JPY is predicted to be stronger

Today JPY is aspected to be stronger than GREEN due a few news regarding consumer spends in overall economic activity released. The total value of inflation-adjusted expenditures by consumer will be good for the YEN. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate.

The unemployment rate although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor conditions.

BOJ Policy Board members come to a consensus on where to set the rate for investor about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it projects the economic outlook and offers clues on the outcome of future rate decisions

USDJPY Prediction 30 Oct 2008

Hello to all readers, It's quite a long time i don't do technical analysis for you. As you know nowadays market to volatile to make a big hit. So, I'm giving you a tips that gonna help you to get a big hit. Try to setup USDJPY for tomorrow trade to sell at price level 96.09 due a day chart and 4 hour chart shows the down trend.

It is 100% level in fibonacci in down trend for 1 hour chart. Try to score another 100% profit at 92.09. It is about 360 pips for the swing.



Warning!!! Please trade at your own risk. FOREX is extremely high liquidity. Any losses of the trade is on your own. Just drop some comments/compliment after the trade would be much appreciated.

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Joint Rate Cut Failed To Dissipate Fear

Oil price recovered after falling to 8-month low at 86.05 (November futures) Thursday morning. We view this as a short-term rebound due to loss of momentum rather than improvement in fundamentals or change in market sentiment. Price should hold below 93.2 and yield resumption of recent decline.

Events that happened in recent weeks reinforced how poor the economic outlook is. From Lehman Brother's collapse to nationalization of Fortis, we realized that recession has spread from the US to Europe. From the $700B bailout plan in US to announcement by European governments on unlimited guarantee to private bank deposits, we have got solid proof that credits have been frozen and worldwide liquidities have been dried up. From the Fed's order of rate cut by 50 bps last night to echoing actions in ECB, BOE, PBOC, Bank of Korea......, we can no longer hide but to admit that our economy is sliding into recession.

Although rate cut caused decline in USD, the catalyst was eclipsed by persisting worries on demand. Yesterday's inventory report indicated such concerns materialized. EIA announced that crude inventory for the week of Oct 1 increased significantly by 8 mmb, compared with market expectation of 2 mmb. For gasoline, the build of 7.2 mmb also exceed market forecast of 1 mmb. Although distillate stockpile fell last week, the less than 1mmb draw was lower than 1mmb reduction as expected by the analysts.

The only news support oil price remains the comments by OPEC members. Venezuelan President Hugo Chavez said Wednesday that some members of the cartel want an extraordinary meeting before the group's Dec. 17 meeting in Algeria. Iraq's oil minister said OPEC may need to consider cutting output if the price of crude remains below $90. However, the determining factor lies on Saudis who did not view falling in oil price as a problem.

Gold retreated again after failing to break 926/932 (Yesterday's high at 924.9). Currently trading at 8894.4, as long as 880.1 holds, bullishness remains for re-test of the above-mentioned level. Break would yield further gain to 989.6 and then 1033.9.

On a fundamental basis, we are also positive on gold's outlook. South Africa, the world's second largest gold producer after China, has recorded a drop in gold output by 23.2% in August, y/y. From investment angle, the largest gold-backed ETF, New York's SPDR Gold Trust GLD, said that its holdings rose to a record 763.9 tons Wednesday. They are up almost by 25% since Lehman Brothers filed for bankruptcy protection on Sep 15.

The price drop today despite worsening economic outlook is probably due to ‘temporary' increase in risk appetite after coordinated rate cut action around the world. Investors just took profits from gold's rally and redeployed them into the oversold equity markets which experienced panic selling in the last few days.

Dollar continued to weaken after the rate cut. Currently trading at 1.3644 and 1.7282 against Euro and sterling, USD has probably formed a near-term top on Monday.

Global Rate Cut: You' ve Made History!

Shortly after the unprecedented $700B financial bailout plan was passed, the Fed acted together with major central banks to cut interest rates. The Fed announced to reduce its key federal funds lending rate and discount rate by 50bps to 1.5% and 1.75%, respectively. In Europe, both ECB and the Bank of England ratcheted the rates by 0.5% to 3.75% and 4.5% respectively. The central banks of Canada, Sweden and Switzerland also lowered their key rates. In Asia, China joined by trimming its key rate by 27bps. It's the first time that global banking authorities worked together to cut interest rates in order to stimulate economy and restore market confidence.

As expected, dollar fell against other major currencies upon the rate cut across the board. In NY morning, USD fell to 1.3663 from 1.3645 (Tuesday afternoon) and 1.7323 from 1.7510 (Tuesday afternoon) against Euro and Sterling. It also lost grounds against Yen, Canadian dollars and Swiss francs.

Reducing interest rates so abruptly indicated financial crisis has intensified. Accompanied with recent weak economic data, recession does not only spread from the US to Europe but also to Asia Pacific regions. World economic slowdown induced investors' worries on oil demand growth.

Although crude oil for November delivery bounced to 90.99 after making a low at 86.05, 8-month low, renewed selling pressure after release of the disappointing weekly inventory report forced the black gold to trade below $90/bbl again (currently at 87.00). As 93.02 resistance holds, we maintain our near-term bearish view on crude oil price and expect price would fall to 85.42 (Jan 08 low) first.

Demand has been slowing very rigorously in developed countries. According to Credit Suisse, OECD consumption has fallen 3-4%. The market has dried up. There's no way for traders to access to credit and therefore they have to deleverage their positions. EIA also slash world oil demand growth next year by 140 000 bbl/day.

EIA has just released report petroleum inventory. Crude oil inventory unexpectedly increased by 8.123 mmb, much higher than consensus of 2 mmb. As for gasoline, the build of 7.2 mmb also exceed market forecast of 1 mmb. Although distillate stockpile fell last week, the less than 1mmb draw was lower than 1mmb reduction as expected by the analysts.

Rumors about OPEC cutting production have been flowing around. After Libya and Qatar warned that the cartel would take action if oil price falls too much, another 'source' said OPEC is unlikely to adjust production in the December meeting unless oil price falls to below $80/bbl while Iraqi Minister said an action should be done if price remains below $90/bbl.

Gold is in favor again as dollar depreciates and investors flock to safe havens. The precious metal for December delivery extended recent rally to 924.9, a rise of $43/oz. The metal has risen more than $70 in three straight sessions since Monday. Despite a minor retreat to 904, we expect gold to resume recent strength.

Marcus Grubb, World Gold Council MD of investment research and marketing, said that central banks had been selling less gold recently. Bill Murphy, the chairman of the Gold Anti-Trust Alliance also believed that gold price should be above $2,000/oz based on physical demand if there was no cartel restraint using derivatives.

Weekly change in inventory as of 01/10/08	Actual	Market expectation	Previous
Crude oil	+8.123 mmb	+2.4 mmb	+4.3 mmb
Gasoline	+7.175 mmb	+1 mmb	-0.9 mmb
Distillate	-0.489 mmb	-1 mmb	-2.4 mmb

EIA, Updated on Oct 8

Congress Shake The World

As US politicos spent the week getting their act together, various European governments were forced to intervene to shore up their troubled banking system and the US dollar saw its biggest ever weekly advance against the euro. It was a bad week for the European currency across the board, and the euro also saw its biggest weekly fall against the yen and it even lost ground to its troubled neighbor, the British pound.

The week opened in Europe with the EUR falling to 1.43 at the news that the Belgian, Dutch and Luxemburg governments were bailing out Fortis to the tune of €11.2B. There were further developments in this story later in the week when the Dutch government announced it was nationalizing the Dutch part of the bank. Then, when Congress shocked the world by rejecting the $700B bail-out plan, the euro rose to test 1.45. However, growing concerns about the European banking sector and Monday’s plummeting oil price ensured that the euro would fall below 1.44 once more before the day was out. The euro’s woes continued and it fell more against the dollar on Tuesday than it had done during any day since its launch.

Tuesday also saw more banking grief for the Europeans as the French and Belgians stepped in with a €6.2B lifeline to Dexia, the world’s biggest lender to local governments. The euro found support at 1.40 on Tuesday afternoon, and commenced to rise. Wednesday saw a ray of hope for the euro in the form of better than expected German Retail sales. However, it was short-lived and despite a very weak US manufacturing PMI, better than expected US ADP jobs numbers and a growing confidence that the US bail-out plan would be passed, saw the greenback pushing the euro down once more.

The US Senate’s vote to pass the bail-out plan brought implementation one step closer and saw EUR/USD finally break 1.40. It was downhill from there to the ECB’s interest rate announcement. The central bank held at 4.25% as widely expected, but Jean-Claude Trichet’s follow-up press conference opened the door for an ECB cut sometime fairly soon and the euro plummeted, testing 1.3750. Friday’s NonFarm payrolls came in at -159,000, the worse in more than 5 years and much worse than expected. However, the dollar gained ground against the euro on the release of this news because it was in fact better than some sectors of the market had feared, it would also serve to ratchet up pressure on Congress to pass the bail-out and finally it was mitigated by the unemployment rate holding steady at 6.1%. There were no surprises this time round when Congress reconsidered and voted 263-171 to pass the US rescue plan.

The euro gained a little to test 1.39 as there are real concerns that the plan will devalue the dollar. However, there is little happening in Europe to inspire confidence at the moment and EIUR/USD closed the week at 1.3770.

GBP opened the week falling against the greenback. The weekend had seen breaking news that the British government was going to nationalize troubled UK bank, Bradford and Bingley, a major player in providing mortgages to the buy-to-let sector. This led to concern that other U.K. financial institutions would also fail. As the week progressed, disappointing UK PMI numbers across the board and more bad news out of the UK property sector increased speculation that the Bank of England would have to cut interest rates at its October 9th meeting.

The economic calendar is on the light side this week. For the US we have FOMC meeting minutes on Tuesday so we’ll be able to read the discussion behind the Fed’s decision to hold on September 16th. Wednesday’s Pending Home Sales will give us the chance to see signs of a bottom in the housing market. On Friday we can keep tabs on the US Trade Balance.
On Wednesday, look out for German Industrial Production and on Thursday the ECB’s Monthly Bulletin gives the stats that the bank used when deciding to hold rates last week.

There’s more housing data out of the UK on Tuesday and Tuesday’s Manufacturing Production and Thursday’s Trade Balance will give us some more insight into the UK recession. The big news out of the UK this week will be the Bank of England’s Interest Rate Announcement, with a cut of 25 bps being widely expected. The Bank of Japan and the Reserve Bank of Australia will also be making their interest rate announcements. I can’t see the Bank of Japan generating much excitement but the AUD looks like a good buy if the RBA only cuts by 25bps.
The central bank speaker agenda is jam-packed and of particular note in these fraught times. Please check our economic calendar for details.

Last week clearly illustrated how vulnerable Europe is to the current credit freeze with Bradford & Bingley, Fortis, Dexia and Iceland’s Glitnir and Kaupthing banks all being rescued in some shape or form by national governments. Meanwhile the Irish government pledged to guarantee debts and deposits to the tune of €400B in six of its key financial institutions. As I write, plans to save German mortgage giant Hypo Real Estate have fallen through when the private consortium pulled out of the rescue deal after looking through the company’s books.

On Saturday the heads of the big four European economies met in France to discuss a coordinated approach. After the summit they pledged to continue to bail out their own banks and went on to call for a global summit but stopped short of any collective action to tackle the problem at a Europe-wide level. This outcome will surely have ramifications for the week ahead and we see EUR/USD coming in for more downside pressure.

New Bail Out Plan

WTI crude oil for November delivery traded lower today after making a $9.5 rebound to 102.84 (held below 103.22 support turned resistance) earlier. Currently traded at 98.72, outlook for the oil price is mixed but 93.36 low should act as support should oil extends weakness. Low turnover increased volatility. Investors are waiting for the result of the 'new' bailout plan will be put on vote tonight and EIA's report on weekly petroleum inventory.

The Senate revised the bill by adding tax breaks for businesses and the middle class as well as increasing deposit insurance. With these provisions, there's higher chance of getting a pass. Nonetheless, the plan is expected to slow down the pace of recession and temporarily boost sentiment. Investors are still lingered with concerns in declining economic growth and oil demand.

ISM manufacturing index fell to 43.5 in September, down from the August reading of 49.9. The figure came in lower than market expectation of 49.5, signaling economy in US shrinks faster than forecast.

At 10:30 EST, EIA released stockpile data as of Sep 26. As expected inventories rebounded due to the return of refining activities after Hurricane Ike and depressed demand. Oil and gasoline stockpiles rose by 4.3 mmb and 0.9mmb respectively while inventory for distillates dropped by 2.4mmb.Both of oil and gasoline’s stock builds surprised on the upside.

MF Global expected a 3 mmb increase in crude supplies while gasoline and distillates inventory would have fallen by 3.6 mmb and 1.1 mmb respectively. However, Platts, an energy information provider, saw either a 1.5mmb increase or decrease in oil stockpile while both of gasoline and distillates would have down by 1-3 mmb.

Started in US, slowdown in economy has been spreading around the world. Recently we see reduction in oil consumption in India and Japan, a Barclays' report stated that in India, sales in oil products reach the lowest in August. In Japan, sales also dropped by 8.4%.

Gold's performance somehow let us down. Despite the break above 926 Monday, subsequent retreat indicated range-trading from 932 to 828.5 is still in progress. Currently trading at 887, gold recovered some of yesterday's loss albeit dollar's strength.

USD continued to strengthen against Euro and Sterling in US morning. Trading 1.3999 against the single currency and 1.7666 against pound, the dollar regained most of the loss since the collapse of Lehman Brothers.

Our view to gold is cautiously bullish and we believe the precious metal's safe-haven appeal still exists as long as global economic outlook remains uncertain. Recently, demand on physical gold has increased dramatically. Jeremy Charles, chairman of London Bullion Market Association said that gold refineries can't make enough bars to keep up with demand from investors.

Even if US bailout plan has been passed, recession seems to be unavoidable. Adding to the problem is huge government debt and aggressive rate cut would cause USD depreciation in long term. This helps gold's strength.

Weekly change in inventory as of 26/9/08	Actual	Market expectation	Previous
Crude oil	+4.3 mmb	+3 mmb	-1.5 mmb
Gasoline	-0.9 mmb	-3.6 mmb	-5.9 mmb
Distillate	-2.4 mmb	-1.1 mmb	-4.2 mmb

EIA, Updated on Oct 1