Israel Raises Oil, Again(?)

Yesterday oil speculators found another reason to keep oil prices at their outrageous price. This time the excuse was an Israeli military practice that was reported to be a practice for bombing Iran. This bubble will not last too long, be warned.

The oil price, financial and automotive sector trouble, and rumors about profit warning in Merril Lynch made the Dow close under the 12,000 point mark, the Nasdaq index went down over 2%, and in general, this options expiration day was very negative.

The dollar took another dive today (Forex Tracer made $390, Forex Funnel made about $100) against most major currencies. The USD/CAD rate went up to 1.0170, and that was the only rise of the dollar against a major currency.

Have a great weekend,
Nadav

nadavs

Less Oil, More Unemployment

China, once again, sets the tone in the global economy. Yesterday they announced that they're going to raise oil caps, and as a result oil went down about $5 per barrel. This move helped Wall Street rise ahead of tomorrow's option expiration.

Unemployment, on the other hand, seems to be on the rise. 381 thousand new initial claims for unemployment have been filed, versus the expected 375 thousand rise. This number brings once again the fear of recession. The dollar responded with flat trading throughout the day, and Forex Funnel used it wisely.

Finally, tomorrow is the quarterly options expiration day on Wall Street. It is also the rebalancing day for some S&P indices. Watch out for high trading volumes and stocks that get "stuck" on a certain price.

Good luck with expiration,
Nadav

nadavs

Slick Excuses

It's excuses time at Wall Street. Yesterday oil nearly hit $140 per barrel, but then retreated. No one knew why that happened, so people invented a new excuse: options expiration. Options may drag oil to a round number, like $140, but there is also some economic reason, and oil went down to about $135.

Today's data includes the PPI, an important gauge of inflation. PPI is more volatile than CPI, but eventually wholesalers affect retailers, which eventually affect consumers. There is no way to escape it. Rising oil and food prices affect the entire economy, which in turn affects the forex market.

EUR/USD was unstable yesterday, rising and falling with no clear patterns. Forex Tracer still managed to pull a small profit out of that, but not as big as usual.

Have a great day,
Nadav

nadavs

The Week Ahead: Third Week of June

The week opened with a sharp rise on the EUR/USD (Forex Tracer decided to take a short position and eventually profited). The dollar went down against most major currencies.

The week ahead has many interesting reports, and an interesting one is the PPI, Producer Price Index. Usually this data comes before the CPI, and it is a good indicator for it. This month's PPI is expected to rise 1%, a huge increase compared to last month's 0.2%. This is a bad sign for the economy, and it usually signals that the CPI will also rise beyond expectations.

Since this is the third week of the month, this Friday is the day when options on Wall Street expire. This means mostly boring and flat trading for the day.

Good luck trading this week,
Nadav

nadavs

Good for Forex, Good for Stocks

Yesterday's CPI figure taught us two important lessons. The first one is that good sales numbers usually come with a higher inflation. The other lesson is that every market interprets data differently. The two markets in this story are the forex market and the stock market.

First, the expected CPI was +0.5%, which is not a small increase. However, the real CPI came out to be +0.6%. Usually, such a small difference does not make such a big impact. However, due to the upcoming Fed meeting, this number is very important.

The stock market reacted with joy to the fact that the Fed is not going to raise the interest rates, as many feared. The S&P index went up by 1.5%, the Dow jumped 1.37%, and the Nasdaq surged over 2%, probably do to the Yahoo-Google agreement.

On the other hand, the dollar rose against all major currencies. The reason for this rise is the completely eliminated risk that the Fed is going to lower interest rates. Inflation is too high, so the Fed can't lower the interest rate and boost inflation. Forex Tracer managed to pull out two quick trades out of this fall in EUR/USD.

As you can see, different market interpret the same data differently. As a trader, you need to know which way to trade on different news, or not trade at all during that times. Know your market and know your pairs.

Have a great weekend,
Nadav

nadavs

Jobs, Oil, and the Dollar

After thinking for a while, I decided to let go of the forex terms right now and focus more on current events and market commentary. On days with not many events, like Sundays, I will continue to explain interesting and important forex terms.

Yesterday could be called Friday the 13, but it came a week earlier. The job report turned out to be extremely negative: 49,000 jobs were taken out of the market. The worse part is the unemployment figure which jumped to 5.5% from 5%, the biggest rise in 22 years. This figure means only one thing: the US is headed or already in a recession.

As a result, the US dollar and Wall Street took a dive yesterday. The EUR/USD pair, which nearly hit a bottom of 1.5360, simply soared to a rate of 1.5769 to end the week. A forex trading system I am testing right now, Forex Tracer, took advantage of this huge leap and created nearly $1000 in about 5:30 hours from an account of $3000.

Wall Street wasn't too impressed with the employment figures as well and sent the Dow Jones index to lose over 400 points near the end. At the close, the Dow went down "only" 394.64 points, a 3.13% decrease. The S&P 500 sank 3.09%.

The bad employment report also signals that a rate cut is likely. This signal sent the oil to one of its highest one day rises: over 7% in one day. A barrel of oil is currently priced at $138.39.

Let's see what Monday brings.
Nadav

nadavs