Forex Beginner Guide: Important Forex News

Oil - Signs That a War in Iran is Close

The clock is ticking closer to the midnight hour regarding a strike in Iran. Israel might do it alone, but will likely have the backing of the US.

Is a war imminent, or are these moves just meant to scare Iran? Here are 5 signs that have piled up very recently.

SWIFT Cuts Iran Off: The international institution responsible for around 80% of the world’s financial transactions announced that it will cut off Iranian financial institutions from its system from Saturday. This unprecedented move is a big blow to Iran, and follows up on EU sanctions.

Majority in Israeli cabinet for strike: Israeli newspaper Maariv (Hebrew link, quote in English) by Ben Caspit saying that 8 out of 14 Israeli cabinet members now support a strike on Iran’s nuclear facilities. The cabinet can give Prime Minister Netanyahu the green light for a strike, at the time he sees fit.

Netanyahu preparing Israeli public: The Israeli Prime Minister continues the tough rhetoric against Iran also after coming back from his long visit in the US. Analysts see this as a preparation of the Israeli public for a war.

Using Oil Reserves: There was a report, later denied, that the US and the UK decided on releasing oil from the emergency reserves in order to lower prices. This could be another preparation.

“Last Chance” Warning: According to Russian sources, US Secretary of State Hillary Clinton asked the Russians to send a message to Iran that the upcoming talks 6 nation talks with Iran are the last chance before military action.

Needless to say, oil prices certainly play a role in the considerations of all sides. Iran is the world’s 5th largest producer of oil, and sits on the Straights of Hormuz, where 40% of the world’s shipments pass through.

All these moves could mount to a preparation for a US backed Israeli strike against Iran’s nuclear facilities. It could also just add to pressure against Iran, trying to force it to comply without really engaging in military action.

Source: ForexCrunch.com

Further reading:

How will Currencies React If Israel Attack Iran

How will Currencies React If Israel Attack Iran

On November 8th, The International Atomic Energy Agency(IAEA) is due to publish an updated report about Iran’s nuclear program. It is expected to provide new and worrying details about Iran’s nuclear capabilities. Towards this event, news about an upcoming Israeli attack on Iran have emerged.

The chances of an airstrike to happen are low. 5 reasons are detailed below. But if tensions rise, how will this impact currencies?

Why a strike has low chances:

Israeli threats add to pressure on sanctions: The Western countries will want to increase sanctions on Iran, while Russia and China are reluctant to do so. Raising the threat to attack puts pressure for more sanctions and helps the US and its allies.

Israeli government under internal pressure: The J14 social justice movement continues to be very active. The government led by Netanyahu managed to divert attention from the recent protest on October 29th through a mini-escalation in Gaza. Keeping Iran in the headlines also helps move public attention to external enemies and diverts attention from internal economic issues. Also the release of abducted soldier Gilad Shalit has a lot to do with this internal pressure. But will the government go ahead with a strike? Probably not – polls show that only half of the population supports an attack, and that most Israelis are convinced it will trigger a full scale conflict. So it’s better to keep the media busy with threats, but to avoid acting.

No US Approval for an Israeli strike: It is hard to believe that Israel will act on its own in attacking Iran. In the past, the different US administration gave Israel a clear red light regarding such an attack. The US may express concern about Israel doing it on its own, but it also goes to show that there is no US approval. In addition, it is uncertain if a full scale destruction of the Iranian nuclear plans can happen without military assistance from the US.

The US doesn’t need another war: The US economy is still in dire straits, despite some encouraging signs seen lately. Obama just announced a retreat from Iraq. Allocating resources to the same region once again will strain the US budget, just as the super committee is trying to find ways to reduce the deficit, and isn’t having a lot of success. Another war, even if the US participation is limited, will put a lot of pressure on US finances one year before the elections, and when the US is finally showing some signs of recovery.

Iran also prefers to focus on external enemies: The Arab spring has also reached the Islamic Republic. Protests were crushed also in Teheran a few months ago. But now there are tensions within the ruling elite that have been surfacing. Keeping tension high with the US and Israel means less awareness of internal issues. The Iranians certainly want tension and it recently said that they will cause “1 million Israeli casualties with only 4 missiles”. But a full escalation isn’t desired also in Tehran.

In case that tensions continue to mount and of course in case all these assumptions collapse and a strike is carried out, most winners and losers can be clearly marked:

The US dollar and Japanese yen will jump as safe haven currencies: they are the clear safe havens at the moment.
Euro, pound, Aussie, kiwi to crash: these are the clear risk currencies at the moment. The mess in Greece and now in Italy already weighs heavily on the euro and has a strong impact on the others.
The Canadian dollar will drop: While Canada exports oil which will clearly rise in case of a Middle Eastern conflict, the Canadian dollar tends to behave more like a risk currency.
The Swiss franc will swing: uncertainty is lower regarding the franc: on one hand, it has moved to the camp of risk currencies since the huge SNB intervention. But on the other hand, it could switch back to the “safe haven” camp in case of a conflict in the Middle East. This is what happened when the Libyan civil war broke out.

What do you think can happen?

EURUSD Head and Shoulders Forming

EURUSD daily chart head and shoulders pattern in the making.

A head and shoulders pattern looks like a human head with 2 shoulders on either side. The shoulders are lower than the head and are often of equal height to each other. The blue line extending horizontally across is the neckline, which connects the 2 low points.

This is a top reversal pattern, or a bearish signal. Of course, this trade setup is still in the making and is only confirmed if prices follow the direction of the red arrow, breaking below the neckline. The pattern is however void once prices break the high of 1.3484.

You can expect many traders to go short if prices break below the neckline level of around 1.3017.

Source: AsiaPacFinance.com

Worst Hit Market After 2008 Crises

Global Market be it American, European, or even Asian Market – all are experiencing the worst market sell off after mid crises in 2009. Asian markets were also reported badly hit while this report was still underway.

Global Market - be it American or European –all of them are experiencing the worst market sell off after mid crises that hit us hard in 2009. Asian markets were not spared and bore the brunt while this report was still underway.

Financial analysts are contemplating that a major correction could be on way; some are even contemplating recession if the downfall continues for another few days.

Hugh Johnson, of Hugh Johnson Advisors confirmed that what we were witnessing was the erosion, and it lead to an over all loss of confidence - confidence in the economy; confidence in the market; and worst of all confidence in the policy makers.

All the talk about bad days being behind us has hit many on face and now investors are coming to terms with the fact that the pep and stimulus was non-effective and has not worked, and therefore things may be heading back to recession and Italy and Spain could be the next casualty of the Euro zone debt crisis.

Rising uncertainties and reservations over the Euro zone debt catastrophe and a new batch of weak economic data coming from the United States did hurt enough to make a dent in investor confidence, which shook investors on Asian as well as European side of market.

Swiss franc has shown prominent signs of weakening and has falling from a record against the Euro after the Swiss National Bank President made a formal announcement that the central bank won’t is in no mood to exclude any measures to curtail or hold back the currency’s advance.

The yen sank more than 2% against the dollar, again, a blow as it is the biggest drop in almost a year, after the Japanese government stepped in to curb the currency’s recent rise. As concern about the global economic slowdown continues to build, nobody is in the position to predict where we are headed for, and how will all this end or shift gear.

The US dollar ended up showing an upward trend and weekly gains were noticed in the currency against most of its major counterparts as traders and speculators preferred to linger about and around this reserve currency before U.S. and German data that is further likely to add to signals pointing towards the possibility that the global economy could be slowing.

The JPMorgan Chase & Co reported that the implied and kind of disguised instability among currencies of the Group of Seven nations jumped to 12.79%, which looks to be at its highest since March.

Charts reflected a bleak picture after the Euro zone’s blue chip Euro STOXX 50 index fell to two-year lows on Friday, sending another shock wave amongst the traders.

Firms and individuals who are experts at technically analyzing the market movement said the index’s recoiling from the top spot has cost them more than 21%, which has also placed the index firmly into a bear-market arena.

The unemployment rate is not expected to change and is likely to remain unchanged at 9.2%. Automobile bear the brunt of the sell-off on concerns about weaker sales for vehicles. The auto index has taken a plunge to the extent of 4.6%. Banks also lose ground due to the upheaval in this uncertain and down sliding economic environment.

Is There Any Good News?

When we are talking Forex, there is bound to be some good news. After all when was the last time that a smart trader did not make the most of the bad weather? A smart forex trader turns to plan and has always been making money irrespective of economy condition.

No matter what the market condition be worldwide and how the economy of the countries is doing, a good and disciplined Forex trader with a strong trading system will always make money.

Source: Forexoma.com

Market Crashes Investor Confidence

Downslide continues in Asian and European markets. European markets breaking their own record and creating fresh lows. It’s the 8th day in a row that the London market is down with no sign of recovery. Impact is clearly seen in Asia, Germany’s DAX index was also down more than 6% at one point.

Recession in major economies cannot be ruled out if situation does not improve.

The shares that suffered the most in European market comprise Oils and banking/Financial, stocks are directly related with economic growth of the economy.

This downhill rally has indeed created some good buying opportunities for investors as some solid stocks are looking really attractive and can be bought at much lower prices – this is one aspect if at all can be counted as some good news in such harrowing times for those who still have some money to spare to make the most of this opportunity.

US Markets opened to the same tune – big swings, sharp spikes, hap-hazard up and down movements as investors wait for Federal Reserve statement on monetary policy that will be announced at 2:15 p.m. Eastern time, which could do something to get the market out of slump and back on track.

Gold is doing great as investors are shifting base and moving towards safe havens. Gold has become more expensive than Platinum, first time in a very long time.

Currency markets are on a roller coaster ride experiencing unprecedented swings and blows, the currency trading scene looking as shaky as any other.

The Swiss franc reached all-time high against the dollar and the Euro as investors preferred to invest in safe currency rather than take a risk with any other in this volatile market. Yen also remained on the high. Currency market is as eagerly awaiting the announcements from Federal Reserve policy makers as any other.

The U.S. Dollar was trading lower against the Swiss Franc, Euro, and Japanese yen at the time of writing this report. USD/CHF was trading at 0.7510, and the US Dollar Swiss Currency pair is likely to find support at 0.7484, and resistance at 0.7801.

The big daddies of currency trading are in favor of keeping a close watch on Euro shorts versus dollar as well as pound, yen, and franc.

CAD recovered some losses for the first time in last six months dropped below parity with the U.S. currency today, but they are hoping the big announcement will give them a respite and scope to recover.

The Canadian dollar today recovered from a six-month low against its U.S. counterpart cutting down and offsetting some big losses. USD/CAD - may find support at 0.9781 and resistance at 1.0057.

Wishing you a great trading session ahead!

Source: Forexoma.com

Asian and European Markets, Commodities up

Asian, and European Markets, Commodities up - US Market Quiet and Low

Following Stocks Federal Reserve announcement that it will keep interest rates near zero for two more years, commodity, stock, and currency markets reacted.

This much awaited announcement will facilitate liquidity on one hand, but on the other it also indicates the economy will be under performing for an extended period of time to come back on track.

However, the announcement came without frills, and the Federal Reserve in no uncertain terms acknowledged the facts concerning the struggling state of economic affairs and that volatility was likely to continue and the situation was not expected to change overnight.

The investor was running hap hazard for a while, and the US market experienced a dip. Price of US dollar pulled back to support at 9508; A break below this exposes 9457; Near-term resistance is considered at 9551. Dollar prices are likely to be influenced by market sentiment for a while which remains uncertain as of now.

Movements in some currency pairs have been seen because of the data & announcements which have come from individual countries more than anything else. The dollar has gained on Franc after the Swiss National Bank informed that it would be taking positive measures to strengthen franc.

Safe bets like gold, Japanese Yen, and Swiss Franc remained investor’s favorite buys.

It is being widely discussed that while Euro is likely to improve, Yen may weaken as Treasury prices pull back, resulting in improving US yields against their Japanese counterparts. Also, Swiss Franc has enjoyed quite a decent run during past few months and a correction or sharp reverse course cannot be ruled out. Investors should be ready with a strategy and be on a lookout for any such sign.

Bank of England Quarterly Inflation Report announcement today made at 5:30 EDT was considered important because depending on the stance government took, and the impact was likely to be felt on British Pound, GBP/USD pair. After announcement was made British Pound extended losses and Sterling fell.

Gold rally continued. Major Asian and European markets rose Wednesday, but US was quiet and opened low. Nikkei rose; Germany’s DAX rose 2.2%; Britain’s FTSE 100 and France’s CAC40 also closed high.

Commodities and commodity related currencies (oil, industrial metals, and Australian Dollar) – all of them are directly related to economic growth and they all went up.

Source: Forexoma.com

The Secret Of The Increasing Unemployment

There are about 14 million unemployed in the United States while corporations continue to report billions in profits and are sitting on over $ 2 trillion in cash, the largest accumulation not seen in almost fifty years.

Why companies are not hiring though? There are several reasons for having such a poor labor market and weak economic situation in the world’s largest economy.

According to the latest Labor Department report, there are 3,228,000 jobs available. With the high number of unemployed people we currently have, if these positions would not be filled sooner or later and the unemployment rate doesn’t change from 9.1% to 7%, we will also have billions of dollars increase in the legal expenses that unemployment creates.

Where is the problem?

According to the surveys done by Gallup and McKinsey Global Institute, CEOs and small business owners claim that they have difficulties in finding qualified employees with the right skills for the available jobs.

Thanks to technology, employers have become able to maintain and promote their businesses with less number of workers and employees. On the other hand, there is a significant decrease in the number of job opportunities, due to the drop in construction and real estate.

Paying less tax is the other problem. There are so many U.S. companies that are keeping cash in their foreign subsidiaries to avoid paying tax on the money repatriated to the United States. An analyst at JP Morgan analyzed the public documents of U.S. companies abroad and identified 258 companies that have $ 368 billion dollars in cash stationed outside of the United States. 28 out of these 258 companies, hold 90% of their cash out of the USA. Hewlett-Packard company, Dover Corp., Gulfmark Offshore, Inc., Brightpoint Inc. and Arrow Electronics, Inc. are some of these companies. These companies have stated that they do not intend to bring money to the United States, because they will have to pay tax on the money they transfer to USA. Some of the other companies have stated that they have to keep their money outside of USA, because of the necessary business needs.

Insurance companies try to force the government to increase the tax in the United States, because of the unemployment insurance. 16 to 26 states are thinking about raising taxes to pay for the money they have borrowed from the federal government to cover unemployment insurance excess. It would be a rise in state and federal taxes to cover the balance and interest. Who is paying this excessive tax? The Companies!

There are also some discussions about possible changes in the tax laws. Some groups argue that either the taxes have to be increased, or the subsidies and benefits granted to the companies have to be decreased, in order to cover the high deficit and debt levels of the federal government.

The issue of cost per employee is another problem. According to an annual survey by the Kaiser Family Foundation, 3184 randomly selected companies reported an average of 9% increase in health insurance payment compared to 2010 that had a 3% increase only. Although this rise is not adjusted for the inflation yet, it is still high.

This shows that employers are paying more for health insurance of their employees.

Another reason is the decrease in demand, because of the consumers debt and low income, and their worries about their jobs and savings, the crisis in Europe where the market bet that there will be a default, questions about the capitalization of European banks, fear in the bonds of sovereign countries and poor economic growth in the strong countries like Germany and France, and Asia where the second largest economy, China, is fighting inflation, excessive credit and a decline in economic output. And finally Japan which is not getting up as quickly as it should be.

Source: Forexoma.com

Pages