Forex Managed Account Secure

EM ASIA FX-Rupiah leads Asia FX slides amid liquidity woes

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 30 Aug 2012 10:42:00 +0000

cepe (100 rupiahs) (Photo credit: andiona)

 * Rupiah dealt prices weaker than indicative prices -dealers
    * Philippine peso turns up on stop-loss dlr selling
    * Exporters support Taiwan dlr, won

 (Adds text, updates prices)
    By Jongwoo Cheon
    SINGAPORE, Aug 30 (Reuters) - The Indonesian rupiah fell on
Thursday amid signs of deteriorating liquidity, leading slides
among emerging Asian currencies as investors toned down
expectations for further monetary easing by the Federal Reserve
next month.
    Actual trades in the rupiah's prices were lower
than indicated on exchange pages, dealers said, citing month-end
corporate dollar demand.
    The Malaysian ringgit slid as investors squared
bullish bets before a holiday. The Thai baht eased as
domestic oil companies purchased dollars.
    Investors were also reluctant to take fresh bets before a
speech by Federal Reserve Chairman Ben Bernanke on Friday when
he may provide clues about whether the Fed will embark on
another asset buying programme, or quantitative easing.
    "Market positions were for some kind of easing, but the risk
now is disappointment of no action," said a senior Malaysian
bank dealer in Kuala Lumpur.
    Recent data released this month pointed to a mild U.S.
recovery, leading to the scaling back of hopes that the Fed may
take further stimulus.
    The dealer said, however, emerging Asian currencies are
unlikely to fall much further as long as expectations stay
intact for the European Central Bank's measures to ease the debt
crisis.
  "If the ECB comes with good news in two weeks, Asian FX will
rush to catch up," said the dealer.
    He added that while the euro has gained since ECB President
Mario Draghi pledged steps to save the euro zone on July 26,
regional units have not benefited that much, so even if the ECB
disappoints, the impact on emerging Asian currencies may not be
that severe.
    The euro has risen more than 3 percent to the dollar since
Draghi's pledge while many of emerging Asian currencies have
eased amid worries about a global economic slowdown, according
to Thomson Reuters data.
    On Thursday, the euro edged up, limiting the downside of
regional units after China's Premier Wen Jiabao was quoted as
saying Beijing is willing to buy European Union government bonds
if it can fully assess the risks involved. 
   The Philippine peso turned higher on stop-loss
dollar selling after firmer-than-expected annual growth, even
though the economy cooled much more sharply than expected in the
second quarter from the previous three months. 
    The Taiwan dollar rose on exporters' demand for
month-end settlements in thin trading, while the South Korean
won recovered most of initial losses on such
corporate flows.
            
    RUPIAH
    Indicative prices showed the rupiah lost up to 0.4 percent
to 9,580 against the dollar, but actual prices were weaker with
9,590 traded, dealers said, pointing to less liquidity in the
market.
    Actual traded prices for the rupiah had been in line with
indicative prices since early July amid improving liquidity.
    The central bank was spotted selling dollars below traded
prices through state-run banks, dealers said.
    "It seems like the central bank is not that keen about
intervening now, but it wants 9,600 to be seen as a strong cap,"
said a Jakarta-based dealer, adding the level is seen as
psychologically important.
    The rupiah's outlook remains murky as a change in central
bank rules on foreign currency hedging earlier this month has
made it easier for investors to smoothly exit their bond
holdings. 
    
    RINGGIT
    The ringgit weakened past its 100-day moving average at
3.1287 per dollar as interbank speculators covered short dollar
positions ahead of National Day on Friday which is a holiday.
    The local unit is seen having a support at 3.1360, a low hit
on Aug. 17.
    
    WON
    The won eased on importers' dollar demand and as Seoul
shares lost ground on selling by foreign investors.
    But South Korean exporters bought the local unit for
month-end settlements and some offshore funds joined the bids,
dealers said.
    "The won may weaken a bit more once exporters complete
month-end deals. But it will be stuck in a tight range as
everybody wants to see the Jackson Hole meeting first," said a
South Korean bank dealer in Seoul.
    
    PHILIPPINE PESO
    The Philippine peso turned higher as traders scrambled to
dump dollar holdings after data showing annual growth in the
second quarter was higher than expectations.
    Initially, the peso weakened to 42.430 per dollar as
investors scaled back hopes for more stimulus by the Fed but the
data changed its direction, dealers said.
    But investors hesitated to chase the local currency before
the Jackson Hole meeting and as the data was not uniformly
encouraging. Compared to the previous quarter, the second
quarter growth slowed much more sharply than expected on slowing
exports.
    "I would expect the dollar to be supported ahead of
Bernanke's speech as traders keep cautious," said a European
bank dealer in Manila.
    
  CURRENCIES VS U.S. DOLLAR   
  Change on the day at 0720 GMT
  Currency    Latest bid   Previous day    Pct Move
  Japan yen        78.64          78.70       +0.08
  Sing dlr        1.2532         1.2540       +0.06
  Taiwan dlr      29.943         29.981       +0.13
  Korean won     1133.85        1133.40       -0.04
  Baht             31.38          31.34       -0.14
  Peso             42.29          42.35       +0.14
  Rupiah         9560.00        9540.00       -0.21
  Rupee            55.66          55.63       -0.06
  Ringgit         3.1270         3.1230       -0.13
  Yuan            6.3507         6.3517       +0.02
 
  Change so far in 2012
  Currency    Latest bid  End prev year    Pct Move
  Japan yen        78.64          76.92       -2.19
  Sing dlr        1.2532         1.2969       +3.49
  Taiwan dlr      29.943         30.290       +1.16
  Korean won     1133.85        1151.80       +1.58
  Baht             31.38          31.55       +0.54
  Peso             42.29          43.84       +3.68
  Rupiah         9560.00        9060.00       -5.23
  Rupee            55.66          53.08       -4.64
  Ringgit         3.1270         3.1685       +1.33
  Yuan            6.3507         6.2940       -0.89
 (Additional reporting by Reuters FX Analyst Krishna Kumar in
SYDNEY, Yena Park in SEOUL and IFR Markets' Catherine Tan,
Editing by Edwina Gibbs )
 
   
 For the new Reuters scrolling global forex service please click
 
 
    
   Double click on brackets for following items: 
   Asian currencies     Asian currencies in Asia 
   Malaysian ringgit   Indonesian rupiah  
   Singapore dollar    Thai baht          
   Taiwan dollar       Hong Kong dollar   
   Philippine peso      Korean won         
   SPEED GUIDES  
   Exotic currencies     Non-G7 currencies  
   RELATED NEWS AND OTHER TOPICS 
   All Singapore news    All Malaysian news 
   Thailand Indonesia Hong Kong Taiwan 
   Philippines Korea All emerging markets 
   All foreign exchange news    
   Foreign exchange technical analysis    [FRX&INSI]

 (Editing by Kim Coghill)

What Traders Need to Know about Forex Managed Accounts before Using it

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 30 Aug 2012 03:50:00 +0000

When comes to forex trading accounts, traders are provided with various choices; they are accessible to the less demanding forex mini accounts that allow traders to trade mini lots and they are also allowed to open standard forex account, with which, traders are able to trade with standard lot. With the popularity of currency trading, more and more expert traders are out there in the forex market to help novice traders or busy traders manage their trades. Thus, forex managed accounts become prevailing among traders for its typical features and distinguishing advantages.

What makes the popularity of forex managed accounts in currency trading?

We know that making good money in currency trading is not as easy as it seems to. The intricate and complicated way of trading in the financial market always makes novice traders confused. They do not know when the best time is to trade and how the price will move in the near future; they tend to be at a loss of what types of analysis to utilize, what kinds of data to refer to and what a reliable trading signal is. Moreover, choosing the most reliable forex trading brokers and forex trading platforms is not an easy thing to do. All these increase the possibility of losing money. Furthermore, traders need to overcome their emotional influence to their decision making when doing currency trading. To those who are in the above predicament, the forex managed accounts are an exceptionally alluring offer; all the problems that a novice traders can come across can be solved by opening a forex managed account. Traders are able to rely on it to do currency trading in the forex market; thus, it becomes increasingly popular among traders.

What is a forex managed account?

A forex managed account is an account type that allows a professional manager to trade and manage trader’s capital on behalf of the trader for a salary or a certain proportion of the profits.

What are the benefits of using forex managed accounts in currency trading?

The popularity of the forex managed account is not incidental. Most traders who use forex managed accounts are attracted by the distinguishing advantages of using forex managed accounts in trading. Before opening such an account, traders need to figure out what benefits they are able to enjoy first.

1. Help make money without taking much of your time

According to survey, a great number of traders who choose to use forex managed accounts are those who are quite busy every day. They do not have enough time to invest in the forex market yet they possess great amount of money that can be invested in currency trading. They know that trading in the currency market provides them with great profit potential. Thus, an expert trader who can trade in the forex market on their behalf can meet their needs. Expert traders can help them watch the market movements, find good trading opportunities and make profitable trades. The most important thing is that they are quite experienced; this increases the possibility of magnifying their account greatly. Thus, using forex managed accounts can help busy traders capture profits from the complicated forex market without spending much time in trading.

2. Do not need to learn trading in the complicated market
A great number of traders want to enjoy the great profit potential of trading in the forex market only to find that they get cold feet when they find that trading in the forex market is really complicated and difficult. Faced with all the things they need to learn, such as the ways to do market analysis, the different forex trading strategies that can be used under different market conditions etc., they tend to be at a loss of what to do. Forex managed accounts is a good way out for such traders for professional traders can help them to trade in the complicated forex market with higher profit potential.

Forexsafe.

[26 July 2012 | New FxTrade Info] Hedge Arbitrage System

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 26 Jul 2012 01:07:00 +0000

FOREXSAFE INVESTMENT MANAGEMENT

Since- 22 February 2012

Detailed Pairs Info

Alltime used pairs:
22 (audcadfx, audchffx, audjpyfx, audnzdfx, audusdfx, cadjpyfx, chfjpyfx, euraudfx, eurcadfx, eurjpyfx, eurnzdfx, eurusdfx, gbpaudfx, gbpcadfx, gbpchffx, gbpjpyfx, gbpnzdfx, gbpusdfx, nzdjpyfx, nzdusdfx, usdcadfx, usdjpyfx)

Alltime best pair:
eurjpyfx with $ 9334.41 (732 pips)

Alltime worst pair:
eurcadfx with $ -433.64 (4 pips)

Last month used pairs:
16 (audcadfx, audchffx, audjpyfx, audusdfx, cadjpyfx, euraudfx, eurjpyfx, eurnzdfx, eurusdfx, gbpaudfx, gbpchffx, gbpjpyfx, gbpnzdfx, gbpusdfx, nzdusdfx, usdcadfx)

Last month best pair:
gbpaudfx with $ 1140.24 (113 pips)

Last month worst pair:
audjpyfx with $ -639.83 (-34 pips)

Current month used pairs:
15 (audchffx, audjpyfx, audnzdfx, audusdfx, chfjpyfx, euraudfx, eurcadfx, eurjpyfx, eurnzdfx, eurusdfx, gbpaudfx, gbpcadfx, gbpchffx, gbpjpyfx, gbpnzdfx)

Current month best pair:
eurusdfx with $ 3566.16 (168 pips)

Current month worst pair:
gbpcadfx with $ -383.97 (-42 pips)

Link Detail : http://www.forexsafe.com/p/hedge-abitrage-live-now.html

Description :

Conservative strategy on arbitrage forex hedging on 22 pairs audcadfx, audchffx, audjpyfx, audnzdfx, audusdfx, cadjpyfx, chfjpyfx, euraudfx, eurcadfx, eurjpyfx, eurnzdfx, eurusdfx, gbpaudfx, gbpcadfx, gbpchffx, gbpjpyfx, gbpnzdfx, gbpusdfx, nzdjpyfx, nzdusdfx, usdcadfx, usdjpyfx that brings steady return, the account statement has very low Drawdown (DD).

Annual Projection Return : > 500%

Minimum Requerements :

Minimum Investment : USD 5000

Account Type : Standard/Micro/Mini Account

Leverage : 1:100 / 1:200

Broker : Any Metatrader 4 Brokerage

Performance :

[2 July 2012 | FxTrade Info] Hedge Arbitrage System

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 02 Jul 2012 02:56:00 +0000

Detailed Pairs Info

Alltime best pair:
eurjpyfx with $ 6244.55 (620 pips)

Alltime worst pair:
eurcadfx with $ -576.86 (-12 pips)

Last month used pairs:
16 (audcadfx, audchffx, audjpyfx, audusdfx, cadjpyfx, euraudfx, eurjpyfx, eurnzdfx, eurusdfx, gbpaudfx, gbpchffx, gbpjpyfx, gbpnzdfx, gbpusdfx, nzdusdfx, usdcadfx)

Last month best pair:
gbpaudfx with $ 1140.24 (113 pips)

Last month worst pair:
audjpyfx with $ -639.83 (-34 pips)

Link Detail : http://www.forexsafe.com/p/hedge-abitrage-live-now.html

Description :

Annual Projection Return : > 500%

Minimum Requerements :

Minimum Investment : USD 5000

Account Type : Standard/Micro/Mini Account

Leverage : 1:100 / 1:200

Broker : Any Metatrader 4 Brokerage

Performance :

Growth alongside austerity: Europe’s impossible dream

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 24 May 2012 11:14:00 +0000

Impossible Dream (Photo credit: Wikipedia)

Probably not by accident, yesterday’s Brussels dinner party of EU leaders ended too late for the European press to pass judgement. There was a weight of expectations, which was largely misplaced given this was an informal meeting to pave the way for the main summit of leaders at the end of next month. The same differences remain on common bonds and the financial transaction tax (UK opposing) and more subtle differences on the growth agenda. Of course, everyone would like more growth but delivering it alongside a program of continued austerity is naturally a different matter and, for now, it remains the impossible dream for European leaders and a balance which Europe (and indeed others) has yet to achieve. In the FX markets, after the push lower through the 1.26 level into the European close yesterday, EUR/USD has held steady overnight, but activity elsewhere shows that dollar-dominance remains the underlying theme.

Commentary

More European bond-bifurcation. Yet another extraordinary day of bond-bifurcation in Europe yesterday with yields of the likes of Germany, the UK, Sweden and the Netherlands all registering new record lows while those of the fiscal miscreants in the south continued to climb. In Germany, the 10yr yield fell to just 1.39% while in the UK it touched 1.76%. Germany issued a zero coupon 5yr Bund on Tuesday. Soon, the UK might be able to do the same if funds continue to poor into London – the 5yr gilt yield is now just 0.75%. Meanwhile, the spread between southern and northern European bond markets continues to widen – the IT/GER 10yr and SP/GER 10yr spreads were out by another 15bp to 422bp and 470bp respectively. There is no reason to think that this leakage of capital and wealth from Europe’s south to the north will not continue. Indeed, there are signs that it is quietly accelerating. As such, we may well find that European bond yields soon fall to levels deemed unimaginable not long ago. The 10yr Bund yield could soon be below 1.0%, as could that of the 10yr Gilt.

A horrible mess in Japan. It remains the case that Japan’s economic fundamentals look extremely challenging. Firstly, the public sector finances are a train-wreck. By the end of the current year, gross government debt in Japan is projected to reach an extraordinary 239% of GDP. The sharply upward-sloping trajectory of government debt will not change any time soon – the budget deficit has averaged 9% of GDP over the past four years and there are no signs that Japan’s current government is in any hurry to reverse the spending largesse. Currently, tax revenues only cover one-half of spending, the rest is borrowed. To put this borrowing binge into perspective, the gross government-financing task this year is expected to reach 59% of GDP, or around USD 3.3trln (roughly the size of the German economy). Secondly, the once invincible Japanese trade sector is unravelling, due to a huge hit to competitiveness because of a significant appreciation in the real effective exchange rate, rising energy prices and a significant loss of productive capacity after last year’s tragic earthquake and tsunami. Exports over the past 15 months have been stagnant, while the import bill has been climbing steadily. Japan has recorded an adjusted trade deficit in every month since March 2011; the cumulative trade deficit over that time has been around USD 66bn, or a little more than 1% of GDP. Given these pressures on the trade side, Japan’s current account surplus is diminishing rapidly. Relative to GDP, it fell to 1.7% at the end of Q1, whereas at the end of 2007 it was just under 5%. Finally, the economy is still extremely weak. Notwithstanding the slight bounce in output in recent quarters as Japan attempts to rebuild, nominal GDP is still 8% below the peak registered five years ago. Moreover Japan has, at the same time, a population that is both ageing and declining, never a helpful combination for growth. Against the backdrop of these dreadful domestic fundamentals it is mystery to most commentators why the Japanese yen is not a lot weaker. Indeed, the yen’s obituary has been written many times over the past decade. What many have apparently missed is that Japan remains the world’s largest net creditor, a mantle it has now held for 21 years. Net assets held by the private and public sector in Japan totalled JPY 253trln at the end of last year, or around USD 3.2trln. Also, in part because Japan’s banks are well-capitalised, both foreign and domestic investors are content to park their cash there, especially over the last couple of years during which many have been frightened by Europe’s worsening sovereign debt and banking crisis. Based purely on long-term fundamentals, the Japanese yen looks decidedly vulnerable. The one major saving grace has been the fabulous net-creditor position accrued over the last three decades. If this exalted status is challenged over coming years (probably because of deteriorating domestic fundamentals), then this ought to weigh on the yen. However, the yen bears need to be conscious that they have been wrong many times before. As always, currencies are a relative game, and it can hardly be said that the fundamentals for the other major reserve currencies looks that special either.

Even lower lows for the Aussie. Australia might be the nicest place to live on the planet (OECD Your Better Life Index), but these days the currency is really suffering. Yesterday, the AUD dropped to a 6mth low of 0.9690, a loss of more than 10% in less than three months. In that time the Australian currency has been comfortably the worst-performing of the majors. It has even underperformed the battered euro, and by nearly 5%. The current month has been especially problematic, with the Aussie down by 7% already. For those like ourselves who have been consistently bearish on the Aussie over that time, the demise is no surprise. Appetite for risk around the globe has been scuppered by both Europe’s slow-motion sovereign debt implosion and China’s much weaker growth picture, with fall in PMI data overnight adding to this perception. Domestically, the economy is looking none too flash either, with the non-mining economy in recession, house prices declining and the consumer saving like there is no tomorrow. Interest rate differentials, which in the past were so supportive for the Aussie, have collapsed. Perpetuating the AUD’s slide this month has been a sharp reversal in positioning by traders. In addition, many real money managers down under, who had become accustomed to a strong currency, have been madly hedging, again contributing to the downside pressure on the currency. Finally, after a protracted arm-wrestle, the bears have a really firm grip on the Aussie. It may well be a while before they let go.

Chinese Economic Reform: How the U.S. Should Prepare

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 23 Apr 2012 15:48:00 +0000

Shanghai Pudong Skyline (Photo credit: Wikipedia)

The U.S. government suffers from understandable but harmful confusion concerning Chinese economic reform. It is correctly understood that market reforms have been most often implemented gradually. However, that slowness is misperceived to be moderation. In fact, when market reforms have occurred, they have been clear and powerful.

This confusion has mattered little in the past nine years because the current Chinese government is hostile toward the market. The political transition that starts in the fall, however, might change things. The natural expectation after an extended period of statism is for any market reforms to be mild. However, if reforms do occur, both history and the existing policy mix suggest that they are likely to be dramatic. The branches of the U.S. government that deal with the People’s Republic of China (PRC) should prepare for this possibility by pushing Beijing for detailed plans of reforms that would actually matter.

Reform Chatter

It is no accident that, after years of stagnation,[1] early 2012 has seen a rush of Chinese economic reform proposals. The pro-state government led by Hu Jintao and Wen Jiabao is on its way out, to be replaced starting in the fall by unknown quantities like Xi Jinping. The reform camp, led typically by the People’s Bank, correctly sees an opportunity.

The person doing the most talking is Premier Wen himself, in particular calling for an end to state monopolization of key sectors such as banking. However, the premier lacks credibility. It was his predecessor, Zhu Rongji, who tried to shrink the state sector, while the state giants that Wen now criticizes re-emerged and prospered under his ostensible leadership.[2]

Elsewhere, the People’s Bank has been inching forward with external financial changes, including widening the yuan’s formal trading band against the dollar and more uses of the yuan in investment. The central bank is selling the nationalist line that a global power must have a global currency while minimizing the fact that a truly global currency requires money to move freely in and out of the PRC—i.e., an open capital account. This would diminish the government’s control of interest rates, a dramatic shift.

Perhaps most important, Wen’s likely successor as premier, Li Keqiang, linked himself to a document co-authored by the World Bank and the Development Research Center, an arm of China’s cabinet,[3]that calls for resurrecting multiple, fundamental reforms that have fallen by the wayside. It would be far too ambitious if the current government were staying in power, but it may not be if the incoming government is less statist.

Reform Pattern

Skepticism concerning the prospects for true market reform is entirely justified. The principal beneficiaries of a decade of statism have been large national firms and elite Communist Party cadres and their families, known as princelings. They constitute a daunting hurdle to introducing more competition and encourage a sense that, if reform occurs, it will be very modest. While sensible, this view cuts against both the pattern of Chinese policy changes and current conditions.

The economic pattern over the past 30-plus years shows fundamental shifts, positive and negative. The granting of limited property rights to farmers in the late 1970s was a revolutionary change. The Tiananmen-driven economic recentralization was brief but stark. Deng Xiaoping’s famous southern tour in 1992 was neither modest nor cautious. Deng’s death and the ascent of Zhu to the premiership in 1997–1998 triggered an attack on the state sector and a much more serious approach to World Trade Organization (WTO) accession.

When the current government took office, concessions made to win WTO membership were still being implemented, but all new policy moved sharply away from the market. The idea of state firms as national champions was fully embraced, lending by state banks moved considerably higher in sustained fashion, and—crucially—an imbalance between investment and consumption appeared.[4] Market reform has been almost completely absent since. History argues for all or nothing: substantial market reform or primacy of the state.

Current conditions argue the same. The various ills plaguing the economy have become too entrenched to be addressed by half-measures. Income inequality could be addressed by severe populism—not market reform but nothing mild, either. Impressive talk will not curb state monopoly power or liberalize interest rates; these require a decisive turn away from the state to the market.

Reform Response

The U.S. was blindsided by the shift, starting as early as 2002, from a Chinese government committed to market reform to one staunchly opposed. After years of fruitless dialogue, it now may be that the U.S. is unprepared for a positive change. Such a change would offer immense opportunities; once clearly underway, it would also call for incentives from the American side. These incentives could include presidential renunciation of sanctions based on exchange rates and an improved investment environment for Chinese firms in the U.S.

Lack of genuine competition is perhaps the most fundamental problem, so one measure to watch is the share of truly private investment in key sectors, such as energy and telecom. An indication of false reform would be if restructured but still state-controlled firms or state firms from outside sectors are portrayed as increasing competition and breaking monopolies.

Recommendations

The safe bet is that no Chinese change will materialize. But if one does materialize, it is unlikely to be subtle. The U.S. should prepare for possible sharp reform in the following fashion:

The U.S. Trade Representative and the Department of Commerce should request a specific calendar for the announced “de-monopolization” of major sectors. They should demand details regarding timing, market shares, and eligible participants. Domestic financial liberalization is another major possibility and could take multiple forms. Interest rates could be directly liberalized, of course, but permitting foreign capital to participate fully in the interbank market or money to leave the country more freely would greatly enhance the influence of market forces, as well. Inauthentic financial reform would be allowing people to do more things with their money they have no interest in, such as holding RMB overseas.
The Department of the Treasury should request timetables for interest rate and capital account liberalization. Good American policy toward the PRC also requires the business community to contribute. There are other indicators that may turn out to be crucial, including ones that are quite obscure at present. Because any market reform will be plain, American companies and business organizations do not need to read tea leaves. But the faster they recognize any authentic change and adjust their strategies accordingly, the better for both the U.S. and the bilateral relationship.

Prepare for the Worst—and the Best

The U.S. is all too ready to bang heads with another statist Chinese regime. History says that if there is reform, it will be powerful rather than modest. The Administration, Congress, and the business community should prepare for that possibility, too.

Derek Scissors, PhD, is Senior Research Fellow in Asia Economic Policy in the Asian Studies Center at The Heritage Foundation.

Doubts About Economy Rise; Treasurys, Too

noreply@blogger.com (mql4indonesia@gmail.com) — Fri, 20 Apr 2012 04:45:00 +0000

Treasury Jordan (Photo credit: Hobbie2)

Treasury prices rose Thursday after a batch of economic data raised doubts about the pace of economic recovery in the U.S.

The government said that applications for unemployment benefits remain elevated compared to the recent average, a troubling sign for an economy that still needs jobs badly.

The Federal Reserve Bank of Philadelphia said its index of regional manufacturing conditions dropped sharply. And the National Association of Realtors said home prices dropped more than expected last month.

Pessimistic investors sold stocks and sought out ultra-safe investments such as Treasurys. The price of the 10-year Treasury note rose 6 cents for every $100 invested, pushing its yield down to 1.97 percent from 1.98 percent late Wednesday.

The yield on the two-year note was unchanged at 0.27 percent. The 30-year bond rose 9.4 cents and its yield fell to 3.12 percent from 3.13 percent.

The three-month T-bill paid a yield of 0.07 percent.

Euro Crisis Inspires Fresh Worries Of Threats To Global Economy

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 19 Apr 2012 01:55:00 +0000

March 25 - Greece Independence Day (Photo credit: Aster-oid)

Europe's economy is like a patient stuck in a hospital run by quack doctors who see sickness as a form of moral failing, and leeches as the preferable cure. The only hope now is that Europe either manages a miraculous recovery or develops a case of something so inarguably lethal that real doctors come running with effective medicine.

Will Europe and its beleaguered currency, the euro, get out of this crisis in one piece? That question is commanding renewed attention as financial markets demand higher rates of interest on loans to the debt-saturated nations at the center of concern, Spain and Italy, thus elevating the prospect that their governments might eventually default. Maybe the euro will endure, and maybe it won't. In any event, Europe seems irretrievably bound for years of retrenchment, diminished living standards and social strife.

"We're going into a long period of stagnation in Europe, with terrible problems that will emerge as a result," declared the former Austrian chancellor Alfred Gusenbauer, speaking Tuesday at Brown University during a conference on the future of the euro, a proceeding that felt much like an autopsy on a body that never should have been born.

"The crisis found us unprepared," said former Italian Prime Minister Romano Prodi. "How to get out of this? It will be extremely difficult."
Continued anxiety about the fate of the euro is bad news not just for Europe, but for the globe as a whole -- and not least for the United States, whose tenuous recovery from the Great Recession is feeling increasingly vulnerable. Europe constitutes the world's largest marketplace. When its people and companies are hunkered down, unable to spend and invest, the consequences ripple everywhere, including to the American factory floor, where a slowing of production is amplifying broader economic worries.

But here's the most frustrating part of Europe's unrelenting crisis and the drag it is imposing on multiple shores: It is both self-inflicted and fixable.

The mantra at Tuesday's conference, held by the Watson Institute for International Studies, was that Europe's problems are not financial in nature, but essentially political. If the members of the eurozone could simply agree to arm their impotent central bank with the authority to sell bonds backed by the full faith and credit of member countries, the crisis would ease. The central bank could backstop the weakest countries in the eurozone and soothe financial markets now fretting over potential sovereign default scenarios. Borrowing costs would come back down, making it easier for the most indebted eurozone member nations to pay their bills.

This, unfortunately, is much like saying that America's economic problems can be easily fixed (which happens to be correct), so long as you ignore the political reality. If Americans could merely agree to lift our tax rates back to the level of the Reagan years, invest the resulting revenues in productive pursuits like education and infrastructure, and then squeeze some savings out of a health care system designed primarily to succor oligopolistic insurance companies, our debt problems would disappear. All true -- and all as politically achievable as forcing Americans to embrace a strict vegan diet.

In Europe's case, the impediments to a proper economic solution stem from the peculiar structure of the eurozone, a currency union without an accompanying political union. Seventeen individual states all share the same money, but still chart their own budgetary courses. In the first decade of the euro, which began trading in 1999, financial markets acted as if the shared currency rendered equivalent the risks of lending to Germany and Greece. The currency masked the fundamental differences that distinguished the fiscal soundness of individual member states, giving less-disciplined governments access to too much credit.

"It was an accident waiting to happen," said Prodi.

Now that the accident is here, with Mediterranean states confronting untenable debts, a lack of political concurrence is preventing the obvious solution: a real central bank that can print euros by issuing bonds backed by all members.

Germany refuses to entertain this idea, disgusted by the prospect of putting its credit on the line for the sake of aiding weaker eurozone member states. This stance is built on a peculiarly German terror of possible inflation -- an outcome that would be wonderful compared to the current alternatives -- and a moralistic desire to punish the profligate. In the conversation that rules Berlin, hard-working, thrifty Germans cannot be expected to finance endless revelry for free-spending Spaniards, Greeks, Portuguese and Italians.

This central notion is responsible for the austerity that Germany has imposed on member states as a condition of the myriad eurozone bailouts that have so far prevented collapse. But this is where we get back to the leeches: Austerity also ensures that Europe cannot grow robustly, enhancing the debt burdens of weaker states.

"Europe is prescribing a medicine that makes the disease worse," Gusenbauer said.

This is now so apparent that even the International Monetary Fund -- traditionally a stalwart advocate of austerity in the face of budget crises, from Indonesia to Argentina -- now warns that Europe has gone too far.

Moreover, austerity imposed as moral curative misses the origins of the crisis. Most of the debtor governments ensnared in the euro mess were not living beyond their means before the crisis. They are now facing impossible debt burdens because they bailed out private banks that lent recklessly. The German refusal to allow euro bonds and the prevailing wave of fiscal austerity is sticking ordinary Europeans with the costs of addressing the sins of wayward banks.

Greece has come to encapsulate the whole euro story in the conventional narrative, but this is bogus. Greece is the only case in which profligacy explains the mess. The Greeks wasted their money on unbridled government spending, corruption and tax avoidance. The rest of the eurozone landed in peril only after the red ink of private banks washed up on public balance sheets. Indeed, Ireland had much smaller debts than Germany as a percentage of its overall economy before the government rescued the banking system. So did Spain.

In the United States, a similarly phony morality play is at work as elites wander around sagely discussing the need for the populace to commence living within its means. American leaders cite fiscal distress as they dismantle many of the institutions that serve regular people, fromcommunity colleges to the social safety net. But we did not get into hock by bingeing on classrooms and food stamps. We got here via extravagant tax cuts for the wealthiest people and disastrous wars in Iraq and Afghanistan. Now, in the logic of the moment, the people who rely upon unemployment checks are going to have to pay to square the books.

In the United States, austerity is nothing more than the product of political dysfunction, an inability among people in Washington to acknowledge simple arithmetic: We need to raise taxes to pay for basic government services.

In Europe, austerity may be the sacrifice required to enable Germans to make peace with transferring some of their prodigious wealth to less-affluent neighbors.

If this is the price established by the political marketplace, it may be better than the status quo -- a long slide toward sovereign default big enough to bring down the euro and usher in another global financial crisis. Yet it is also madness, as if the patient neglected by the hospital is best served by chopping off a finger or two to ensure that the doctors finally see his case as requiring emergency intervention.

IMF says faster growth in US, progress in Europe bolsters prospects for global economy

noreply@blogger.com (mql4indonesia@gmail.com) — Wed, 18 Apr 2012 02:17:00 +0000

Français : Christine Lagarde, directrice générale du Fonds monétaire international (FMI) English: Christine Lagarde, Managing Director, International Monetary Fund (Photo credit: Wikipedia)

WASHINGTON — The International Monetary Fund is more optimistic about the global economy after seeing faster U.S. growth and a coordinated effort in Europe to address its debt crisis.

The global lending organization said Tuesday that the U.S. economy should expand 2.1 percent this year. Europe will likely shrink 0.3 percent and the world economy should grow 3.5 percent. All three of the IMF’s estimates are slightly better than its January forecasts.

While short-term spending cuts are necessary, European governments should focus on long-term deficit reduction plans that don’t kill off economic growth, the IMF said.

The group praised European leaders for bulking up its bailout fund and taking other steps to address the crisis. The 17 countries that use the euro currency should emerge from a shallow recession later this year, the IMF said.

The IMF said the crisis continues to loom as the biggest threat to the global economy.

“With the passing of the (European) crisis, and some good news about the U.S. economy, some optimism has returned,” IMF chief economist Olivier Blanchard said. “It should remain tempered.”

The IMF’s World Economic Outlook report comes as the 187-nation organization and its sister lending institution, the World Bank, prepare to hold their spring meetings in Washington this week.

The report represents improvement from January, when IMF officials warned that the global economic recovery was in danger of stalling.

Since then, European leaders have worked together on a plan intended to restrain deficit spending. New governments in Spain and Italy have committed to reforms and spending cuts. And the European Central Bank has lent more than $1 trillion to the region’s banks. That has brought down borrowing costs in some of the most troubled countries.

In the U.S., consumers are spending more, business investment has grown and the job market has shown “signs of life,” the report says.

Blanchard said that recent steps to boost Europe’s bailout fund to about $1 trillion are important, but that alone cannot solve the crisis.

One key challenge for Europe is balancing the need to cut government budget deficits without choking off growth, he added. This is made more difficult by investors, who demand deficit cuts but react badly when such cuts reduce growth. Spain is struggling with this challenge at the moment, Blanchard said.

“It’s quite like you’re damned if you do, damned if you don’t,” he said.

Still, “the right strategy is the same as before,” he said. Governments need to make short-term cuts to establish credibility. But they should primarily focus on long-term commitments that decrease trend spending and put in place rules that reduce deficits over time, he said.

The risk that Europe’s debt crisis could worsen remains high, he noted. And even if it does not, growth in most advanced economies is likely to remain slow.

A separate report from the IMF forecast that Spain and Italy were likely to miss their budget deficit targets for this year. Spain’s deficit will equal 6 percent of its economy, the fund said in its Fiscal Monitor report. That’s above its target of 5.3 percent.

Italy’s deficit will reach 2.4 percent of its economy this year, above its 1.2 percent target.

Still, Jorg Decressin, the IMF’s deputy director of research, praised Italy’s government for taking steps to cut its deficit and reform its labor markets.

Spain’s government plans a steep cut to its budget deficit this year, despite sky-high unemployment of nearly 22 percent. Some economists worry the cuts will slow the economy even more.

The fund said Spain’s policies are “broadly appropriate,” but added that “slightly more moderate” deficit reductions “would have been preferable.”

Governments are cutting spending and raising taxes in Europe, the United States and Japan, dragging on growth, the report said. And banks are also reducing their debts, particularly in Europe. That’s reducing lending and also slowing growth.

China’s growth is forecast to slow to 8.2 percent in 2012, a healthy pace but down from 9.2 percent last year. Japan’s economy, meanwhile, is forecast to expand 2 percent this year after contracting 0.7 percent last year.

Overall, the economic landscape has improved from only a few months ago. IMF Managing Director Christine Lagarde said last week that the better outlook means the IMF might not need to seek as big a boost to its war chest. She had suggested in a January speech that the international lending organization would need an additional $500 billion, on top of the roughly $385 billion it already has.

Lagarde is seeking the additional funds to help Europe resolve its debt crisis and keep the impact from spreading to other regions.

She didn’t specify a figure last week but indicated that she hoped to resolve the issue at the April 20-22 meetings of the IMF and World Bank.

Earlier Tuesday, Japan pledged to provide $60 billion in loans to the IMF, a move Lagarde called “an important step.”

AS YIELDS MOVE WIDER, SPANISH WOES CONTINUE TO WEIGH ON THE EURO

noreply@blogger.com (mql4indonesia@gmail.com) — Tue, 17 Apr 2012 01:22:00 +0000

Spanish Scrabble (Photo credit: Arthaey)

One of my colleagues wrote last week: “You can’t spell Spain without pain,” and truer words have not been spoken. As currency traders return to a full week of work after the Easter break, euro-dollar finds itself under pressure as credit spreads in the region once again widen out.

After a few months of relative calm in the wake of the European Central Bank’s (ECB) long-term refinancing operations (LTRO), the markets are once again concerned about the credit quality of Eurozone peripheral debt, with yields on Spain’s benchmark 10-year bonds rising to 6.10 per cent – their highest level since last December. Meanwhile the yield on German 10-year bunds collapsed to 1.65 per cent on Monday as flight to safety flows drove the return to record lows. This widening out of spreads between the periphery and the core has been the primary reason for the sell off in euro-dollar over the past several days.

The rise in Spanish yields occurred despite the fact that the country’s fiscal authorities agreed to steep budget austerity measures. Yet some analysts have pointed that it is precisely the focus on austerity that has capital markets deeply concerned. The fear is that austerity may destroy the Spanish economy, and that it will drive Spain either out of the euro or into the arms of the European Stability Mechanism.

Euro-dollar therefore appears to be caught in a Catch-22 situation, as markets on the one hand demand fiscal control and austerity, and on the other become highly concerned that the medecine will kill the patient. In short, austerity may kill Spain’s economy and therefore no one wants to lend to a dying government.

Last time the CDS spreads widened out by 150 points, euro-dollar lost 10 big figures. This time, the decline has been much more modest as the pair has only fallen by 5 cents off its recent highs. Yet Ray Dalio, the famed manager of Bridgewater Associates, one of the most profitable hedge funds in world, believes that there is more pain to come. Dalio argues that the LTROs may have temporarily brought down Spanish borrowing costs, but they did not translate more interbank lending, leaving Spain in worse shape than before. Furthermore, Spanish banks have little appetite for more government bonds while foreign banks continue to be net sellers of Spanish paper.

All of this should prove quite interesting this Thursday as Spain attempts to auction off approximately €4bn of 10, 5 and 3-year bonds. The auction will no doubt be the focus of the currency market and its results could determine the near term direction of euro-dollar.

For the time being, the $1.3000 level appears to be strong support for the single currency, which has remained relatively buoyant despite the onslaught of negative news over the past several weeks. However, if this Thursday’s auction proves to be a disappointment, euro-dollar could not only break the $1.3000 support but ultimately tumble as low as $1.2500 over the next few weeks, as credit concerns and fears of fracture of the Eurozone return with a vengeance.

Boris Schlossberg is a Director of Currency Research for GFT

GBP/USD Monthly Fundamental Forecast April 2012

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 16 Apr 2012 02:06:00 +0000

WASHINGTON, DC - NOVEMBER 09: Federal Reserve Chairman Ben Bernanke leaves after delivering opening remarks during a conference on small businss and entrepreneurship at the Federal Reserve Bank November 9, 2011 in Washington, DC. Titled 'Small Business and Entrepreneurship during an Economic Recovery,' the program was sponsored by the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of Atlanta and the Kauffman Foundation. (Image credit: Getty Images via @daylife)

Outlook and Recommendation

The economic outlook for the UK has brightened over the last few months. In light of better-than expected results from the PMI surveys (particularly the services index),

The GBP/USD has remained range-bound in March from 1.5603 to 1.6037. Though it was difficult for the Sterling to maintain the 1.60 price.

Highest: 1.6037

Lowest: 1.5603

Difference: 0.0434

Average: 1.5826

Change %: 0.5464

The dominant factor driving the North American currency forecast is the outlook for the US economy (and employment) in addition to oil prices, central bank policy and shifts at the long end of the US Treasury yield curve. The US dollar (USD) is supported by an improving economic backdrop, flows into US securities markets and a weakening outlook for both the yen and euro; however, US central bank policy and elevated oil prices are significant weights against the USD.

Investors are bearish, the Bank of England is dovish but technical’s are bullish, the government is committed to austerity and inflationary pressures are not dropping as quickly as the market had hoped. As we enter April, GBP has outperformed the USD, EUR and CAD on a year-to-date basis. A theme we expect to continue in Q2; accordingly we hold a year-end 1.63 target.

The UK’s medium-term growth prospects continue to compare favorably with those of its continental counterparts. The manufacturing PMI posted an unexpected gain in March, rising to 52.1, while the same indicator for the euro zone indicated a continued contraction in activity, with France and Germany falling back below the neutral 50-mark. Nevertheless, the economic situation is tenuous. Fourth-quarter GDP growth was revised lower in the final print (on a retrenchment in services), meaning that the economy grew only 0.7% in 2011 (the previous estimate was 0.8%). Inflation, at 3.4% y/y in February, has proved to be stickier than anticipated, and will likely average well above the Bank of England’s (BoE) 2% target this year. Recent official rhetoric suggests that additional quantitative easing is unlikely (notwithstanding two dissenters favoring expanded asset purchases at the last BoE meeting), though this will depend on key economic data over the coming months.

Central Bank

The Bank of England -BOE INTEREST RATE DECISION

Actual: 0.5%Cons.: 0.5%Previous: 0.5%

BoE Interest Rate Decision is announced by the Bank of England. If the BoE is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the GBP. Likewise, if the BoE has a dovish view on the UK economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.

FED INTEREST RATE DECISION

Previous: 0.25%

The Board of Governors of the Federal Reserve announces an interest rate. This interest rate affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the exchange rate. Generally speaking, if the Fed is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the USD.

Long—Term Charts — April 9th 2012

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 09 Apr 2012 02:42:00 +0000

The author of this video looks at the week of April 9th in the Forex markets. EUR/USD, USD/CAD, AUD/USD, and the NZD/USD pairs are featured.

Trade Idea: GBP/USD – Sell at 1.5730

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 15 Mar 2012 09:29:00 +0000

GBP/USD - 1.5666

Most recent candlesticks pattern : Hammer
Trend : Near term down

Tenkan-Sen level                       :1.5653
Kijun-Sen level                        :1.5690
Ichimoku cloud top                     :1.5684
Ichimoku cloud bottom                 :1.5675

New strategy :

Sell at 1.5730, Target: 1.5630, Stop: 1.5765

Position: -
Target: -
Stop:-

Despite intra-day brief fall to 1.5636, lack of follow through selling and current euro-led rebound suggest consolidation would be seen and test of Kijun-Sen (now at 1.5690) would be seen , however, still reckon resistance at 1.5745-49 would limit upside and bring another decline later. Only a breach of support at 1.5621 would signal the rebound from 1.5603 has ended and bring retest of this level, break there would extend recent decline from 1.5993 top to 1.5570 and possibly to 1.5550.

In view of this, we are still looking to sell cable on recovery. Only a sustained breach of said resistance at 1.5749 would shift risk to upside and signal low has been formed, bring a stronger rebound to 1.5790-00.

A strengthened dollar…

noreply@blogger.com (mql4indonesia@gmail.com) — Wed, 14 Mar 2012 20:52:00 +0000

Today strong optimism was raised on the U.S soil to therefore watch an ongoing strengthening of the dollar throughout the day to reach an 11-month high against the yen as the Federal Reserve cheerfully raised its outlook regarding the superpower's growth to therefore ease the high prior forecasts that the central bank will begin a third round of bond purchases.

Accordingly for the dollar index, which measures the performance of the dollar against six major currencies including the euro and the Japanese yen and the pound sterling, it rose to currently trading at levels of 80.52 reached its highest level during the day at 80.63 since the opening of trading at levels of 80.23 and its lowest level during the day at 80.19.

On the other hand gold plunged and is currently trading at 1,641.74 $ while crude oil is currently narrow trading after the report of the Energy Agency of America, which showed a rise in oil inventories that exceeded expectations to currently trade around $106.48 a barrel.

However as a result of technical movements the euro consolidating on the four-hour scale and the one-hour chart and is forecasted to show later on an incline to the downside according to the one-hour and four-hour stochastic oscillator with in fact so far the EUR/USD pair trading around $1.3027 while recording the highest level of $1.3089 and lowest level of $1.3010. The trading range for today is among key support at 1.2840 and key resistance at 1.3250.

The British Pound is narrow trading as well throughout the one-hour scale driving accordingly the GBP/USD pair to trade around $1.56714 and therefore shows mixed signs on different time charts while recording the highest level of $1.5742 and lowest of $1.5648. The trading range for today is among key support at 1.5460 and key resistance at 1.5880.

Finally, although the USD/JPY pair rose strongly throughout the day it is forecasted to plunge up to the downside according to the one-hour and four-hour momentum indicators with the USD/JPY pair narrow trading presently and trading around ¥83.62 while recording the highest level of ¥83.81 and lowest levels of ¥82.94. The trading range for today is among key support at 82.00 and key resistance now at 85.00.

[Forex Job] Head of FX at FXCM

noreply@blogger.com (mql4indonesia@gmail.com) — Fri, 25 Nov 2011 16:04:00 +0000

Company
FXCM Ltd

Location
Scotland-Edinburgh

Remuneration
Competitive

Position Type
Permanent

Employment type
Full time

Updated
25-Nov-2011

eFC Ref no
929261

FXCM represents an excellent opportunity for an enthusiastic, entrepreneurially minded finance professional to run and build a foreign exchange business based in Edinburgh. The company is fully funded and is already trading.

It has a high quality, internet based IT platform linking with the market so the main driver required is bringing in clients and enabling them to use the platform. The right candidate will be significantly incentivised and should be able to build a sales team over time and a client list of significant value. The business operates alongside a very successful fixed income trading business and an FSA regulated fund administrator.

1. Key Job Deliverables/Responsibilities:
    • Identify, create and pursue new business opportunities in the corporate foreign exchange sector
    • Bring in new clients to the existing high quality platform
    • Once income-generating, build the business by recruiting a high quality sales team
    • Identify particular client types and sales strategies for those groups
    • Continue to nurture top clients to maintain business value

2. Job /Role Competencies:
    • Strong numeracy and communications skills to be able to present and negotiate with executive level positions within a prospective client company
    • Strong sales skills to persuade clients to join the platform
    • Competency to manage a sales team and the complete sales cycle process to ensure maximum productivity and completion of sales/pipeline reports and competitor information
    • Enthusiasm and motivation to build the business and create value

3. Previous Experience/Qualifications:
    • Experience in attracting new clients to a financial service
    • Direct foreign exchange experience useful but not essential
    • Proven track record in sales
    • Experience in building and managing a sales team

4. Regulatory Requirements of Role:
None

For more information click here

EU Summit relief rally may be short-lived

noreply@blogger.com (mql4indonesia@gmail.com) — Sat, 29 Oct 2011 04:37:00 +0000

Image by Getty Images via @daylife

The Week Ahead

Highlights

EU Summit relief rally may be short-lived
USD under pressure on a number of fronts
G-20, FOMC, ECB and RBA meetings next week

EU Summit relief rally may be short-lived

As expected, EU leaders came up with a sufficiently credible plan to prevent a disorderly default of Greece, recapitalize EU banks, and increase the size of the EFSF in an attempt to quell contagion to other EU sovereign debt. Risk markets responded with a massive rally on what we think is over-exuberance, but also likely due to a huge squeeze on short-risk/long USD positions. The details of the EFSF expansion, the Greek debt swap and other mechanisms are still to be worked out over the coming weeks, but market sentiment over the package appears to be fading rather quickly.

No less of an authority than the new president of the Bundesbank, Jens Weidmann, has already called the EFSF expansion into question, telling a conference in Munich the plan is “not too different from those which were partly responsible for creating the crisis, because they concealed risks.” His comment hits at the critical issue behind the Eurozone debt crisis, namely that it's all about confidence and perception. If markets believe the plan is credible, then it may not even be needed. But if markets don't buy the notion that more borrowing will solve Italy's already over-extended debt, then even the expanded EFSF won't be sufficient. Ultimately, that comes down to growth prospects for the individual debtor nations, and there we think the prospects are daunting to say the least.

European credit markets appear to be already voting with their feet, as core-peripheral bond spreads have begun widening again after a mere 24-hour respite. Italian 10 year government bond yields are back over 6% and Spanish bond yields have reversed their declines from the post-summit euphoria. US Treasuries rallied on Friday on safe haven demand, sending 10-year yields lower by about 10 bps in a potential failure/rejection above the daily Ichimoku cloud. US stocks look to have stalled for the moment, with the S&P 500 possibly topping below the top of the 1290 weekly cloud/1300 psychological resistance levels. Across markets, the rebound in risk assets this past week basically ‘closed the gap' from the collapse that started in August (in stocks) and the surge in the USD that started in early September. While there has been some potentially serious technical damage done to the risk-off trade, we think we're more at a crossroads than a major turning point. We will be especially alert for indications that the risk rebound is reversing next week. We think the FOMC will need to deliver QE3 for gains to continue (see below for more).

Back to the EU debt crisis, in the weeks ahead we think there is likely to be a fair amount of cheerleading for the EU package, not the least from next Friday's G-20 meeting, and we expect several commitments of support from key potential investors, like China, Brazil, mid-east and other sovereign wealth funds; Japan has already signaled willingness to invest. We'll be watching the reaction of risk assets on those expected signs of support, and the less risk markets respond favorably, the greater our doubts about the sustainability of the rebound will grow. We will be especially alert to how markets trade to start the week, after a weekend spent digesting the full implications of what the EU has actually delivered.

USD under pressure on a number of fronts

The USD was hit hard this week, as long-USD positions were liquidated en masse. Apart from positioning, the USD is under pressure as risk markets rebounded, reducing safe-haven appeal of the buck and US Treasuries. We would also note that risk aversion remains in the background as seen by continued strong demand for the other FX safety valves, CHF and JPY. But the big driver by far of the current risk rebound/USD weakness are growing expectations that the Fed may deliver QE3 at the conclusion of next Wednesday's two day meeting (see more below). We would expect further USD weakness if the Fed delivers more QE, but it will depend on the size of the program. If the Fed abstains, the USD is more likely to bounce back. Lastly, we also think the USD is under pressure across the board on month-end portfolio re-balancing flows. Given the outsized gains in US stocks in particular, foreign investors have larger USD exposures and need to sell more USD to maintain hedging ratios. We would expect further USD weakness to start the week based on these flows, but that the selling pressure may culminate following the 11EDT fixing. If the USD shows resilience in early NY trading, it likely means markets have turned more risk averse on a reconsideration of the prospects of success of the EU debt plan and USD-demand is swamping asset manager USD-supply.

The USD index has dropped to finish the past week just above the 75.00 level, holding above the 76.4% retracement (75.01) of the late August rally to just below 80.00. In EUR/USD, that level equates to 1.4220/50 as the key hurdle to further gains. In AUD/USD, August highs at 1.0765 are the equivalent pivot to fresh upside. Gold prices have recovered as the USD has weakened and are currently testing the daily cloud between 1747/1756; price looks like it should open next week above the cloud top, which falls to 1727/26. However, be alert for a failure and daily close back below. Friday's price action across most major USD-pairs also resulted in numerous small real bodies (doji and spinning tops) on daily candle sticks, an indication of uncertainty following Thursday's huge rally/USD sell-off. This keeps us alert for a potential USD reversal, but mostly we expect further consolidation ahead of the FOMC.

G-20, FOMC, ECB and RBA meetings next week

The G-20 will gather in Cannes, France on Thursday and Friday next week. We expect the group to show solidarity with the Eurozone and endorse the EU debt plan. We would also look for signs of cash-flush members indicating at least a strong willingness to consider investing in the EFSF and related vehicles, though firm commitments will likely need to wait until all the details are worked out.

On Wednesday, Nov. 2, the Fed is expected to maintain current rate policy, but the key will be whether they announce a third round of QE. We think there is a 50-50 chance that they announce a program to increase the amount of mortgage-back securities they're purchasing. The move would be to complement the White House's plans to revise the Home Affordable Refinance Program (HARP) and jump start the US housing market and potentially reinvigorate the broader economy. The key is the timing. The details of the HARP revisions are not yet finalized (sometime by mid-Nov.), so the Fed may announce a conditional QE3 pending the changes to HARP. But US data has also showed some improvement in recent weeks, potentially leading the Fed to hang on to this last bullet. Still, with unemployment stuck at 9%+, what's the point in waiting. Bernanke will hold a quarterly press conference and take questions following the announcement.

This will be a major event for the USD, as recent Fed speakers hinting at QE3 have contributed to recent USD declines/rallies in stocks and other risk assets. If the Fed delivers QE3, we would expect further USD declines/gains in risk assets, but the size of the program will matter. QE3 on the order of $500 bio may not see much further USD weakness as the rumor has already been sold. QE3 of USD 1 trillion or more would likely trigger further USD declines. Analyst estimates suggest a program of USD 1-2 trillion is what's needed to have the desired impact on the housing market and economy. No QE3 and the risk rebound is likely to reverse hard, especially if markets are already having second thoughts on the EU debt plan.

The ECB will meet on Thursday, with new president Mario Draghi at the helm. We don't expect any changes to the ECB base rate, but we do expect a further weak economic outlook, which may add to pressure on the EUR. We expect Draghi to reiterate the ECB's opposition to participating in the EFSF and maintain that the ECB will not be the lender of last resort. The ECB is the only European institution with the ability to fully resolve the debt crisis, so continued opposition is not a good thing for overall confidence in the debt crisis.

The RBA is meeting next week and is expected to announce a 25 bp rate cut to 4.50% when it announces on Tuesday afternoon Downunder, but it's a close call with 11out of 26 forecasts indicating steady rates. More benign CPI this past week opens the door to a rate cut and we think recent AUD gains will also bias them toward a cut.

Startup a forex hedge fund in record time perfectly legal and under eurozone jurisdiction

noreply@blogger.com (mql4indonesia@gmail.com) — Wed, 12 Oct 2011 22:59:00 +0000

Image via Wikipedia

Post by Shavasb

Successful traders managing to beat the market and with verified track record must seriously take into account commencing up their very own forex/commodity or equity hedge funds, attract funds from other traders and perhaps turn out to be the next billionaires as opposed to setting up a foreign exchange brokerage or an investment firm dealing in equity, bonds or foreign exchange.

Suppose you are the profitable trader and you can approach and raise funds from a tiny group of traders who trust your track record, but you are frightened by the regulatory hurdles, because we all know that even in the least developed markets, turning into involved in the monetary industry and then trying to raise money is a difficult and time consuming procedure, which in most circumstances kills the entrepreneur spirit.

Must you give up? Undoubtedly no, since there are answers for your requirements which can get you up and operating in record time, in a completely legal way and below EU jurisdiction permitting you to raise money from investors and managing your affairs via a versatile and tax friendly atmosphere. Here is how it performs.

A Private Fund or in legal jargon, a variable capital International Collective Investment Scheme (ICIS) will be set up primarily based in Cyprus, which essentially indicates when investors enter the Fund with funds, the organization concerns them with units and when they redeem their units and exit the Fund, these units are cancelled.

It has to be noted that the investment goals, the composition of the owners, directors, entry and exit charges and other problems, repayment clauses as nicely as administrative costs will be integrated in the Offering Memorandum (OM), which is basically the legal document through which an investor enters or exits the ICIS.

The supervisor and regulator of ICIS in Cyprus is the Central Financial institution of Cyprus, a eurozone member central bank.

In order to setup the Fund or the ICIS, the minimum requirement is for the promoters to give at least a single shareholder who will inject the minimal capital of EUR 50.000 or USD 70.000 and will become the founding member holding the voting shares and hence absolute handle, if they so wish. Other investors may be non-voting.

The ICIS also demands at least two competent directors (1 of whom is preferable to be Cyprus resident for the Fund to qualify for tax positive aspects), a reliable Custodian Financial institution which will hold the assets and an independent Administrator firm which will calculate the Net Asset Worth of the Fund, based on which investors will enter or exit. A regulated fund management company could act as the all round fund manager who will then outsource the real management to the specialist manager. The fund management company requires to make positive that the EU

Hedge funds reduced exposure ahead of big rally

noreply@blogger.com (mql4indonesia@gmail.com) — Tue, 11 Oct 2011 02:20:00 +0000

Image via Wikipedia

By: Saxo Bank

Hedge funds and large investors continued to reduce their long exposure to commodity futures and options last week. The data compiled 3 October showed a 4.2 percent reduction to 920,000 lots, the lowest level since July 2010.

This also helps to explain the strength of the rally that followed as funds scrambled to rebuild positions. The rally that began Wednesday was the biggest three-day rally of the year and was helped by increased efforts in Europe to deal with the debt crisis and signs that the U.S. economy may avoid recession.

The energy sector saw an increase in net longs of 20 percent primarily helped by a sharp reduction in the Natural Gas short position. The WTI crude position meanwhile continued to be scaled back, moving below 200,000 lots just ahead of the rally which began last Wednesday when U.S. inventories showed a much bigger draw than expected.

Exposure to the grains sector was cut by 2 percent to 242,000 lots, the lowest level since July 2010 and much below the 2011 peak of 890,000 lots back in February. The “World agriculture supply and demand estimates” report will be released this Wednesday and any signs of tightening could attract new buying given the sharp reduction of long positions over the last month.

The metal sector was flat on the week with a small increase in gold longs - the first in four weeks - being off-set by another increase in short copper positions.

The soft sector also saw a reduction in speculative longs as positions in sugar and coffee were reduced while the cocoa short position increased further.

Hedge funds reduced exposure ahead of big rally

noreply@blogger.com (mql4indonesia@gmail.com) — Tue, 11 Oct 2011 01:53:00 +0000

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By: Saxo Bank

The metal sector was flat on the week with a small increase in gold longs - the first in four weeks - being off-set by another increase in short copper positions.

The soft sector also saw a reduction in speculative longs as positions in sugar and coffee were reduced while the cocoa short position increased further.

Shrewd hedge funds profit in turbulent September

noreply@blogger.com (mql4indonesia@gmail.com) — Fri, 07 Oct 2011 01:56:00 +0000

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LONDON, Oct 6 (Reuters) - A select band of shrewd hedge fund managers have avoided September's market pitfalls to post healthy profits, even as Europe's deepening debt crisis leaves much of the $2 trillion industry nursing painful losses.

Bearish macro bets such as owning U.S. and European government bonds, as well as being short equities, commodities and the euro, have helped funds navigate a crisis that has seen fears of a global recession and a banking crisis grow.

Brevan Howard's $25 billion Master fund, one of the world's biggest hedge funds, gained 1.5 percent last month to September 23, said two sources who had seen data on the fund's performance. This takes profits this year to 12.3 percent.

And GLG, part of Man Group, saw its $2 billion Atlas Macro fund, which is managed by Driss Ben-Brahim and Jamil Baz, gain an estimated 6 percent in September, said a person close to the company.

In contrast, the average hedge fund lost 3 percent last month, according to Hedge Fund Research's HFRX index, taking year-to-date losses to 8.4 percent. The third quarter was the worst for three years.

Equity funds were hard hit, particularly those focusing on stocks' fundamental value, with MSCI's World index of stocks falling a further 8.8 percent during the month.

A number of industry insiders have pointed to markets being preoccupied with economic worries, rather than company fundamentals.

'This is not 2008, but perhaps one similarity with 2008 is that market's focus is on macro, and no-one is really focusing on the micro,' said Frank Frecentese, global head of hedge fund investments at Citi Private Bank.

EQUITY, CREDIT FUNDS

Global macro funds -- made famous by the likes of George Soros -- have tended to be more bearish than equity managers and have benefited from falling bond yields in countries such as the United States, Germany and the UK.

On Thursday the Bank of England announced a further 75 billion pound stimulus, pushing yields on longer-dated debt to record lows.

Stenham Asset Management said its Trading fund, which invests in macro hedge funds, gained an estimated 0.8 percent in September, taking third-quarter gains to 3.4 percent.

Meanwhile, a smattering of equity managers were able to profit, even as markets fell.

Marshall Wace's $1 billion Eureka fund, managed by co-founder Paul Marshall, gained 1.5 percent in September, taking gains this year to 5.8 percent, said a source familiar with the matter.

And its Global Opportunities fund, which is run by Fehim Sever and which focuses on emerging markets, rose 6.5 percent last month, lifting this year's profits to 23.8 percent.

Among credit funds, CQS, one of Europe's biggest hedge fund managers, saw its Credit Long-Short fund, which is managed by Simon Finch, gain 1.7 percent in September, taking year-to-date gains to 7.9 percent.

This was helped by active trading of both long and short positions, according to a source familiar with the matter.

And while GLG's Emerging Markets fund has suffered this year, its Emerging Credit Opportunities portfolio gained 1 percent last month.

(Reporting by Laurence Fletcher. Editing by Chris Vellacott and Will Waterman) Keywords: HEDGEFUNDS/PERFORMANCE

(laurence.fletcher@thomsonreuters.com)(+44)(0)(20 7542 7729)(www.twitter.com/reutersfletcher)

Forex: Currency Speculators add to bets in favor of US Dollar, decrease Yen longs

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 03 Oct 2011 03:08:00 +0000

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators remained bullish in favor of the US dollar against the other major currencies as the trading environment continued to be risk averse. Non-commercial futures traders, usually hedge funds and large speculators, decreased their long positions in the Swiss franc, Japanese yen, Australian dollar and the New Zealand dollar directly against the US dollar while increasing bearish bets for the euro, British pound sterling, Canadian dollar and the Mexican peso, according to data reported on September 27th by the CFTC.

EuroFX: Currency speculators decreased their futures positions for the euro against the U.S. dollar for a sixth consecutive week as sentiment continues to be bearish for the European common currency. Euro positions declined as of September 27th to a total of 82,473 net short contracts from the previous week’s total of 79,460 net short contracts reported on September 20th. Euro positions are at their lowest point since June 8, 2010 when net contracts were on the short side at -111,945.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions edged lower for the fifth consecutive week to stand at the lowest level since June 2010. Pound positions decreased to a total of 64,010 short positions on September 27th following a total of 59,755 short positions as of September 20th.

JPY: The Japanese yen net contracts edged lower after gaining for two consecutive weeks, according to data on September 27th. Yen net long positions decreased to a total of 42,322 net long contracts reported on September 27th following a total of 45,617 net long contracts that were reported on September 20th.

CHF: Swiss franc long positions declined for a fifth straight week as of September 27th. Speculators continued to trim bets for the Swiss currency futures to a total of 2,424 net long contracts following a total of 4,221 net long contracts as of September 20th. The Swiss currency, usually a popular safe haven currency, has remained in neutral since the Swiss National Bank conducted a policy to fight the strength of the franc and maintain a pegg against the euro at the 1.20 level.

CAD: Canadian dollar positions fell further on the bearish side, according to data on September 27th. CAD net contracts fell to a total of 20,550 short contracts as of September 27th following an increase to a total of 5,458 net short contracts reported on September 20th.

AUD: The Australian dollar long positions declined sharply for a third straight week as of September 27th as speculators have decreased their sentiment for the Aussie. AUD futures positions fell to a total net amount of 5,167 long contracts following a total of 23,095 net long contracts reported as of September 20th. The decline in speculators data marks the lowest level for Aussie positions since July of 2010.

NZD: New Zealand dollar futures positions fell for a second consecutive week and declined to their lowest level since the middle of April, according to the data reported on September 27th. NZD contracts fell lower to a total of 9,591 net long contracts following a total of 13,565 net long contracts registered on September 20th.

MXN: Mexican peso contracts continued their decline lower and dropped for the eighth straight week to remain on a bearish front against the dollar. Peso positions declined to a total of 20,626 net short speculative positions as of September 27th following a total of 16,890 short contracts that were reported as of September 20th.

COT Data Summary as of September 27, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -82,473
GBP -64,010
JPY +42,322
CHF +2,424
CAD -20,550
AUD +5,167
NZD +9,591
MXN -20,626

Gold in free fall - 20% down from high

noreply@blogger.com (mql4indonesia@gmail.com) — Mon, 26 Sep 2011 23:49:00 +0000

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The gold price is in free fall and only another major global crisis will stop its descent.

After falling 11% last week, the precious yellow metal dropped 7.5% on Monday - its steepest one-day fall in five years - bringing the gold price down 20% from its all time high of US$1,920.30 an ounce in early September.

This makes this month gold's worst month in three years.

By late afternoon, the precious metal had lost almost US$50 from the US$1,641.39 it was quoted at the JSE's close on Friday to trade at US$1,591.50 - some US$328.80 from its all time high.

Many market watchers warned that a correction was coming and now they are saying the price is likely to bottom and level off before it starts to climb again.

“Gold has certainly taken a dive - and could stumble further in the days immediately ahead - but I think we will see the yellow metal begin its comeback sooner rather than later, possible in the next few days,” said Jeffrey Nichols, managing director of American Precious Metals Advisors.

In his latest Nichols On Gold note the gold and precious metals economist said the precious metal was “just an innocent bystander”.

He said rather than any dramatic reversal in world physical markets it looked like the precipitous price decline in recent days could be blamed entirely on speculators including some prominent hedge funds and the trading desks of the big Wall Street banks, which have been reversing their positions or cashing out of gold altogether.

“Nothing that has occurred in the past few days in any way diminishes my long-term enthusiasm about gold-price prospects. The same bullish gold-market fundamentals and macroeconomic trends that I have been discussing for many years now remain in place and promise significantly higher gold prices over the next five years or longer,” Nichols said.

Investors cashing out of gold and getting back into cash, particularly the US dollar, demonstrates just how jittery investors are in uncertain markets.

While the threat of another global economic meltdown has not been dismissed, the US dollar is the sweetheart of investors.

“In times such as these, the US dollar does then reign supreme. It should and it shall. 'Money' is finding its way to its ultimate safe harbour, and clearly that is not the euro and that is not gold,” said Dennis Gartman in Monday's Gartman Letter.

In the pecking order of safe havens precious metal rank well behind the US dollar and the dollar is the final bastion in panic.

“What is taking place in the metals is a classic question of margin clerks vs. the market; a game of 'money' and not a game of fundamentals,” said Gartman, adding that simply put, 'money' and 'margins' trump fundamentals.”

Interestingly, Sharps Pixley noted that the recent move in gold looks on the face of it like a 'Lehman's moment'.

Back in October 2008 when Lehman's collapsed gold also fell as margin calls in collapsing equities were funded by the selling of profitable positions in gold.

Gold's move was counter-intuitive in that it did the opposite of what was widely expected.

Moving counter to the US dollar, gold seems to be moving in tandem with the rand.

The rand flirted with levels around R8.50 last week with some forex traders warning the local currency could move through R9 to the US dollar.

On Monday afternoon it was holding up well at levels around R8 against the greenback.

“For about a year and a half, our two currency models reflected that the Rand was overvalued by close to two standard deviations, the extent of the recent sell off, was sudden and rapid. Based on our models now the Rand is fairly valued but usually it overshoots when it corrects from close to two standard deviations over/under valuation,” said Aeon Investment Management.

Aeon Investment Management also believes that the gold price is probably in a short term correction phase and will most likely start forming a base and appreciate towards the end of the year.

At these low prices the market has seen buyers snap up the precious metal, particularly in India where the wedding season is getting underway.

It is also a good time for those who want to get into gold at more reasonable levels and ahead of the next potential rally.

“If someone is silly enough to sell huge volumes of gold for effect - it is clear that there are plenty of investors willing to take that metal off their hands at a knock-down price. For gold bulls this will in hindsight be seen as the clearing out of exhausted longs - a pruning if you like - with new growth yet to come through,” said Sharps Pixley CEO Ross Norman.

“Where's the next $200 in gold - we confidently predict to the upside,” said Norman. - I-Net Bridge

The fact that less is more will always be true in trading

noreply@blogger.com (mql4indonesia@gmail.com) — Fri, 23 Sep 2011 12:21:00 +0000

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“I don't mind having a bad week, or even a few bad weeks. What's important to me is if I can look at substantial profits at the end of the year! And right now it looks like I will be able to do so again at the end of this year, even though 2011 didn't start out that gloriously.” - Marco Mayer

Hello:

Successful trading rules are a paradox. A risk control rule says: Risk less to make more or risk more to make less. The fact that less is more will always be true in trading. For example, less intricate and easier speculation methods tend to produce more agreeable and far more decent returns (not account doubling, which is repugnant to disciplined and experienced risk managers). Your goal is to metamorphose into a proficient and adept speculator. A proficient and adept speculator acknowledges that trading oughtn’t to take all your time. Trading should be a factor that facilitates your ability to have the time and opportunity to live a fulfilling life and engage in other activities you enjoy doing.

Below is the summary of some of my trading activities this week.

AUDUSD

Primary Trend: Bearish

Having opened with a vivid gap this week, this pair has fallen by about 500 pips. I was able to gain 200 pips from this bearish move. The next line of action would be to sell on rally.

NZDUSD

Primary trend: Bearish

Traders need to bear it in mind that we’re just seeing the beginning of another bear markets in Forex. Price is the leading indicator and it should act in helping traders know the next thing to do, which is the assumption of short trades in this context. In the world of trading, price is king.

AUDNZD

Primary trend: Bearish

This cross is a kind of ranging right now. But a closer look reveals that the Aussie is still stronger than the Kiwi, though with limited domination. The price must break the level at 1.2600 - which is a very strong resistance – before any dependable bullish movement can be seen

EURCAD

Primary trend: Bearish

Also starting with a gap this week, this cross has gone up by approximately 500 pips. There’s a threat to the longer-term bearish outlook. The next plan is buy to a pullback, using our predefined rules. The trading rules mentioned here provide ready-made answers to what we should do in terms of trading orders we should place.

EURNZD

Primary trend: Bearish

Here too, there’s an extremely grave threat to the bearish trend. If there’s a continuation of the present bullish breakout, then the weak market would be rendered invalid. The price on this cross is above the SMA 200, while the SMA 50 is still below the SMA 200. The ADX 20 is moving above the level 23, just going to the level 30. +DI has just moved above –DI, indicating the beginning of a protracted northward move. The Kiwi can’t stand this!

GBPCHF

Primary trend: Bullish

The bullish movement on this instrument is still intact, though it’s getting tricky to find a suitable entry price. One way of handling this is to use both Buy Stop and Sell Stop orders in an equilibrium zone, so that I can catch the next price breakout. With this, I try to keep it simple and just wait for setups to unfold.

Conclusion: How do you define success in trading? Ed Ponsi has an interesting answer to give. His answer and other quotes conclude the articles below. They point out the big difference between the disciplined trader’s goals and mindset and the gambler’s goals and mindset.

1. “Well, if you are making money, you are ahead of the majority of traders, but anyone can make money in the short run. I would define success in trading as consistency. A trader who can make just 2% to 3% per month, every month, without taking inordinate risk or suffering a severe drawdown is a successful trader. He or she is outperforming most traders, hedge funds, mutual funds and indexes. A trader who can make more than this on a consistent basis, year after year, is a rock star.”

2. “When you are new to trading, a losing streak becomes really bothersome because we begin to doubt ourselves. We begin to question whether or not we have a future in this business. Over time, I began to realize that losing is just a part of winning, a necessary part. To use a military analogy, you cannot win the war unless you are willing to lose some battles along the way. It is necessary to suffer short-term losses in order to achieve long-term success. Once I realized this, losing did not bother me as much.”

3. “Usually, the longer I am in a trading position, the more profitable it has become because I am trying to capture a trending move, and I want to hold it until the trend fails.”

Derivatives | Cautious approach to innovation

noreply@blogger.com (mql4indonesia@gmail.com) — Thu, 22 Sep 2011 02:36:00 +0000

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Anup Roy

One critical derivative product introduced after the downturn is the cross-currency option, launched on the exchanges in October 2010

One of the key reasons why the Indian financial system was not affected by the 2008 global meltdown was the banking regulator’s conservatism. The central bank ring-fenced the Indian banking system by imposing stringent criteria on various instruments, including trades in permitted derivative products, and deferring the introduction of others, one of which was blamed for sinking large global financial institutions.

The Reserve Bank of India (RBI) had proposed the introduction of credit default swaps (CDS) a number of times since 2003, but drew up final guidelines for them only this year.

Developments in the currency and interest rate derivatives markets show RBI has only recently opened up the space. In 2010, it introduced currency options though currency futures were launched just before the credit crisis in 2008. Both have garnered reasonable volume, but are nowhere close to their volumes overseas.

Derivatives allow companies to hedge their currency risks and play a key role in asset-liability management. It is a must-have for firms with most of their inflows in dollars and costs in rupees.

“We live in a world where there is mismatch and we need certainty that the mismatch can be bridged. That’s why we need various kinds of derivatives,” said Rostow Ravanan, chief financial officer of software firm MindTree Ltd. “Availability and access to a robust derivatives market is what brings stability in the operation of a corporate.”

As Indian firms gets connected to the world for their operations, the need for derivatives is on the rise, say bankers. “Derivatives are here to stay,” said Ananth Narayan G., head of fixed income, currencies and commodities at Standard Chartered Bank. “Risk remains extremely high to stay un-hedged. Clients’ risk-management needs will always be there, so will derivatives.”

One critical derivative product introduced after the downturn is the cross-currency option, launched on the exchanges in October 2010. RBI allowed options on four currency pairs: rupee-dollar, rupee-yen, rupee-pound sterling and rupee-euro. Volume in this segment has crossed $500 million on the National Stock Exchange, but is far below volumes in the currency forwards market.

Volume in futures and options combined crossed Rs1 trillion in July, in a sign the currency derivatives market is picking up pace. Average volume in exchange-traded currency derivatives is Rs60,000-80,000 crore.

Banks and retail investors dabble in the segment as speculators. Small and medium enterprises enter the market for their simple needs, but big firms largely stay away as their needs are complex and they need custom contracts that exchanges cannot provide.

RBI governor D. Subbarao has indicated he believes in the dictum Festina lente —make haste slowly—when it comes to reforms. This, say bond market dealers, indicates RBI will be cautious and ensure regulations are well entrenched before introducing more derivative products.

The central bank has been cautious regarding the introduction of new products. It issued four draft discussion papers and guidelines before coming up with final guidelines on CDS in India.

There are two kinds of derivatives—traded bilaterally over the counter (OTC) and exchange-traded. Until a few years ago, most of the derivatives in India were of the OTC kind. Even now, the size of the OTC currency market is larger than that of its exchange-traded counterpart.

The currency derivatives segment includes foreign currency forwards, currency swaps and currency options. The interest rate derivatives segment includes interest rate swaps, forward-rate agreements and interest rate futures (IRF). Then, there are products linked to the overnight money markets, such as collateralized borrowing, lending obligations and overnight index swaps.

Overnight money market-linked products are overwhelmingly successful, but products that involve a longer-term view have failed.

In most developed nations, fixed-income markets compete with equity markets to attract investors. In contrast, in India, the daily equity market volume is at least double that of the debt market, including government and corporate bonds.

A few large investors, mostly banks, control the bond market. Other investors include insurance companies, a few mutual funds, and pension and provident funds. They are also the medium through which RBI intervenes in the bond and currency markets.

Several committees have been formed to deliberate on measures to deepen the bond market and introduce new products. The most influential was headed by R.H. Patil, chairman of National Securities Depository Ltd and Clearing Corp. of India Ltd. The key recommendations of the committee, submitted in 2005, are yet to be implemented despite the finance ministry’s acceptance of them.

The cautious attitude of the regulator—that derivatives are used for hedging and not speculation—is helping to safeguard the financial system, but may be impeding the market’s growth. As the derivatives market will be dominated by hedging needs rather than speculation purposes, currency derivatives will continue to outshine interest rate derivatives, say experts.

In global markets, interest rate derivatives are the most popular products, followed by currency derivatives. The volume in equity derivatives is small in comparison. But in India, equity derivatives have notched up large volumes compared with currency and interest rate derivatives. In fact, currency derivatives are picking up well, but interest rate derivatives, particularly interest rate futures, have not been accepted.

Experts say India has all the derivatives products that make a market vibrant. New products, they say, may not be needed at all.

“You don’t need any fancy derivatives to make the market more vibrant. You just need to have more participation of India forex and simplification of rules,” said Abhishek Goenka, chief executive officer of India Forex Advisors Pvt. Ltd.

The main problem with the available derivatives is they are not traded in their current form and RBI may have to eventually tweak them to make them more market-friendly. RBI may have to introduce some amount of speculation and change the structure of the products.

This is a contentious issue.

Many banks have significantly downsized or completely wound down their derivatives teams, especially after RBI clamped down on exotic deals.

In a way, this indicates that the future of derivatives may be constrained by RBI if it continues with its tough supervisory stance. There will not be many entities to make two-way quotes available or extend liquidity in the market.

Indian public sector banks that assume the responsibility of being market-makers for any new instrument behave in a similar manner. It has often been seen that after the launch of a derivative product, volumes go up sharply as banks trade aggressively among each other. The volume thins out every passing day as they lose interest and other players don’t fill in.

To invite serious entities into the market, RBI needs to change the structure of the products, say market experts.

As per the present set of rules, all derivatives must be physically settled. That means, at the end of the contract, the buyer should buy the underlying assets. This hurts fixed-income derivatives in particular.

For any fixed-income derivative product with a long-term view, there are not enough bonds that are liquid in the market. Since they cannot be traded, it becomes uneconomical for the purchaser to get these papers as they need to be held till the bonds mature. Products such as IRF are not picking up despite the regulators’ best efforts.

However, RBI has introduced cash-settlement in 91-day treasury bills IRF, which experts say is a first step to introduce cash settlement in a range of other derivatives products. The Indian market could see progress on this front in the coming days.

In currency markets, liquidity is expected to improve in other maturity markets. Now it is limited to contracts maturing in two-three months, but Goenka of India Forex expects liquidity to improve in the 6-12 month maturity basket as well in the coming days.

Corporate clients will need to have a bigger play in the exchange-traded currency market. They currently do not get longer-tenure contracts of their liking because of the absence of banks—the market makers in the longer tenure of the exchange-traded currency derivatives market.

There is a serious lack of jobbers and arbitrageurs in the currency market too. These professionals quote two-way prices and act as intermediaries in the currency derivative markets. Currency market participants say going forward, India will see more such intermediaries as they are in equity market sub-brokerages as currency derivatives become fashionable with retail traders. Retail traders have only recently started participating in the currency derivative segment and their participation will increase.

Unfinished agenda

The biggest problem of India’s financial markets is the absence of a term-money market, needed to integrate all the money market rates with the final lending rate of banks.

This is how developed markets perform. Lending rates are linked to the term-money rates prevailing in the market and banks have to add a risk premium to it.

Lending rates of Indian banks have become more transparent with the introduction of a base rate system. However, the reference rate taken to arrive at the base rate differs from one bank to other. Once the term-money market comes into play, banks’ base rate, certificates of deposit, fixed-income rates and even CDS, besides a plethora of other instruments, can be standardized. This will bring in a lot more transparency and with it a different set of players in the market.

In fact, banks don’t need to have different rates among themselves once there is an active term-money market. They may just check rates and make their decisions on a daily basis, as with a standardized CDS. This, according to some, could become a reality one day in the Indian banking system. There could be Libor-equivalent lending as in overseas markets. Libor stands for London inter-bank offered rate.

If markets become deeper, rates will converge and capital convertibility will open up. But there are economic implications of opening up. The market may turn into one for speculators from being one for hedgers.

As India’s links with the global markets strengthen, OTC derivatives are getting standardized and the documents signed between banks and the clients are adhering to the standardized international format laid down by the International Swaps and Derivatives Association. This shows that firms are getting aligned with international standards when it comes to derivatives.

Interest rate derivatives may include instruments such as caplets, floorlets and swaptions, while credit-risk derivatives may include credit-linked corporate notes, credit-linked swaps, asset-backed securities, etc.

For such instruments to succeed, Indian companies will need to acquire the relevant market expertise.

“These derivatives are needed to manage balance sheets with multi-currency exposure. If Indian companies become big and mature enough to dabble in multi-currencies, then these instruments will be needed. But Indian companies’ balance sheets are fairly simple, so these instruments are a bit far away for the Indian market,” said J. Moses Harding, head of markets at IndusInd Bank Ltd.

The interest rate market is currently more or less limited to overnight index swaps.

An interest rate swaps market has also developed in the OTC space. Banks are the key participants here and while the volume is low, it is steadily gaining popularity. The popular benchmark here is the Mumbai inter-bank offer rate (Mibor) and the Mumbai inter-bank forward offered rate (Mifor).

As India needs to have its own lending benchmark along the lines of the Libor, Mifor and Mibor-related derivatives will gain in popularity, experts say.

Having said that, derivatives are instruments created when there is a need felt for them.

“Derivatives innovation is limited by imagination. You can create as many derivatives as you want, but there should be proper regulations around to control them,” said Ravanan of MindTree.

According to bank and corporate treasurers, the greatest lesson learnt after the 2008 crisis was that derivatives should be used strictly for hedging and not for speculation. Companies that dabbled in speculation and bought derivatives for making quick money learnt their lesson the hard way.

Hedge Fund Heavyweight Sees Gold at $2,200

noreply@blogger.com (mql4indonesia@gmail.com) — Wed, 21 Sep 2011 01:44:00 +0000

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Gold, platinum and Brent oil will lead gains in commodities as investors seek to protect their assets and shortages emerge, according to Tony Hall, the hedge- fund manager who earned 33 percent for his clients this year.

Gold may climb 21 percent to a record $2,200 an ounce by the end of 2011, platinum may gain 10 percent and Brent could rise 25 percent to $140 a barrel in six months, said the London- based chief investment officer of Duet Commodities Fund Ltd., which manages more than $100 million of assets. Its eight-month gain compares with a mean return of 0.6 percent across commodity hedge funds tracked by HedgeFund.net and beat larger rivals such as Clive Capital LLP and Fortress Commodities Offshore Fund Ltd.

“The fear of recession, the fear of worse economic numbers is weighing on commodities and stopping gains from fundamentals from coming through,” said Hall, 31, who spars as a heavyweight boxer. “We still believe in the gold story. If you believe the world is in trouble or in further economic growth disruption, then gold is a good safe haven. If you believe that the world is going to come out okay, then it’s a good inflation hedge.”

At a time when the MSCI All-Country World Index of global equities declined 10 percent this year, the Standard & Poor’s GSCI measure of 24 commodities advanced 2.7 percent, led by silver, gold and energy.

Investors held about $431 billion in raw materials by July, an almost fivefold gain in six years, Barclays Capital says. As equity holders contend with losses of $8.5 trillion since May, speculators made their biggest wagers on higher commodity prices in almost three months in the week to Sept. 6 as they anticipated that even weaker economic growth will mean shortages.

Winning Run

Gold advanced 28 percent to $1,819.88 this year, heading for an 11th consecutive annual gain, the longest winning streak in at least nine decades. It’s the second-best performer in the S&P GSCI behind silver, which rose 31 percent. Gold is trading at 45 times the price of silver, down from a multiple of 84 in 2008. Silver, the precious metal most used in industry, rose more than threefold to $40.4338 since the end of that year.

The gold price of $2,200 predicted by Hall would be 15 percent more than the all-time high of $1,921.15 reached Sept. 6. It would still be below the then-record $850 reached in 1980, equal to $2,337 now in inflation-adjusted terms. Bullion had tumbled 5.7 percent from its all-time high by Sept. 16.

Central banks are expanding their gold reserves for the first time in a generation. Euro-area nations added 0.8 metric ton to their holdings this year, the first increase since 2001, International Monetary Fund data show. Central banks and government institutions worldwide bought 192.3 tons in the first half, according to the World Gold Council.

Arno Pilz

“I’d say gold will have a very good run higher, and a very good retracement would be justified,” Hall said. “If we see a retracement back to $1,700, I think at that point would be a good opportunity to get in.”

Gold and platinum-group metals, used mostly in jewelry and catalytic converters for cars, were the best performers for Duet in the past two months, said Hall, who has traded commodities for about a decade. The fund also profited from betting against silver in May and June, he said. Silver futures traded on the Comex exchange in New York fell from $49.845 an ounce on April 25 to as low as $32.30 on May 12.

That trading idea came from Arno Pilz, 42, who founded the fund with Hall in July 2010. The former head of metals trading at Lehman Brothers Holdings Inc. oversees the fund’s investments in precious and industrial metals while Hall runs the energy trades. They plan to add an agricultural specialist in second- half 2012 at the earliest and cap total assets at $1 billion.

Clive Capital

Pilz, who has traded metals since 1999, has a Master of Philosophy degree in management studies from Oxford University’s Templeton College. He makes his own cider and salami and is building a 1:2 scale Land Rover for his two daughters.

Hall and Pilz beat larger rivals including Clive Capital, which oversees $4.8 billion and fell 11 percent this year, and the $1.1 billion Fortress Commodities Offshore Fund, which returned about 1.8 percent, according to people with direct knowledge of the funds’ performance.

Duet’s best trade was on Brent crude in the second quarter, Hall said. The contract, traded on ICE Futures Europe in London, gained as much as 34 percent this year as fighting erupted in Libya, which has Africa’s largest oil reserves. The disruption to supplies of light crudes, which yield a higher proportion of more profitable products including gasoline, increased demand for similar grades such as Brent.

‘New Highs’

Brent costs about $24.59 a barrel more than the West Texas Intermediate grade traded on the New York Mercantile Exchange, a global benchmark, up from about parity in 2009. The premium dropped from $25.93 on Sept. 6 after a 600,000-barrel cargo of Libyan crude was offered for shipment, a sign exports may resume, said three people with direct knowledge of the transaction.

Brent slumped 12 percent to $111.81 a barrel since early April because of concern that slower economic growth will curb demand for energy. The Paris-based International Energy Agency cut global oil demand forecasts for this year by 200,000 barrels a day and 400,000 a day for 2012 on Sept. 13, and said stockpiles in developed nations fell to below the five-year average for the first time since the global recession in 2008.

“Eventually the crude fundamentals will come through and become the dominant factor,” said Hall, who holds an economics degree from University of Bath. “We are going to see new highs in Brent over the next six months.”

More than half Duet’s commodity book is expressed through options, with crude and precious metals positions concentrated in periods three to six months ahead, said Hall, who previously worked for Credit Suisse Group AG and Deutsche Bank AG.

Gasoil Cracks

Fuel was also the fund’s worst trade, on a view concerning price differentials of gasoil and other products.

“Energy relative value has been the most disappointing part of the portfolio this year, with our view that middle distillates would outperform other products,” he said.

The so-called cracks, reflecting the spread between the price of the refined product and crude, slumped 29 percent since peaking at $24.17 a barrel on March 16, according to data from PVM Oil Associates, a London-based brokerage. Gasoil is typically used as a heating fuel.

Speculators held 1.275 million net-long futures and options across 18 commodities tracked by the U.S. Commodity Futures Trading Commission in the week ended Sept. 6, the most since the week ended June 14, data compiled by Bloomberg show. They had raised that combined position for four consecutive weeks. They cut their bullish bets by 5.2 percent in the latest week.

Platinum Bull

Duet is also bullish on platinum, which gained 2.3 percent to $1,810.38 an ounce this year. The metal, mined mostly in South Africa, will trade as high as $2,000 to $2,200 this year, Hall said. Holdings in exchange-traded products backed by the commodity are at a near-record 44.3 tons, valued at about $2.6 billion, data compiled by Bloomberg show.

Platinum is trading at a ratio of 2.5 times the price of palladium, compared with a 10-year average of 3.5. The metals are mined together and both are used in autocatalysts.

Platinum supply will fall 21,000 ounces short of demand this year, widening to a deficit of 54,000 ounces in 2012, Barclays Capital estimates. Mining companies are going as deep as 1.4 miles underground to maintain output, pumping chilled air down mine shafts to cool seams as hot as 160 degrees Fahrenheit.

“Platinum looks like great value in the precious metals complex,” Hall said. “Platinum is a store of value, a precious metal and an industrial metal. If the economy picks up we’re going to see bigger demand in catalytic converters.”

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