NFP Figures Fuel Dollar Uprend but For How Long?

The positive NFP figures for the U.S. sparked another round of USD buying on Friday. Unemployment dropped below the 6% mark and the NFP numbers were decently higher than expected (248k versus 216k). Will this lead the way for one more month or even one more quarter of USD strength? To answer that important question our post today focuses on the EURUSD and USDJPY.

EURUSD APPROACHING TRIANGLE BOTTOM

The break of the rising wedge (blue trend lines) has been impressive to say the least: a 1,500 pip fall so far. Within that downtrend the strongest bearish candle closed last month (September), which implies that the downtrend in fact accelerated last month. With the low of last month already broken there seems to be little standing in the way of a further EURUSD downtrend continuation.

The exception is the 1.25 psychological round number which is a support level that deserves monitoring. But once this level breaks then a downtrend continuation in October seems likely. The next stopping spot could be all the way at the bottom of the wedge (orange trend lines).

The 4 hour downtrend channel (blue) does a great job of capturing the downtrend. As long as price stays within the top and bottom lines then traders should primarily be concerned with catching downtrend continuations. For the moment Forex traders can see that price is potentially at the bottom of the channel, which could indicate that the EURUSD is at a retracement or correction spot.

I will keep a very close eye on:

a) Does price indeed make a correction here or will it break below the current bottom and below the channel?

b) In case of a break, I would be interested in trading short below the 1.35 on lower / intra-day time frames. (scenario 1 in screenshot)

c) In case of a retracement, I will be looking to trade shorts for more downtrend continuation at spots of resistance. I also want to monitor how price retraces back to the upside.

1. In case it’s very quick and impulsive, a bigger retracement could be starting (scenario 4 OR 5 in screenshot).


2. In case it’s slow and corrective, a downtrend continuation seems even more likely (scenario 2 OR 3 in screenshot).

USDJPY UNABLE TO BREAK 110

The USDJPY made an impulsive drop last week but then managed to recover due to the NFP. The speed and rate however remains impressive and the question arises whether the 110 resistance level could be too tough to crack in the short-term.

When viewing September monthly candle (above screenshot) I remain bullish in the medium term and do expect a continuation of the uptrend this month. But this week could easily see a triangle pattern (scenario 1 in screenshot below) or bigger correction (scenario 2) unfold. Of course, if price does manage to break above the 110 resistance, then swing longs and intra-day longs are fully on the table again. Until then, I would only be looking for a potential bounce at the support (scenario 1) or at the 38.2 Fibonacci retracement level (scenario 2).

How do you see the USD against EUR and JPY? Post your opinion or analysis down below!

Wish you Happy Trading, and thank you for all of your article shares. It is much appreciated!

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Week in FX Asia – USD/JPY Flirting with 110 as NFP Boosts Dollar

• BoJ and Abe say weak yen a positive


• USD/JPY tests 110 awaits policy meeting next week


• Hong Kong unrest and weak Chinese PMIs

Japanese Prime Minister Shinzo Abe and Bank of Japan Governor Haruhiko Kuroda both tried to calm local concerns that the Yen slide is happening too fast. The USD/JPY is close to breaking the 110 price level. The PM Abe addressed councillors in the Japanese Diet and he told them that a virtuous economic cycle is about to begin. BOJ’s Kuroda for his part tried to reassure investors by saying the weakness of the currency is positive if it truly reflects fundamentals. Kuroda told the parliament that a weak yen is good for exporters but the imports have to be managed. He considers the net effect positive.

The duo of Japanese leaders are facing criticism for lack of definitive action in 2014. Last year was an achievement of economic policy for Japan so much, that its movement is named after its architect. Abenomics has so far failed to gain any traction in 2014 and its is only because of interest and growth rate differentials that the JPY has moved to this level desirable by exporters.

USD/JPY tests 110 awaits policy meeting next week

The USD/JPY was able to break above 110, but retreated currently trading at 109.79 after strong employment numbers out of the United States. Next week’s release of the minutes by the Federal Reserve and the Bank of Japan’s Monetary Policy statement on Monday could further fuel the USD rally.

Hong Kong unrest and weak Chinese PMIs

Hong Kong political unrest in a very civilized and tech savvy manner have proven difficult for the Chinese government to deal with. The two system rule is facing a tough test and will determine how China deals with public protest and difference of opinion in a well connected world. Asian markets were hit as protests and political uncertainty are not alien to the region, given the coups this year. What provided a change was the fact that HK was one of the shining examples of capitalism around the world, but yet under communist rule after the handover in 1997. Now China has the opportunity to have a smart protest movement inside a repressive government. No doubt Chinese leaders are anxious as they are not used to dealing with this kind of protestors but must do so in the same civilized manner if they intend to write a new page of Chinese history instead of going back to using antiquated methods.

Economic growth forecasts continue to shrink after manufacturing PMIs continue to weaken. This week even service PMIs came in lower but still well above the 50 expansion reading, the service PMIs fell to 54.0 from an earlier print of 54.4. The real estate sector is contracting after falling below 50. This was a disappointment after what is traditionally the best month for real estate September did not live up to expectations.

Next Week For Asia:

The market is not done yet with the central banks. Next week the Reserve Bank of Australia kicks things off on Monday. Despite an AUD rally of late (AUD$ 0.8670), the market will be expecting some dovish currency comments from Governor Glenn Stevens. It has become a regular part of his rhetoric repertoire.

On Tuesday, the Bank of Japan takes center stage; in all respects Prime Minister Shinzo Abe is happy with the yen’s relative weakness of late. Wednesday will be dominated by the Federal Open Market Committee minutes. As per usual, the market will be looking for any clues to justify building on current positions. The Bank of England meeting dominates Thursday: Is Governor Mark Carney still the favourite to be the first developed nation to hike interest rates? Finally on Friday, Canada will report its own jobs report.

Fore more market moving events visit the MarketPulse Economic Calendar

WEEK AHEAD

* AUD Reserve Bank of Australia Rate Decision

* CHF Consumer Price Index (YoY)

* GBP NIESR Gross Domestic Product Estimate

* USD Fed Releases Minutes from Sept. 16-17 FOMC Meeting

* AUD Employment Change

* EUR ECB Publishes Monthly Report

* GBP Bank of England Rate Decision

* CNY New Yuan Loans

* CAD Unemployment Rate

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U.S. Dollar Continues Winning Streak

The dollar had the longest rally since teenagers bought Beatles albums and Lyndon Johnson was president as the Federal Reserve signaled interest rates will rise next year while other central banks pushed stimulus plans.

The U.S. Dollar Index rose for a 10th consecutive week, the longest since at least March 1967. Sterling rose after Scotland rejected independence, reviving bets the Bank of England will join the Fed in raising rates. The yen fell versus all of its 16 major peers as the Bank of Japan pledged to maintain stimulus to fight deflation, while the European Central Bank debuted a loan program. A report next week may revise second-quarter U.S. economic growth higher.

“The Fed and the BOE are the two central banks that’ll start hiking rates next year, and we like being long dollar and sterling,” said Athanasios Vamvakidis, head of Group of 10 foreign-exchange strategy at Bank of America Merrill Lynch in London. “There’s more room for investors to accumulate long positions on the dollar.” Long positions are bets a currency will gain.

Bloomberg

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Dollar and Sterling Get Direction Orders

Strap in and be prepared for opportunities, as this is a big week for investors and capital markets. Geopolitical events, a few central bank meetings, and the Scottish referendum are supporting the recent uptick to both volume and volatility, especially in the forex asset class. The US dollar remains king, as both the currency and global yields rise ahead of the Fed’s two-day meeting. Market consensus expects this week’s FOMC meet will be a Ms. Yellen hawkish event, especially following Friday’s solid US retail sales data (+0.6%) for August that was supported by positive revisions to previous months. Even better than expected University of Michigan sentiment data has added to the markets conviction (84.6).

Later today, the Reserve Bank of Australia will kick-start the week with its Monetary Policy Meeting minutes being released this evening. The RBA held its benchmark steady at a record +2.5% for the thirteenth consecutive month at its last meeting. Many believe that it was a mistake, arguing that Governor Stevens should be more aggressively confronting the weakness in the Aussie economy and its high unemployment rate. A less dovish Fed has been persecuting the “carry” trades despite a supporting Aussie jobs number last week. Aiming to guide the Aussie lower (AUD$ 0.9008) is China’s industrial output slowing (+6.9%) to six-year low over the weekend, the depth of the global financial crisis renewing fears of a hard landing from the world’s second largest economy. Even retail sales slowed to a four-month low while fixed investment growth are down at a multi-year low rate.

Yen weakness helps BoJ

On Tuesday, investors will also attempt to decipher interest rate clues from a speech the Bank of Japan Governor Haruhiko Kuroda will make. Currently, they are looking for any sign that Prime Minister Shinzo Abe is pushing for further monetary stimulus. Many have been expecting the BoJ to ramp up its stimulus program in the face of revived deflationary pressures and amid an economic slowdown worsened by a drag caused by a hike in the sales tax. However, with the Yen undergoing its own sharp decline (¥107.24) is certainly doing some of the stimulus work for Governor Kuroda.

Last month’s German ZEW index of economic sentiment hit a 20-month low, and on Tuesday morning the market forecasts are for an even bigger drop. This would suggest that the mood amongst the German population is only getting worse to domestic deteriorating growth, mounting Euro deflationary pressures and the general squeeze caused by further EU/US sanction on Russia over Ukraine. The EUR received solid support last week from heavy unwinding of EUR-funded “carry” trades and by Friday close was the best performing currency for the week (+3.75%) against the AUD and up +0.15% vs. the USD. The market should be expecting the single currency to see some further consolidation ahead of Wednesday’s FOMC decision where the market expects the Fed to be “less” dovish.

Payrolls to influence Fed

Wednesday is another data laden day. Investor’s get a peek at the BoE’s MPC minutes. On September 4 the BoE left policy unchanged, but the vote was split 7-2. If there is any hint that anyone of the seven are leaning towards tightening then the market will be quickly recalibrating the “tightening” bias, and this despite Carney’s latest efforts to talk down any near-term UK rate increases (£1.6246). In hot pursuit will be the Eurozone’s CPI for August. It’s one of the biggest influences on ECB policymaking. Recently, it’s been on an alarming slide towards deflation and reason enough why Draghi and company acted so earlier this month by cutting rates further and introducing a bond-buying program.

A fear of the Fed taking a more hawkish stance at its two-day meeting that ends next Wednesday is keeping both European and U.S. bond yields elevated. U.S. policymakers are expected to shed some light on plans to raise interest rates. The market will be focusing intently on the FOMC press conference after the federal-funds rate decision. Before this meeting, the market has an especially disappointing payrolls report (+142k), which is expected to support Ms. Yellen’s hesitance to rush towards a rate increase next year. However, there are other signs of US robust growth, so there is a chance that US policy makers could firm up its signal on that. It should keep the market on its toes.

Scots need Braveheart

Just like the Scottish sovereignty vote has been doing especially over the past ten-days. Scottish referendum fever continues to grip market price action, and though the odds for the country to vote to leave the U.K. has lessened, sterling’s fate rests on next Thursday’s Scottish independence vote (results on Friday) as the vote outcome remains too close to call. Sterling, which last week plummeted to a new ten-month low (£1.6035) after poll slightly favored independence, is trading in a tight range as we start the week (£1.6245). Expects things to heat up again as the week progresses.

Also on Thursday, the Swiss National Bank (SNB) will set its Libor (London Interbank Offered Rate) though no changes are expected. However, Swiss authorities could be put to the test if the EUR’s downfall escalates and encroaches on the two-year-old EUR/CHF floor at €1.2000. There is no reason to assume the appetite for SNB intervention is diminished at this point. In fact, the pressure for action has intensified.

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Officials not Macro Economics Driving FX | Zero Hedge

This month the main drivers of the foreign exchange market have been official developments rather than macro-economic factors that often shape investors’ decisions.In addition to Russia/Ukraine and China developments, it was the ECB’s failure to take more measures to address the tightening of financial conditions, and falling inflation, that finally managed to convincingly push the euro above the $1.38 area that had capped it since last October.It was also comments by Draghi on March 13 that have thus far put the euro’s high in just below $1.3970. This past week, it was a seemingly more hawkish Federal Reserve than expected, with the help of new Chair stripping the veneer of the traditional strategic ambiguity of language (“considerable period = around six months), that was …

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Weekly outlook for the major currencies, from a technical perspective.

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The Challenge of the “Best” Choice

This website is for entertainment and educational purposes only. Material shared on this blog does not constitute financial advice nor is it offered as such. Therefore, The Simple Dollar assumes no legal liability for the completeness, accuracy, or suitability of the information provided by its authors.Readers will also note that The Simple Dollar maintains financial relationships with certain third party merchants. If readers access and utilize the services of one of these affiliates through a link on the blog, The Simple Dollar may be compensated for the referral.Please read the blog’s policies on privacy and image-use.And always consult a locally licensed insurance agent, financial adviser or certified attorney before making any financial decisions.

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As I write this article, my three year old son is perched on my lap with my arms around him. He’s playing with one of his favorite toys, a Transformer that’s easy to transition from a fire truck to a robot, and he’s telling me stories about them.

He’s happy and safe and secure sitting here on my lap. He’s not worried that there won’t be enough food for supper or that we might have to move because we can’t afford the house. He doesn’t hear Mom and Dad arguing about money.

He just climbed down onto the floor and is now driving his fire truck around my legs. I’m “jumping” each time the fire truck runs into one of my feet and he thinks that those little jumps are simply hilarious.

His laughter just fills up this little office.

One of the most difficult lessons I’ve had to learn as a parent is that my choices regarding my children need to focus entirely on what’s best for them, not what’s best for me.

For example, when I’m at the store, there are times when I would love to buy my son a special treat because I would enjoy seeing the pleasure that it would bring him. However, I know that buying him that toy isn’t the best choice for him over the long term.

When one of my children does something wrong, it would be easier for me to either just let it slide or to just get angry, but neither one of those are the best response for the child.

The best choice in a given situation is often not what it seems to be.

When we’re making personal decisions, it’s really easy to just default to whatever choice is best for us right now in the short term. A splurge at the store? Sure! A treat in the checkout line? Why not? Do something special for my spouse or kick back and watch this movie? Let the credits roll! Bumping up that retirement savings? Hmmm… it’d make my paycheck smaller, so I’ll wait.

The problem is that the little burst of happiness you get from the short-term choice quickly fades away. That treat at the checkout is devoured quickly. That movie ends. The few extra dollars in your paycheck are spent on completely forgettable things.

At the same time, the other things you care about suffer. You don’t have any pocket money when something you really value comes along. Your spouse quietly feels taken for granted. Your retirement account barely grows.

We usually don’t see those long-term consequences when we’re making the choice in the moment. Instead, we have to think about those consequences outside of the moment and constantly remind ourselves that, by giving up a little inconsequential thing right now, we contribute to something much better later on.

Boost that retirement savings a little bit. You won’t miss the few dollars per paycheck, but you’ll definitely be glad you have more retirement savings down the road.

Skip that treat at the checkout. You’ll find a few more dollars in your pocket at the end of the week which can either be used for something more meaningful or help you get your finances on track.

Spend an hour taking care of a task your spouse is dreading – and maybe cook a nice dinner, too. Your spouse will know in a quiet way that you really care and that will radiate throughout your marriage.

As I wrote this article, my son wandered into his bedroom and came back with another Transformer toy. He played with both toys on the floor for a while, but now he’s running the toys up my leg and whispering, “Daddy.”

He wants me to play with him. In this moment, I’d rather get some work done and then play a game with one of my friends, but when I look over at his smiling face, I recognize that, before long, he won’t be a three year old boy any more. He won’t want his father to play Transformers with him. As we play, I can look for opportunities to teach him little things, talk to him about his life a bit, and make him feel more secure.

It’s time to play with some Transformers.

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Closed EU long and UJ short

Closed EU long and UJ shortFebruary 13, 201412.22 gmtI have reviewed the longer time-frame charts and correlated charts including DXY and 10yr USTs, and I think we will see a bounce in the dollar around these levels. That means UJ will reverse up, yen pairs will rise and EU, even GU will fall.Closed UJ short at 102.02, +13 pips.Closed EU long at 1.3660, +32 pips.About these adsShare this:Email Facebook Google Related From → Trades

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12.22 gmt

I have reviewed the longer time-frame charts and correlated charts including DXY and 10yr USTs, and I think we will see a bounce in the dollar around these levels. That means UJ will reverse up, yen pairs will rise and EU, even GU will fall.

Closed UJ short at 102.02, +13 pips.

Closed EU long at 1.3660, +32 pips.

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Closed EU long and UJ short

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Net Worth and Pleasure

This website is for entertainment and educational purposes only. Material shared on this blog does not constitute financial advice nor is it offered as such. Therefore, The Simple Dollar assumes no legal liability for the completeness, accuracy, or suitability of the information provided by its authors.Readers will also note that The Simple Dollar maintains financial relationships with certain third party merchants. If readers access and utilize the services of one of these affiliates through a link on the blog, The Simple Dollar may be compensated for the referral.Please read the blog’s policies on privacy and image-use.And always consult a locally licensed insurance agent, financial adviser or certified attorney before making any financial decisions.

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In a post a few days ago, I made an offhand comment about how I didn’t really receive personal pleasure from seeing my net worth increase, though I once did. A few people emailed me on that subject, so I thought I’d clarify what I meant.

When I first began to overcome my personal finance mistakes, I found that calculating my net worth and looking at the change from month to month was incredibly powerful. It was a single number that provided “proof” that I was making better decisions than I was making before.

An increase in net worth meant that I was unquestionably spending less than what I earned, which is the key to personal finance success. An increase in net worth meant that all of the hard day-to-day choices I was making were actually adding up to something big.

It was exhilarating. Each time I calculated that number, I could clearly see the impact that my choices were having even if they weren’t really evident in my day-to-day life.

Over the ensuing years, however, things changed in my life. I changed careers and moved in a self-employment direction. We bought a house and had two more children. All of our debts disappeared and we started building a nice nest egg.

In other words, I began to really see the impact that our financial choices are having on our day-to-day life. If we hadn’t turned our finances around, I would not be self-employed right now. I wouldn’t be able to be sitting there waiting when my children come home off the bus. We wouldn’t be living in a nice house with enough space for a home office. I would be feeling stress from things as simple as checking the mail.

I don’t have to look very far to see how our good financial choices changed my life.

So, let’s look at those situations side-by-side. When we first started our financial turnaround, I didn’t see those changes in my day-to-day life. I was still working the same job, living in the same place, driving the same automobile.

I didn’t have the milestones in my life to demonstrate the changes brought about by our financial choices.

Today, things are different. I have lots of things in my life that have only happened because of our financial choices. Being financially stable opened the door to the house we own. Being financially stable opened the door to a career change for me, one that lets me help my children get ready for school in the mornings and be there for them when they get home, which is incredibly important for me.

I don’t need a number to show me those things.

It’s those life milestones that show me the incredible positive impact that good personal finance choices have made in my life. Every single day, my life shows me what I’ve accomplished and why I need to keep my eye on the ball.

At first, I needed that number to see that I was accomplishing something. Now? I don’t need that number. I just need to look around my life.

That’s the reward for sticking with personal finance improvement. You eventually begin to see how it affects your life in a lot of ways and when you recognize that it’s your hard work that made it happen, it inspires you to keep going.

I still figure up my net worth every once in a while, but it’s mostly an exercise to ensure that I’m making smart financial decisions. The day-to-day inspiration that I used to get from that number now comes from the realities of my life – and that’s the result of pushing through those years where I was working hard to improve things but I wasn’t seeing any direct reward.

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