies of course the European currency is overvalued.
Since 2002 the European currency has set historical minimums against the U.S. dollar, its value has almost doubled in the past year, reaching the highest level. Now the euro against the dollar was still at 70% above the minimum 2002. Meanwhile, the fundamentals do not support a significant strengthening. It is projected that this year's slowdown in growth the euro will be 4.8%, compared with the previous forecast of 4.1%. At the same time, it is expected that among the Big Seven is a small decrease in growth rate, namely 2.8%, will show the U.S. economy. In addition, the OECD has recently increased the forecast of world economic recovery, based on expectations that the revival of the U.S. economy will lead to positive economic growth in the world. However, regarding the forecast of OECD Europe has been more grim ... The reaction of the authorities to the crisis in the euro area was not as intense as compared with other countries, the interest rate here is still much higher than in the United States, Britain, Japan, Switzerland and Canada. In fact, among the members of the European Central Bank raised considerable disagreement about setting the lower limit of the interest rate at 1 percent. Analysis of the euro area economy has forced the OECD recommend that the ECB quickly reach the lower limit of the discount rate. Probably, the ECB has already taken steps to counter the alarming forecasts - at the beginning of this month, it was decided that $ 600 billion infusion into the European banking system to increase the flow of credit.
And what about the undervalued currency ...?
The currencies of major export-oriented Asian economies dominate the most undervalued currencies in accordance with the purchasing price parity. Among them are the Malaysian ringgit, Thai baht, South Korean won and, not surprisingly, the Chinese yuan. Even after the transition four years ago from the pegged rate controlled swimming in which the Central Bank of China adjusts the value of the yuan against a basket of currencies, national currency continues to remain heavily undervalued. As mentioned earlier, the Big Mac index and the OECD PPP are not long-term trading instruments. However, when used in conjunction with fundamental and technical analysis, as well as analysis of market sentiment, he suggested that a further assessment of future prospects. If you take into account the challenges facing the euro area, these estimates represent an additional reason to convince you that until such time as will overcome the largest in the history of the global economic slowdown, the European currency would be under pressure again.
Brian Rich
By Money and Markets
Friday, July 24, 2009
UBS expects reducing euro / franc in the medium term
Currency strategists expect UBS reduce euro / franc in the medium and long term. National Bank of Switzerland, of course, is not interested in the continuing strengthening of the national currency - sooner or later, but the Central Bank to intervene, especially if the upward movement of the franc would begin to undermine the credibility of the policy bank. UBS analysts believe that in 3 and 4 quarter pair euro / franc will continue to be traded near the 1.52 level. At this time, a pair of euro / franc was at around 1.5225.
Mizuho believes the growth of the dollar / yen excessive
U.S. dollar strengthened against the Japanese yen, reaching its highest levels in three weeks and having played half the reduction in early June-mid July. However, according to analysts Mizuho, the growth of U.S. currency exceeds expectations. This upward movement, believed in the bank, is part of the consolidation process similarity near the "line of the neck, which eventually could become a corrective setback type A, B, C. Therefore, currency strategists expect Mizuho prefer signs forming the top of today or early next week. As a strategy to recommend the bank to open small short position at 94.75 with a stop order above 95.35 and reinforce their confidence with the break below 94.40 and further to 93.25. At this time, a pair of dollar / yen trading at around 94.82.
Pound / dollar. Mood remains negative
Pound / dollar was able to take orders for the purchase of around $ 1.6430 and the fixing of profit accounts for short-term stabilization, but the subsequent rebound above forced sellers whose warrant is now seen around $ 1.6480, $ 1.6495 and $ 1.6520, to intensify, and now a couple again pressures minima session. Dealers noted that, while the latter has been able to keep a couple of further decline, the market appeared rumors that are located below a large foot, while walking the talk that the break below $ 1.6400/90 may entail additional more substantial elimination of long positions, opening the way to the lower levels.
CBA believes in the Australian dollar
Australian dollar continues to remain within the range established over the past few days, the mood remains positive, and the bulls do not lose hope for a new attempt to test this year highs around $ 0.8265. Such hope is shared and currency strategists Commonwealth Bank of Australia, which does not preclude attempts at correction of AUD / USD lower, but expect that they will be limited and a significant mood change in the foreign exchange market participants are not going to happen. In the CBA believes that as economic recovery RBA will be one of the first central bank, which would tighten monetary policy that will support the growth differential rates and increase the attractiveness of investment in Australian assets. As a result, the strategists recommend that the bank attempts to reduce the use of AUD / USD below $ 0.80, AUD / EUR below E0.56 and AUD / JPY below Y73 as an opportunity to buy with the expectation of growth in the next few weeks.
Commerzbank: break up into a pair of euro / yen is unlikely to happen
The pair euro / yen is trying to overcome the key resistance of 134.40 - 135.25, which at the level of 135.15 runs 55-day moving average. Commerzbank analysts note that so far the couple could not pass the last level, and perhaps this time the situation will repeat itself. While the euro / yen is kept below the resistance of 135.25 and 136.90 (a maximum of 9 June), follow the Bear in the bank forecast in the short and medium term. According to currency strategists Commerzbank, in order to offset the upward pressure, the pair need to break the level of 131.60. In this case, may further decrease to a level of 127.00. Above the 136.90 mark, that the bank believes the less likely the possibility of growth to the recent peak 139.25. Now a pair of Euro / yen traded at 135.03.
Standard Bank: euro / dollar can make a breakthrough
Standard Bank analysts expect the pair euro / dollar will break. Of course, summer - it vyalaya time, resulting in the euro / dollar is now trading in a narrow range of 1.3750 - 1.4330. However, the bank believes that this situation will change soon. Standard Bank currency strategists note that the current circumstances just create the preconditions for a breakthrough band. Thus, a pair of Euro / dollar will break, and, most likely, this breakthrough will be negative for the U.S. currency. According to analysts the bank, the euro / dollar is likely to reach a level of 1.48. At this time, a pair of Euro / dollar traded at around 1.4234.
Barclays Capital holds a neutral forecast for euro / dollar
On Thursday, the movement of a pair of Euro / dollar has led to the foot function in both directions, leading market participants in some confusion. According to analysts Barclays Capital, the further direction of a pair is difficult to predict. However, the Bank believes that in order to ensure the euro / dollar a more positive mood, it is necessary to closing the day above the break above 1.4185 or a maximum of 1.4290. While in the bank to adhere to neutral-Bear projection of the pair in the short term, and recommend that in order to sell at 1.3980 and 1.3720. The breakthrough level of 1.4045 would be confirmation of the start of downward movement. Now a pair of Euro / dollar traded at 1.4235.
Euro / yen is popular in an attempt to reduce
Spurt euro / yen above Y134.80 against the backdrop of a better than expected data on business activity in the euro area and the pleasant surprises from the IFO report resulted in the execution of the foot, allowing bulls to test the strength of the following series of orders for the sale of Y135.10 / 20. Here, however, the upward movement was halted, with news from the UK supported by a weakening of the positive attitude and a pair of correction lower, which, incidentally, turned out to be rather limited. Dealers noted that attempts to reduce continue to attract fresh interest in the purchase, which is now visible around Y134.65/60 and Y134.45/40, and the bulls have a chance of continued growth, but also recommend to follow closely the developments in the equity markets, weakening optimism which will be negative signal for the euro / yen.
Pound fell to the data on GDP
A new series of economic statistics from the UK has been far from positive for the pound, taking into account the fall in GDP in the second quarter to -5.6% y / y, while the expected decline by only 5.2% y / y. The British currency is still in advance of the publication of a report feeling the pressure to respond to news and a sharp fall, breaking bidy initially around $ 1.6490/85 and then in the $ 1.6460/50, to date, reached a fresh session minima near $ 1.6435. Bidy placed up to $ 1.6430, while holding back the tide of the bears, but the break below would be a negative signal, involving the potential for continued downward movement in the direction of $ 1.6410 and $ 1.6390/80.
Commerzbank: the growth of euro / dollar will be stopped
Yesterday, a pair of Euro / dollar rose to six-week peak at 1.4290, but was not able to hold at these levels and by the end of the session the U.S. fell to a minimum at 1.4120. To date, a pair overcame resistance in the area of 1.4185/1.4200 and now moving towards long-term resistance at 1.4240/1.4365 area, where the maximum of June and goes through the line 10-month resistance (as well as a maximum of 29 Dec., 2008). According to analysts of Commerzbank, this area keeps growing euro / dollar. Regarding the reduction of a pair, the key is the level of 1.4055 - Bank currency strategists believe that in the event of a breakthrough, downward movement of the euro / dollar strengthened. If that happens, the next support will be 55-day moving average, which takes place at the level of 1.3969, after which the couple rushed to the area of 1.3740/04. At this time, a pair of Euro / dollar traded near 1.4220 level.
Thursday, July 23, 2009
The dollar rose sharply after the closure of Wall Street
After the completion of trades on Wall Street dollar rose sharply against the euro. On the one hand this is due to records of Microsoft, and Amex, which were published after the conclusion of the regular trading session on Wall Street. Microsoft reported earnings of 34 cents per share, which was worse than forecasts at 36 cents per share. This company with a total strength of 91000 officers announced intention to cut 5,000 jobs (5.45%). The frustration led to an increase in U.S. currency. In a couple of euro / dollar below 1.4185 performed a series of foot, which increased the rate of downward movement in which the minima were tested in the field of 1.4120.
Analysts note the positive tone of the report the Bank of Canada
According to analysts TD Securities, the Bank of Canada report on monetary policy is not presented special surprises, and simply became a supplement to the statement made on Tuesday. However, the bank noted that it was impossible to overlook the overall tone of the report, which was more positive than just a few months ago. And coupled with the persistence of interest rates at current levels, it seems that everything is going to slow but eventual recovery. BMO Capital Analysts also note the positive tone of the report the Bank of Canada, which, of course, led to a sharp strengthening of the Canadian dollar. In addition, support for the currency has had a price increase in the stock and commodity markets and rising consumer confidence. As a result, the Canadian dollar reached a seven-peak relative to the U.S. currency, reaching 1.0850. Now a pair of dollar / Canada is traded at around 1.0870.
Unicredit recommends buying euro / dollar on the decline
According to analysts of UniCredit, the euro may decline against the U.S. dollar, and any such reduction to investors should be seen as a good opportunity to buy. Range trade continues to dominate the pair euro / dollar and European currencies but still shows a downtrend, which can be used to purchase a pair of down below the level of 1.42. Bank analysts recommend buying euro / dollar pair has kept at a considerable distance from the level 1.4050. Now a pair of Euro / dollar traded at around 1.4258.
U.S. / Canada falls after the publication of a report the Bank of Canada
The nature of the report on monetary policy the Bank of Canada finally having bears in the Canadian dollar, which had hoped that it will contain some tough criticism over the growth of domestic currency, and is now actively reduced positions open in anticipation of the release. Thesis that the strong Canadian dollar has tempered the pace of economic recovery, was not new and growing dissatisfaction with the increase of CB loonie has not been observed, but the statement that the risk reduction for sustainable global economy has slowed, it is close to the bottom and the third quarter of this year from Canada's GDP in annual terms, you can expect the positive momentum, the participants were the foreign exchange market as a signal to sell the U.S. currency. Increased pressure on the latter, meanwhile, has contributed to very strong growth in the stock market, where some major stock indexes updated annual maximums. U.S. / Canada so far has gained support in the form of bidov of C $ 1.0900/0890, but the mood remained negative, and dealers believe that the couple has a chance to continue to decline to the recent minimum of C $ 1.0800 / C $ 1.0780.
UBS: optimism in the markets unstable
Currency strategists UBS noted that over the past few days, stocks have shown a very rapid and strong growth, and returned to peak this year, and now the actions of market participants have become somewhat weak, which partly contributes to the continuing uncertainty about the situation with the CIT Group. As UBS notes that the company is relatively small compared to major U.S. banks, but the precedent is cause for concern about the status of the entire financial system. Swiss bank strategists doubt that the current increase in appetite for risk is sustained, and in view of the continuing adverse economic statistics, see the risks of a new wave of sales of risky assets over the next three months, which recommend the use of the pound against the attempts of growth dollar and the euro to open short positions.
Correction in the market shares of burying the hopes of bulls
Published today, the corporate records as a whole, once again proved beneficial to investors, and UBS have drawn attention to the fact that to date the results of the reported hundreds of companies from five members of the index S & P 500, while eighty-two cases, the data were better than that analysts were expecting. Key stock indices in the present, however, show a slight decline, and it should be noted that the events of recent days suggest a weakening of bovine momentum in the markets of shares and currency strategists ANZ Bank recall that exchange rates remain very dependent on how the situation will emerge in the stock market. The bank sees the risk of shares after the recent correction of rapid growth, that will is not a positive development for the currency risk, which, however, are close to year highs. The failure to break above threatens to disappoint the bulls, and there is a danger that the major currencies turn below, following the stock market.
Mizuho sees opportunity for growth in the pound / dollar
After two days downward correction from the peak on Monday, set at a level 1.6555, the British pound found support at 1.6310 and early European session, returned to the area near the 1.6500 level. According to analysts Mizuho, a pair of pound / dollar is trying to determine the direction. However, the bank believes that this trend may well continue to be ascending. According to foreign analysts Mizuho, the pound / dollar is near the top of model "triangle". Yesterday, in the chart, a candle "dozhi with shipoobraznym minimum, which shows a pair of attempts to determine the direction and the possibility of break up. Regarding the longer term, the bank believes that a week-long closure will ensure higher levels of 1.6600 pound / dollar-needed impetus for good growth. Now a pair of pound / dollar was at 1.6504.
HSBC has raised the forecast for the pound
Published yesterday, the meeting minutes of the monetary policy of the Bank of England has been quite good for the bulls on the pound, given the consensus in the issue of preservation of previously agreed level of quantitative easing in the amount of stg125 billion, as well as the unanimous decision to keep rates unchanged. HSBC Currency strategists point out that evidence of the unwillingness of the central bank move to further strengthen the incentives are a positive signal in the long run, while the bank expected that as the economic recovery rates would be raised, which will also help to maintain interest in the pound. At the same time, rates in the United States, according to strategists at HSBC will be the lowest level of very long period of time, and the bank reported that a decision to revise its forecast for the pound / dollar at the end of next year from $ 1.60 to $ 1.75.
Wednesday, July 22, 2009
RBCCM: strengthening of the franc could once again be caught in the sight Central Switzerland
According to analyst RBC Capital Markets, the strengthening of the Swiss franc may cause an increasing concern to the leadership of the National Bank of Switzerland. Given the fact that the nominal effective rate franc goes beyond the current upper range since the last intervention, the Swiss National Bank in an attempt to stop the growth of the national currency, the franc could strengthen again to return to the zone of central attention. Currency strategists RBC Capital Markets put significant support in the pair dollar / franc 1.0600/1.0625 area (yesterday) is. Significant short-term support in a couple of euro / franc passes in the vicinity of 1.5100/1.5125. Now a pair of dollar / franc traded at 1.0661, euro / franc was at around 1.5160.
CIBC: U.S. / Canada expected range trading
Attempts to increase the dollar-Canada C $ 1.11 higher, once again proved to be unsuccessful, which again led to a shift of attention of market participants to recent minimum around C $ 1.0960. Currency strategists CIBC, commenting on the situation, pay attention to the strong pereprodannost pair and see the risks that the support of C $ 1.0925/50 again support the American currency. In such an event from a couple can be expected to continue trading in a stable range, while in order to be able to talk about the potential for the development of upward correction bulls, according to strategists bank needed break above C $ 1.1175.
UBS expects the strengthening U.S. dollar
According to analysts of UBS, the U.S. dollar may rise after checking the forecast of world economic growth to match the reality. Currency strategists expect moderate growth in the Bank Rate in the United States over the next week against the backdrop of a gradual return-to-market strategies for avoiding risk, and the suspension of the growth (or even downgrade) risky assets. Check expectations of recovery of world economy in the wild a few late, and if and when it occurs, concomitant treatment of risk would support the U.S. currency.
RBS: AUD / USD will continue to rise
According to analysts of Royal Bank of Scotland, Australian dollar could rise against the backdrop of the stability of the situation on stock markets and reduce volatility. The bank believes that increasing the returns differentials, coupled with stability in global stock markets and the decline in volatility and credit spreads will lead to an increased demand for high-yield assets, and thus a possible increase in the Australian dollar to a new annual peak. RBS analysts believe that the Australian dollar will continue to strengthen the level above 0.80, and the actions of the Reserve Bank of Australia, only a slow rate of growth in the short term. A pair AUD / USD now trading at 0.8123.
Morgan Stanley expects the fall of the ruble in the short term
The Russian currency takes position during the bidding on Wednesday, given the decline in stock quotes and correction in oil prices, and now the dollar / ruble holds about 31.19, testing yesterday's maximums. Currency strategists Morgan Stanley noted that in the absence of rising prices for oil pressure on the ruble is likely to continue, while at the bank doubtfully suggests potential for further significant growth in equity markets and see downside risk in oil prices to $ 55 a barrel. The implementation of such scenarios, according to strategists, threatening to fall in the Russian currency, and they see the risks of growth dollar / ruble to 34.60 by the end of the quarter. However, in the bank more optimistic about the longer-term prospects of the ruble, given the risks of a resumption of growth in oil prices in the coming years. At Morgan Stanley have forecast for oil for 2011 at $ 95 per barrel, and note that this price level will involve the strengthening of the ruble, which resulted in the dollar / ruble is likely to rise to the mark in 23.90.
Corporate records continue to set the tone for the trading forex
Another series of pleasant surprises on the part of corporate reporting, which included such companies as Boeing, Pepsi, Eli Lilly and Pfizer, supported the improvement in sentiment on equity markets, allowing the major stock indexes significantly reduce losses. However, the Bulls still are not in a hurry to go on the offensive, and the sharp correction of the pound / dollar, supported by the performance of the foot above the sixty-fourth the figure, was stopped in the area of $ 1.6450. To date, the couple has adjusted somewhat lower, and now holds around $ 1.6425, but dealers noted that, while the pound was able to return above $ 1.6410/20, the bulls remain fragile and should be back above $ 1.6460, to be able to talk about the possibility of a resumption of growth . Currently, dealers noted the strengthening of the negative attitude against the backdrop of news that Morgan Stanley in the second quarter was a loss of $ 1.37 per share.
Australian dollar may be adjusted below
The Australian currency continued to benefit from the location of the bulls, but the last few days attempting to increase above $ 0.8190/00 greeted with a very fierce response, and dealers noted that in the ranks of buyers were visible signs of anxiety, which, in the absence of progress in an upward movement in the near future, may result in a record profit on long positions accumulated over the past few days. A similar view, however, adhere to and currency strategists Societe Generale, who see the risks weakening optimistic mood among investors, and are advised to use the attempted growth of the Australian dollar to $ 0.8185 for the opening short position with the foot at the close of the day above. AUD / USD is currently trading around $ 0.8145, testing bidy around $ 0.8140/35 and the break below will open the way to further reduce to $ 0.8105 and then to $ 0.8085/80. Ofer is now seen around $ 0.8165/70 and around $ 0.8190/00.
Tuesday, July 21, 2009
CIBC: what can cause less aggressive statement of the Bank of Canada
According to analysts CIBC, Bank of Canada has a little less concern for strengthening the national currency as a threat to economic growth. In his most recent statements of the Central Bank has argued that the growth of the Canadian dollar could reverse all the positive points in the economy. Today, the strengthening Canadian dollar has been mentioned along with the restructuring as factors that could significantly limit economic growth. The bank believes that it is less aggressive statement could result in the Canadian currency will continue to rise, or at least remain at current levels, which, according to bank analysts, is a big threat to economic growth than ready to accept the leadership of the Bank of Canada.
Rabobank: growth in the euro / dollar is coming to an end
According to currency analysts Rabobank, upward trend in euro / dollar of the minimum 14 July at 1.3900, finally coming to its conclusion. By the end of August Bank strategists predict decline pair euro / dollar to a level of 1.3700. Indeed, over the next three months at Rabobank expect further weakening of European currencies to the level of 1.3200, and in late 2009 and early 2010, analysts see the bank a couple of euro / dollar is already at the level of 1.2800. For the next year, for 9 months, believe in the bank, the euro / dollar will recover lost ground and return to the 1.3100 mark, and by the end of 2010 will reach 1.3300. At this time, a pair of Euro / dollar was at around 1.4225.
Indicators Ishimoku Strategy
As practice shows experienced players in the market Forex, when you use this method of work no one had ever received a negative result (if you take the unit to record a large period).
Thus, we can safely recommend the method outlined below for use as a beginner market, and those who already have experience in the FOREX market.
History
This indicator has been invented in Japan, a country with ancient traditions of finance. That is it we owe the appearance of one of the first theories of trade in the market, namely the analysis of a candle.
Back in the mid 18 th century, comes from the ancient camurayskogo kind man named Munehisa (Sokyu) Honma, selling rice, brought the basic principles of the analysis to trade rice in the market.
It is clear that since then, much has changed in the behavior of the market, and the methods of analysis, but now Japanese analysts suggest the best indicators for use by traders. And proof - an indicator Ishimoku.
General Strategy
This indicator was created Hosodoy stock analyst, who believed that it is necessary to include the signals from the line-spen Chico, setting stoploss abroad clouds opposite to the direction of the entrance. For example, if we play inside the cloud bottom to top, the stop-loss, we set for the lower boundary of the clouds, as if the top down - over the top.
Take-profit at the game inside the cloud is another cloud boundary, taking into account the filter (which is 10-20 per cent of the clouds), but outside the boundaries of the cloud - getting any return signal, that is, for example: rose at the intersection of the graph line SENKOU-SPEN vvniz. Standing until, for example line-Chico spen reaches up schedule.
(Theoretically, the output signal is: turn TENKAN-SEP, the reverse is the intersection of the line graphics Chico-SPEN, the reverse is the intersection of the graph of a line clouds in prices).
Hosoda used his indicator for trading on an index Nikey. And got very good results.
The most powerful is the signal to the four-hour schedules. Then - at the time, then the minute schedules.
This is considered the strongest signal breakdown schedule line senkou spen-B, and Chico-spen, and then equal in strength - the signal lines and the three "golden" and "dead" cross. Thus, we have an indicator, which gives us approximately 65 percent (!) Chance of winning.
Various additional tips:
# The technical stop-loss. He exhibited in the 15-30 points of euro, pound on the 20-40, 35-50 and 30-80 on the yen on the franc. - For the game on time schedules. Such stop-loss is not wise to stand for day and weekly schedules. (They stop-loss is always displayed according to the 2nd or 4 ways). At the same time he is exposed to low levels of early (if possible).
# The next high level. (We - choose from the fact that the closer - in prices or heavy cloud level and take the earliest).
# The value of such a stop-loss can be quite large (with the game on the weekly charts, it can reach 200 pips on the day -100-120, on time - 40-50 to 50-60 euro for pound, franc at 70-100, 60 -90 to yen).
# Stoploss - always 15 pips (on the franc -30). The probability of such a foot operation, we believe a priori equal to not less than 40 per cent. (80, if you stand up against the trend in hours 40 - if, for trend. AND 50-60 - if the market fletuet).
# Stop-loss price for the cloud.
Stop-loss set outside the channel at about 5 points behind. Practice shows that the game in the channel has the greatest chance of success if we play in the direction of the trend (time) - when the game within days and days - if the game goes the other day.
From the theory of games is well known that for sufficiently large number of experiments, playing the game with a plus-sum, you will eventually win, therefore, with sufficient psychological preparation, the method has a fairly routine earn money.
Moving Average (MA)
Moving averages (Moving Average), are the most frequently used indicators of technical analysis. The well-known adage states that: «At the moving average traders earn hundreds of times more money than all the other indicators together».
On the schedule moving averages are the following:
Properties window:
Moving averages vary the method of averaging.
Simple Moving Average - simple moving average
Exponential Moving Average - exponential moving average
Smoothed Moving Average - smooth moving average
Linear Weighted Moving Average - linear-weighted moving average
* Moving average. R - averaged value.
* Weighted Average (Weighted Moving Average)
P1, P2, P3 - averaged values
* Exponential Average (Exponential Moving Average)
P1, P2, P3 - averaged values
Moving average smooths fluctuations in the study of currency, with an average of a certain historical period. The advantage of this technical indicator is the ability to visually cut off the small fluctuations, and clearly see the direction of movement.
The disadvantage of moving averages is the average lag in relation to the rate of the study variables. It follows that the larger the averaging period, the more important signals they give, but at the same time, and more late. The value of the moving average - that it gives the general direction of motion. Moving averages, as sotsopros crowd, where will the price. If they rise, the expectations of a good crowd. Fall, respectively, bad.
Systems based on moving averages
The most simple system, based on the moving average, buy it while it's growing and selling, as it decays.
Plus Strategy: simplicity.
Less: Due to the delay of one bar, spike, making this strategy maloprimenimoy.
The interaction of price and AI
The most famous of these strategies is as follows:
Buy when the MA increases and the closing price is higher than MA;
Sell when the price closing below the MA;
Sell when the MA is reduced, and prices closed below MA;
Cover the sale, when prices closed above MA.
This strategy gives the money, although it is rarely used, because there is much more efficient system.
The intersection of the middle
Buy when the price crosses the average upward. Sell when the price crosses the average down.
Perhaps the oldest of the currently used strategies. Nevertheless, we have sold tens (if not hundreds) of traders, who successfully apply this simple strategy.
In this strategy there is only one negative: it is usually to add a «Filter volatility». Say, do not sell it when the RSI is near zero. And also, it is not applicable to trade in nizkovolatilnye (holiday) days and at night.
For beginners this is probably the best strategy. Suppose you do not earn money on it, all the world, but through it you can feel the taste of money in the market Forex!
RBC Capital Markets: No dollar / Canada is continuing
A pair of U.S. / Canada continues to roll from the previous five-week reached minima. But currency analysts RBC Capital Markets believe that the reason is that the sharp strengthening of the Canadian currency has led to a fixation of the profit participants in the market. The Bank believes that some players have started a little more to worry about the reduction in dollar / Canada - over the past few sessions, a couple fell from the field 1.1400/1.1500 before the minimum at 1.1000 today. The slight decline in the stock and commodity markets also contributed to the weakening Canadian dollar. A pair of U.S. / Canada at the moment, trading at 1.1050.
Barclays Capital raises the level of 94.90 in the key pair dollar / yen
Japanese investors have returned to the 3-day weekend and bought the yen, despite an increase in the prices of securities. Barclays Capital Currency strategists tend to bear the forecast, if the dollar / yen will hang below the recent maximum of 94.90. In this case, top-down goals are the levels of 93.25 and 91.70. If the pair will be able to perform daily closing above the level of 94.90, the analysts believe the bank, the dollar / yen will be in the range of 94.00 - 99.00. Now a pair of dollar / yen is at around 94.29.
Analysts on possible actions of the Bank of Canada
According to analysts Barclays Capital, Bank of Canada can not simply express dissatisfaction with the fall of pair dollar / Canada to a level of 1.10. The intervention is still could be in terms of activities within the framework of traditional politics, and the Central Bank may be a hint that this option is not removed from the agenda. The bank believes that the Bank of Canada may well demonstrate a willingness to undertake certain actions in order to prevent excessive strengthening of the national currency, if it considers that it creates the macroeconomic risks to the economy. A similar view of analysts and RBC Capital Markets. The bank believes that the Bank of Canada is still no intention to enter upon the path of quantitative easing. Changing the interest rate is also unlikely to happen. However, as noted in the bank, market participants may revise the level of concern about the further strengthening of the Canadian currency, if the Central Bank considers it "an obstacle to economic recovery."
Citigroup: the dollar will weaken
Corporate Records continues to please investors, pushing major stock indexes to the maximum this year, Citigroup and currency strategists note that in these circumstances, preserving the pressure on the U.S. currency looks quite logical, but, given the next wave of growth expectations for the recovery of world economy, they see the risks the fall of the dollar to fresh minimum. Euro / dollar remains within a narrow range of intraday and currently holds about $ 1.4222, continuing to test Ofer near $ 1.4230/35, break above which will open the way to $ 1.4250/60, and then to $ 1.4330/50. At Citigroup, meanwhile, noted that followed the three-month forecast for the pair at $ 1.43, but looked forward to its growth to $ 1.46 over the next six / twelve months. The bank is also expected weakening of the dollar against the yen and had forecast for this pair at the Y93 and Y90, respectively.
Dollar / Canada fell after the decision on rates
In anticipation of the announcement of the decision of the Bank of Canada Dollar / Canada remained under strong pressure bears and, after the market participants did not notice in the accompanying statement of any aggravation of the rhetoric about the national currency, the couple has undergone a new wave of sales. Dealers noted that the break below C $ 1.10 caused the elimination of short-term long positions opened earlier today, which allowed the pair to break in a fresh session of a minimum of about C $ 1.0960/65, while the loss of support around C $ 1.1000 is a negative sign for the bulls. However, until that dollar / Canada is above C $ 1.0945/40, and to demonstrate the potential for further collapse to a minimum this year, bears need to break below the said support.
Monday, July 20, 2009
Mizuho: What currency will benefit from increased "appetite for risk"
According to analysts Mizuho, the British pound, Australian and Canadian dollars for this week will continue to grow due to good reports on the income of American companies and economic data, exceeding analysts' forecasts. These factors have increased interest in risky assets. The Bank believes that "the dynamics of the British pound reflects expectations about the banking industry in the world economy, the Canadian dollar has a close relationship with the sentiment in commodity markets, and Australian Dollar is the most high-yield among the major currencies. Japanese yen this week, will remain in the background."
Channels Keltnera Strategy
The name given by the name of their author Chester Keltner, who first introduced the system of earnings for the 10-periodnoy moving average in his book 1960. «How to make money in commodity markets».
This price envelopes or bands, which are placed above and below the exponential moving average multiplied by its value on the value of the average True Range (ATR).
There is no doubt that this is a very interesting channels. In the first place because they ingeniously connected by two indicators: moving averages and the indicator ATR.
* The current maximum negative current minimum;
* Absolute value of: the current maximum negative previous closing;
* Absolute value of: the current minimum, minus the previous closing.
Upper Canal Keltnera = EMA (closure, x) + (m * ATR (y))
Lower Canal Keltnera = EMA (closure, x) - (m * ATR (y))
Where:
x = length (days) EMA
m = multiplier
y = length (days) to calculate the ATR
This is indeed a powerful and surprisingly simple system. It allows you to answer the constant question Trader: Where is the trend, but with Flat and earn money.
Channel Strategy
Channels are built to last three extremum - the line for two Nizam and the parallel through the top, or vice versa, the line on the two peaks and two parallel Nizam. The lines are constructed by the maximum (minimum), then have to tenyam candles.
The distance between the extremum is not limited. There are "groups extremes" - two or even three candles with practically the same maximum (minimum). Identify them as one extreme, the channel holding the line at the top (bottom) the right of them.
Open positions - when you reach the border canal - interior canal. In doing so, the signal for opening occurs when prices hit a zone + -5 points from the line of the channel. Number of lots continuously for a week (better - the whole month).
Stop with the turn at the opening: 50-70 points.
The purpose - the opposite border of the channel.
Always be open only one position (with a selected number of lots). After opening the position focus on the best exit from the market for this: When the distance from the opening price of 50 points (to profit), the stop is moved to the point of opening.
Next - podzhatie at a distance of 50 items every 10 points (trailing stop). When approaching the goal of decreasing the value podzhatiya. Podzhatie made only to increase profits, but never - to zoom out. With smooth reaching the channel border (of the current!), Closing the position, and opening a new position in the opposite direction.
If faults stop loss in - the opening position in the opposite direction for the purpose of paragraphs 57 (a turn). Principles podzhatiya - the same. According to a new position established by the stop order, without a turn at a distance of 57 items. When triggered the second stop - a break in the trade for two days.
This strategy allows you to borrow money from a well-measured movements of currency pairs. Do not sell to the powerful news and in the case of abrupt change of the expected trend.
But the main thing - time to close the profit is not greedy!
The strategy is designed for all levels of experience.
Bill Williams Strategy
Without a doubt, the system B. Williams - the most ambiguous and controversial strategy of our time. Someone makes it hundreds of thousands of dollars, someone (an absolute majority) continuously loses.
In any case, if you understand it to the depths, you will no doubt be able to earn good money at it.
Basically, all the prerequisites for this strategy based on the «Chaos Theory» - the theory of random walks, which will be found grain patterns. Traditionally, chaos is seen as a disordered structure, although in reality it is the opposite nature rather chaotic.
Chaos - this is a higher degree of order, which is organizing the links and the lack of randomness as opposed to cause-effect relationships. Chaos constant temporal stability. Financial Markets - generation of chaos.
In the linear world of cause and effect is predictable. In the non-linear (real) world, such a relationship between cause and consequence of non-existent. Therefore, in terms of B. Williams, the use of fundamental and technical analysis can not receive regular income in the financial market.
In accordance with the Chaos theory is the investor, which is starting from a linear perspective, will never see the "real" market, thus, bear the risk of permanent loss. Chaos theory is refuted, what is the basis of technical analysis: the behavior of the market in the future like the past.
Bill Williams believed that the reason that traders lose in the market, is that they too rely on various types of analysis, which he believed "in reality does not work, so they are useless and even dangerous."
In order to achieve excellence in the trade in financial markets, you need to know the very structure of the market. This can be achieved by exploring the market in five dimensions:
Fractal (phase space)
The driving force (power phase)
Acceleration / deceleration (power phase)
Zone (a combination of strength / power phase)
Line Balance
Each dimension adds additional information to the general picture of the market, so to fully understand his need to "measure" the market in all five dimensions.
It should be noted that prior to the appearance and performance of the first signal from the first dimension (fractals), the signals of other measurements (AB, AC, zonal trade and Balance lines) are ignored. But after the first position on the fractal signal trader "adds" to that position every time you receive the signal from any of the five dimensions. As a result, when driving the market in 30% of the trader managed to earn 90-120%.
Sensitive to price dynamics technique out of the market allows you to record profits in the last 10% of the trend, capturing not less than 80% of traffic (from the words of B. Williams). Recently, B. Williams approach to trade in financial markets has become very popular among traders in the market FOREX.
For each of the principles of Bill Williams has created his own indicator that helps determine the appropriate phase.
The driving force (power phase). Bill Williams Alligator (Alligator)
Bill Williams Alligator (Alligator) - a combination of three lines of the balance (Fig. 1):
Alligator jaw (blue line) - This 13-periodnaya moving average for central price (High + Low) / 2, displacement of 8 bars in the future;
Alligator teeth (red line) - This 8-periodnaya moving average for central price (High + Low) / 2, displacement by 5 bars into the future;
Alligator Lips (Green Line) - This 5-periodnaya moving average for central price (High + Low) / 2, displacement of 2 bar in the future.
With the Alligator can determine the direction of the current trend or its absence.
If all three lines are intertwined, the Alligator is asleep. " At that time, the market traded in a small price range (for Flat), selecting from a trader gained in the last movement of prices. The longer the Alligator is asleep, the more he becomes hungry, and the more powerful will follow the movement of prices. While the Alligator is asleep, stay away from the market! Woken up, Alligator disclose mouth (Balance lines diverge) and starts to hunt for prey. Naevshis, Alligator again falls asleep (Balance Lines converge).
If the Alligator does not sleep in the market, there is upward or downward trend (production runs from Alligator):
if the price is higher feed Alligator, the trend is upward;
if the price is below the mouth Alligator, the trend is bearish.
Another useful feature Alligator - assistance in identifying markings Elliott waves. If the price is outside the Alligator mouth, the market formed by pulse wave, as if inside the mouth, then correcting.
Gator Oscillator - definition of periods of "sleep" and "bodrostvovaniya Alligator
Gator Oscillator shows the degree of convergence / divergence Lines balance.
Gator indicator appears in the form of two histograms:
histogram above zero shows the distance between the blue and red lines (jaw and teeth);
histogram below zero shows the distance between the red and green lines (teeth and lips).
All bars of each histogram are colored in green and red color:
Column painted in red if its value lower than the previous column;
Column painted in green, if its value above the previous value of the column.
The main purpose of Gator Oscillator - assist in visually determining the presence or absence of trend. With the help of visible periods of convergence and overlap Lines Balance - «sleep» Alligator - and during his «awake».
Fractal (phase space)
Fractals (Fractals) B. Williams - the first measurement of market
Fractal for purchase - a series of five successive bars, followed by the highest peak and it is for two bars with lower maxima. Fractal for sale - a series of five successive bars, followed by the lowest minimum and it is for two bars with higher minimums. Fractals for the purchase and sale may consist of the same bars.
Fractals submit the following signals:
if the fractal is higher than for the purchase of Zubov Alligator (red line), the pending order Buy Stop at the opening position should be placed at 1 pips above the maximum of the bar, which was formed fractal;
fractal if the sale is below the Alligator Zubov, a pending order Sell Stop should be placed at 1 pips below the minimum bar, which was formed fractal.
If the fractal to purchase an Alligator Zubov below or fractal for sale - above Zubov Alligator, then the transaction must be omitted so as not to feed the Alligator. Fractals are active, or until their «defeat», or to the emergence of a new fractal in the same direction (in this case the previous signal has been canceled, and the pending order is removed). Critical, where he was "astonished" fractal, ie, what you need to enter a bar in the market after overcoming fractal. If the bar is outside the Alligator Zubov, then the transaction is allowed.
Fractals - this is the first measurement of the financial market. Any entry into the market begins to overcome the fractal. Only after being overcome first fractal, we start to receive signals from other measurements (indicators B. Williams) to open new positions in the direction of the first signal. The signals from the future of fractals in the direction of the first transaction will also serve as a basis for opening additional positions.
The driving force (power phase)
Magic Oscillator Bill Williams (Awesome Oscillator - AO) B. Williams - a second dimension of market
Magic oscillator (Awesome Oscillator - AO) defines the driving force behind the market (second dimension) at the time of the last 5 bars, comparing them with the driving force in the last 34 bars.
Awesome Oscillator - the difference obtained by subtracting 34-periodnogo simple moving average, which was built on the central values of the bars (H + L) / 2, from 5-periodnoy SMA on the central values of the bars (H + L) / 2. The graph indicator appears in the form of histograms (Fig. 4).
Fig. 4. The use of magic oscillator (Awesome Oscillator) to determine the driving forces of the market
In the green painted each column, which is higher than the previous, and red - each column, which is lower than the previous one. Magic oscillator creates a signal for the purchase of three and three signals for the sale, which can not be used until such time until the first filling fractal to buy (sell) outside of the mouth Alligator.
Awesome Oscillator (AO): signals for buy / sell "saucer"
The signal for the purchase of "saucer" signal occurs when the histogram is located above the zero line, changing direction from downward to upward (Fig. 5).
Column "A" should be above the column "B" and can be any color. Column "B" shall be red. Column "C" (signal) must be green. Signal bar - a bar, where an alarm column.
After formation of the signal exhibits a pending warrant Buy Stop at 1 pips above the signal bar. The last signal on the purchase of "saucer" supersedes all previous (do not forget to delete the pending order after the lifting of the signal). For all types of signals of the rule: Buy only if the current column, green, and sell only if the current column is red.
Acceleration / deceleration (power phase)
The Third Dimension: Acceleration / Deceleration Oscillator (AC)
Indicator acceleration / Deceleration (Acceleration / Deceleration, AC) measures acceleration and deceleration of the driving force (the third dimension).
Suppose the ball rolling on the street (using Awesome Oscillator can determine its momentum). If the road goes uphill, the ball begins to slow down (ie it has the reverse acceleration), and although the Awesome Oscillator (AO) will continue to determine the driving force behind the ball, will soon come a time when the ball stops. To this point, the trader is not caught unawares, B. Williams suggested using the indicator Acceleration / Deceleration (AC) for the measurement of the acceleration. Before you change the dynamics of prices, change the driving force. Earlier change acceleration. Therefore, the indicator Acceleration / Deceleration - important part of successful trading.
In MetaTrader 4 histogram Acceleration / Deceleration (AC) - the difference between histogram Awesome Oscillator and 5-periodnym moving averages for the Awesome Oscillator:
MEDIAN PRICE = (HIGH + LOW) / 2
AO = SMA (MEDIAN PRICE, 5) - SMA (MEDIAN PRICE, 34)
AC = AO - SMA (AO, 5)
Where:
MEDIAN PRICE - median price;
HIGH - the maximum price of the bar;
LOW - the minimum price the bar;
SMA - simple moving average;
AO - LED Awesome Oscillator.
Unlike magic oscillator AB crossing the zero line indicator of Acceleration / Deceleration (AC) signal is not. But still can not buy, if the column is red, and can not be sold, if the green column. It also signals Acceleration / Deceleration (AC), the trader should be ignored until such time until the first filling fractal to buy (sell) outside of the mouth Alligator.
Acceleration / Deceleration Oscillator (AC): a signal to sell above the zero line / sell at below the zero line
The signal to sell above the zero line "indicator of Acceleration / Deceleration Oscillator (AC), if a two consecutive columns with higher values than the most recent lowest column.
The signal to sell below the zero line "Acceleration / Deceleration Oscillator (AC), if a two consecutive columns with lower values than the latest greatest column
If the AC histogram below zero, the signal to sell below the zero line "is formed when a column of three consecutive higher values than the most recent lowest column.
Buy Stop Order is placed at 1 pips above the maximum of the signal bar.
If the histogram Acceleration / Deceleration Oscillator (AC) above zero, the signal to sell above the zero line "is formed when a column of three consecutive lower values than the latest greatest
Zonal trading (fourth dimension of the market)
When the driving force (Awesome Oscillator - AO) and acceleration (Acceleration / Deceleration - AU), directed to one side (both green or both red) - this means that the driving force not only moving in that direction, but also accelerating. This principle is based trade zone (fourth dimension B. Williams).
If the current columns of the AU and AO green, it shows the green zone. If the current columns of AU and AB red, it shows the red zone.
In order to open new positions on the purchase of green area (at the sale in the red zone) must be at least two consecutive green (red) bars, while the closing price of the second bar must be above (below) the closing price of the previous bar.
However, after five green or red bars in succession, we cease to "add", as more than 6-8 bars, painted in one color, are rare.
In the case of the fifth green (red) bar should be set the Stop Loss order at 1 pips below the minimum (above the maximum) price of the fifth bar. If the next bar stop-order is not executed, then you need to change the level, which at 1 pips below the minimum (above the maximum) price of the sixth bar, etc.
The fifth dimension of the market: Trade Balance Lines
Balance Line - this line, which would have been the price, if no new information (Chaos), which has an impact on the market at this time. B. Williams tried using complex mathematical calculations and computer simulations to find the line balance and to build a histogram, showing the distance between the price and the line balance. To his surprise, it turned out that this distance is very good and with a sufficient degree of reliability is described by the histogram Awesome Oscillator.
If the present Line of balance in the form of the mountain top, when the market receives new information, the price is easier to withdraw from the line of balance, than to come back later to it (easier to go downhill than up to it ").
In order to understand the fifth dimension and learn to deal Lines balance carefully examine Fig. 12:
Buyers were weaker at the bar "b" as compared to the bar "a". This proves a lower maximum bar "b".
Why sellers were stronger at the bar "b"? Because the market was new information (in the figure indicated by the dotted squares), which altered the balance of power.
If buyers get the spirit and be able to lift the market (see the bar "c") above the maximum of the bar "a", it means that there have been dramatic change in the behavior of stock market crowd, which is a harbinger of the transaction in the fifth dimension.
Fig. 12. New information in panel pricesIn our case, a bar "b" will be "basic." Thus, we come to the definition of "basic bar.
The base bar for the signal to buy - either the current bar (bar "b", which was not yet bar "c"), or the last with the lowest peak (bar "b" after the appearance of the bar with a higher maximum - bar "c "). The base bar for the signal to sell - either the current bar, or the latest with the highest bottom.
Formulate the first three postulates fifth dimension:
Study the chart, right to left.
Pay attention only to the maximum, if looking for a signal to buy. Pay attention only to the minimum, if you're looking for currently for sale.
Find the base bar: for the signal to buy (to sell) the base bar will be a current or bar, or the last bar with the minimum maximum (maximum minimum).
If you have a basic bar to buy or sell, you at least have passed their first half-way to commit the transaction in the fifth dimension market B. Williams.
The fifth dimension of the market: the signal to buy above the Balance
The signal to buy above the Balance If the price is above the balance, and we are looking for a signal to buy, we hope that the price will go "in front of the line balance, ie "to come down under the mountain"). Enter the new rule - Rule number 4:
To buy (sell) needed another new maximum (minimum) if you go in front of the line balance, and two new maximum (minimum), if you approach the line balance.
According to this rule for the appearance of a signal to buy, we need only to overcome the high price of the nearest of the previous bars with a higher peak than in the base bar. I'll try to explain this idea with the help of Fig. 13.
Suppose that on the screen we see only the bar number 1 and all previous ones. № 2,3 bars, etc. yet. At this point the bar number 1 begins to fall under the definition of the base bar to buy. This will be the current bar, which is lower than the previous high bar.
The essence of the signal above the line on the purchase balance is that we hold pending order Buy Stop at 1 pips above the maximum of the bar, which was preceded by the base bar (ie bar number 1 in our case).
Back to Fig. 13. The graph is a bar number 2, whose high is lower than that of the bar number 1. Automatic bar number 2 becomes the base bar. We cancel the pending order exhibited in the previous case and exposes Buy Stop at 1 pips higher than the maximum number 1 bar (this bar is a basic pre-bar - bar number 2). The same procedure is repeated at the bar number 3 and at the bar "B". When you see the bar "B", it becomes a basic bar, and the pending order is located at 1 pips higher than the maximum number 3 bar.
Then a bar number 4, but the bar "B" continues to be basic, because if you look right-left, it will be the first bar with the lowest maximum. Maximum bar number 4 is lower than the level we have put pending order, so we are not yet in the market. Appears bar number 5, which also did not change the basic position of the bar and did not fulfill our pending order. But the appearance of the bar number 6 with a maximum greater than the maximum of the bar before the base, has resulted in our Buy Stop worked and we have entered the market for "a signal to buy above the Balance."
The fifth dimension of the market: the signal to buy below the Balance
Obviously, the buying below the Balance, we hope that the price will go "to the line of balance, we would" climb the mountain. "
So, we need more than one maximum, as much as two to get the signal to buy below the line balance. Let us turn to Fig. 14.
Suppose an bar "B". This bar is basic, because he was the first, if you look right, left, a bar with a minimum peak. Now to get the signal we need to find a maximum of 2 on the left side of the base bar "B". Bar "3" will be the first of them. Bar "2" would not meet our criteria, because its maximum below the maximum of the bar "3." Bar "1" will be our second peak, which we are looking for. Its high maximum above the bar "3." Therefore, we place the pending order Buy Stop at 1 pips above high bar "1."
The appearance of the bar "4" has made changes in the overall picture: the base bar is still "B", a pending order has not yet been executed. Bar 5 also did not change. But at the bar, "6" worked our pending order and the fifth signal is measured on a purchase below the Balance realized.
Bill Williams has suggested several ways to set the Stop Loss orders:
If the market trend exists, the position must be closed if the closing price bar crosses the teeth Alligator (red line).
In a rapidly moving market, as the level for the Stop Loss order using Alligator Lips (green line). The market recognizes the rapid, if the angle of inclination angle higher prices of green line. In this way, and earlier at the end of the bar Stop Loss order is moved to the level of red or green line of the next bar.
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