GOLD Short To Medium Term Forecast :

GOLD Short To Medium Term Forecast : GOLD Trading in COMEX (Spot) at 1596.65 USD.

Technical Resistance :- 1597$-1607$-1625.33$.

Technical Support :- 1581$-1564$-1555$-1545$.

Last Hope :- 1534$,below this level a free fall or Bloodbath would be expected.

Target Intact :-1480-1440-1400=1385-1375=1325-1300USD (Say Next 2-4 Months).

GBPUSD creates scope for more declines towards its March 2009 low.

The British Pound maintained a very narrow range in between the 1.4320 to 1.4526 after bouncing back from a fresh yearly low of 1.4240 on last week. A revised version of the GDP data will be published today, it is forecasted at around 0.3 percent, and previously it was 0.2 percent. Also in this week there are other major events which may shake the Pound, now at a lower level. The British Pound continues to fall as concerns remain high that U.K. will be unable to handle its massive debt, and also the Europe’s financial problem is also pressuring on British Pound.


Last week’s higher than expected CPI figure has more pressure on the GBPUSD pairs that is the GBPUSD spent its most of the last week trading below the 1.4500 mark. Currently this pair is trading in dangerous phase – any negative news from the U.K would this pair go down upto 1.42 to 1.400 range.

Yesterday the key data on existing U.S Home Sales was published, a leading indicator of economic health. Previously it was 5.35 M. The latest release from National Association of Realtors said that sales of existing home sales rose 7.6 percent to a adjusted annual rate of 5.77 million unit in April, the economy showed signs of recovery. This indicates positive sign for U.S dollar.

On May 25, 2010 Adam Posen, a member of the Bank of England’s Monetary Policy Committee is going to speak about the monetary policy .Most of the investors are very much interested what he is going to make the policy about the interest rate and about the general economy.

Britain economy is very badly affected from last one quarter; previously Britain grew its economy only by 0.2 percent in the first quarter. The second data is expected better than previous a growth rate of 0.3 percent. If the data is as forecasted then the Pound will be in a rocking mode. The BBA Mortgage Approvals data is published today. Along with this the Britain will publish quarterly data on its GDP.Last time this data was 34.9 K now it is forecasted at 37.6 K which has medium positive impact on Pound.

On May 27, 2010 CBI Realized Sales published at around 3.30 Pm of Indian Time. It’s a leading indicator of consumer spending .This is a survey of about 160 retail and wholesale companies which ask responds to rate the relative level of current sales volume. It is forecasted that there will be a small rise from 13 to 14 this time.

On May 28, 2010 Gfk Consumer Confidence, its survey of about 2,000 consumers which is expected to show a little bit less than previous that is previously it was drop to -16 , now it is forecasted at -15 points. Also the data called Nationwide HPI published this weekend which is forecasted increase by 0.5 percent this time.

From technical point of view, the major resistance at 1.4772, followed by 1.5126. The second most resistance for GBPUSD is at 1.5392.

The fresh 2010 low of 1.4240 is the immediate support. For GBPUSD the stronger support at 1.3930.The ultimate support level for GBPUSD is at around 1.3487, which the lowest level seen in over 20 years as you can on the chart.

For long term view for GBPUSD, this pair is in bearish movement from 1.7040 (Aug, 2009) expected to fall upto 1.4000 area to reach next bearish cycle on monthly chart.

Have A Very Happy and Profitable Trading Ahead !!

EUR/USD rebounds from the lower level 1.2143 hits the weekly high at 1.2671.

Euro recovers from the four year low at 1.2145 on Wednesday extended higher today Eur/Usd at 1.2671.From past four sessions, all the commodities and equities continued their sell off dragging the Euro Lower. From last night on Wednesday the Euro rose biggest weekly advance more than 9 months against the dollar, on the optimism European Union officials meeting today .In this meeting they are going to take the decision on the region’s debt crisis.

Japanese Finance Minister Naoto Kan said that it’s undesirable for currencies to stay from “stable “levels. The Euro touched a four –year low on May 19, has gained around 2 percent after the announcement from European Union of 750 billion bailout packages for Euro zones. German officials announced ban on short selling so it was negatively affected on Euro zone.

While today is the major data coming from German .The data called German Ifo Business Climate. The data is forecasted 101.9, previously it was 101.6 its leading indicator of economic health – business reacts quickly to market conditions, and changes in their sentiment can be early signal of future economic activity such as spending, hiring, and investment. If the data is coming as the prediction the euro goes in a green otherwise it will go down

As per the technical point of view Eur/Usd having resistance level at 1.2672 and the second resistance 1.2853. On the other side the Eur/Usd having major support at 1.2334 and the second support level at 1.2137. If the Eur/Usd breaks this second support level then there is no hope upto 1.2064level.

Have A Very Happy Trading !!

Nifty Comparison Between 2008-2010, Nifty May Target 4870-4855

The above sheet is showing the comparison between the Nifty movement from 2008-2010. Now nifty is close last week as the same as closed at 09 May,2008. So Nifty follows the trends. Also history repeats again.

Weekly Nifty Trend :    

• Bearish black candle breaking and closing below the trend line from March 2009 lows.
• Volumes were good and breadth very negative.
• Oscillators are weak below the 50 level and macd is once again in sell mode.
• Trend line support at 4814 

Daily Nifty Trend : -

• Fall continuously on all days of the last week on increasing volumes and extremely bad breadth.
• 61.8 % fibo support at 4955 of rise from 4675 . 
• Oscillators weak and stochastics in oversold zone in positive divergence.
• Taken support on trend line from 3918. Must trade above 4990 for a bounce from the trend line.
• 200 dema at 4880 coinciding with the 50% fibo level of rise from 3918  and the 200dsma is at 4962 almost coinciding with 61.8% fibo level of rise from 4675.

The nifty has fallen sharply for the last 5 trading days without respite.The daily and weekly oscillators are weak and indicating further fall. The intraday charts though are showing positive divergence and very minor bullish patterns which could develop into a small bounce.Strong supports at 4960-4955-4880 supports this possibility.

Trade above 5046 is necessary for further bullishness.Resistance is at 5150.

The trend is down and one should look for opportunities to short on rallies.

Happy Trading !!

Dipak Sharma

sdipak83@sify.com
9372486367

Four points to always remember in the back of your mind.(Global Market Update)

1) EURO Zone will spilt or there will be serious disagreements among the members during the next five years.

2)Dollar will make historic highs against Pound and Euro in the next three years.

3)Stock, metals and energy markets currently looks very uncertain until 27 May, notably alternative energy stocks, will enter in its most unique era in the Wall Street history.

4)Rand(ZARUSD) will enter into a hugely negative period from mid June and I see Rand going back to 13.00 against USD by end of 2012.

One surprising point is here – compared to USA market fall, all other markets will fall even more although the Goldman charge originated from USA. Japan, Hong Kong, India, China and all major European market will crack big.

More Downside Pressure Expected on Euro versus US dollar.

After a strong up a couple of weeks ago the EURUSD pair has meandered over the last week. Greek hopes and worries dominated the Euros trading in the last week. The Euro had the best weekend gap, starting above 1.36 and almost reaching 1.37 last week. After it dropped and closed the gap on Friday. The Greek troubles aren’t over yet.


After starting the week with an impressing weekend gap (after releasing the news of Goldman Sachs scandal) Greek Finance Minister Giorgos Papakonstantinu said Greece’s talks with the European and IMF officials on a potential aid package will last two weeks and a joint text will then agreed by May15. He also said “rumours about restructuring pf debt are nonsense”. Axel Weber, the President of the Bundesbank is not only an influential member of the ECB,but the leading candidate to replace Jean-Claude at the top position. He said to the group of German lawmakers that Greece may require financial assistance of as much as 107.92 billion dollar to escape its debt crisis and avoid default.

The European Union said Greece’s budget deficit last year was worse than it previously forecast and could top 14 percent of gross domestic product as “off-market swaps” cloud its estimates. The EU’s statistics office said today Greece’s deficit was 13.6 percent last year, higher than the governments April 7 forecast of 12.9 percent. Greek bond yields have surged to the highest in more than a decade. Also in near term the Euro has the selling pressure because the widening of the Greek 10-year bond or German Bond spread to 500 basis points.

On Tuesday the German PPI data was released at 0.7 percent while the forecasted value was 0.5 percent. German Producer Prices took a break and remained unchanged last month. After two months of surplus, Europe’s current account, consisting of good trade balance ,services and money, fell into a deficit of revised 1.7 billion last month. This deficit was actually 3.9 billion and 5.3 billion was the market consensus. From the past six months, the German ZEW economic sentiment has been on the fall, hurting the Euro all the time. Previously it was 44.5 points; the released data was 53 points which had a small impact on the Euro.

French Flash Manufacturing PMI is released with value of 56.7 points. The services sector is somewhat lagging behind, in Europe’s second largest economy. According to German Flash PMI, the Europe’s largest economy enjoys a strong manufacturing sector. The services sector was released to advance from 60.2(revised) to 61.3 points. All European Flash PMI rose from 54.1(Revise) to 55.5 Points. All the numbers are above the critical line of 50 shows positive economic expansion.

Today, the President Mr. Jean-Claude Trichet of the ECB might comment about the situation of debt-struck countries and might also say something about the stagnant economy.Tomarrow there are three main economic indicators called German Ifo Business Climate ,this is the second major survey from Germany. The data is expected to rise from 98.1points to 98.9 points. The data is the highest in almost two years. There is another data, which is going to be published on Friday called Industrial New Orders, the data is expected to fall from 1.6 percent to 0.9 percent.

As a technical point of view, the EURUSD has a support at around 1.3109 - this was the low of last year in May (that is May18, 2009)and the second support at 1.2959 .On the other hand, the EURUSD has a resistance level at 1.3423 which was the high of March 26, 2010.The second resistance for EURUSD is at 1.3493.
Have A Great And Profitable Trading Day.........

Canadian Dollar (Loonie) becomes stronger versus US dollar. (USDCAD)

USDCAD was declining from 1.0777 (that is 5 Feb, 2010) as compared to the low of 0.9985 last week. Because of the higher prices of commodities the Canadian dollar rose to parity with the greenback last week. The Canadian dollar fell sharply because of the disappointing employment report which was showed the Canadian economy added 17,600 jobs as against expectations of 26,000. After released this data last week, the USDCAD has settled into declining channel.


Rising prices of commodities and oil prices, the Canadian dollar has crossed parity with the US dollar for the first time from last two years.Becuase commodities and crude from bulk of Canadian economy and its exports. As the commodities and oil prices rise the investors think that the US greenback will strengthen on positive economic news.

The Canadian dollar had hit the historic high of 1.10 percents US against the greenback in the year of 2007.Then it had dipped more than 75 percents US last year as the global crises deepened.

On Monday last week, the Bank of Canada’s quarterly business outlook survey said that companies on balance expect sales to pick up and they are planning to boost investment spending and hiring. Canadian Finance Minister Jim Flaherty said the rise by the Canadian dollar has been “relatively orderly” and business has been able to deal with its climb to around parity with the US dollar. Canadian housing starts were at a rate 197,300 in March, down from revised 200,400 in February, while economists expected 200,000.

Statistics Canada Tuesday reported that Canada’s merchandise exports rise 2.8 percent in February, on the strength of industrial good materials. The Canadian dollar to its strongest level in 22 months against the US dollar. Economic optimism and expectations forecast the Bank of Canada could begin raising rates as early as June.

Today, the US released report on initial jobless at 484,000 (earlier 460,000) which was above the expected 439,000.This is positive for US dollar and negative for the loonie.

On technical point of view, The USDCAD having support at 0.9972 levels. The next support of USDCAD is 0.9820, which was the low of 29 May 2008.The resistance of USDCAD is around 1.0065 and the second resistance is at 1.0105 which was July’s 2008 high.

Characteristics of Successful Traders

Successful traders have absolute control over their emotions; they never get too elated over a win and too depressed over a loss.


Successful traders seldom think of prices too high or low.

Successful traders do not panic; they make adjustments rather than revolutionary changes to their trading style.

Successful traders do not flinch at making the decision to take a loss, they never let loses ride and never add to loosing trades.

(One old trader told me he thought his positions like stock in a store. If something sells it's making you money and you add to that line, if something does not sell it is losing you money so you discount and unload it).

Successful traders treat trading as a business not a hobby.

Successful traders stay physically fit.

Successful traders are prepared for all eventualities on any given trading day. They come to work with a plan that includes many contingencies and not what they just hope will happen.

In your trading program you should therefore have answers to the following what if:

prices open sharply higher or lower?

The market is quiet?

The market is very volatile?

The market makes new highs?

The market makes new lows?

The market goes up early then reverses later?

The market goes down early then reverses later?

The successful trader only trades with money he/she can afford to loose.

Trading can result in substational looses. It is also exciting, exhilarating and can be very ADDICTIVE. The more you are emotionally involved in your money, the harder it will be to make objective decisions about market entry and exit.

Successful traders spend as much time focusing on money management as they do on trading methods.

YOU DO NOT HAVE THE PROFILE OF A SUCCESFUL TRADER IF YOU DO NOT HAVE AT LEAST SOME OF THE ABOVE TRAITS.

Successful traders keep a low profile.

Successful traders listen to the markets. Unsuccessful traders try to impose their will on the market.

Have A Great Trading Day Ahead..........

GBP/USD jumps to test monthly highs at 1.5404.

GBP faces risk of a decline towards its 2010 low at 1.4789 having weakened for a second consecutive week. GBPUSD pair declines from the 1.5389 level (March 17 2010 high) to the level 1.489 level.

This week, the British Pound expects a busy week, with the rate decision being the peak. After the weekend break, the opening price of GBPUSD almost lost the ground level after Friday’s US Non- farm payroll report was released. This data increased by 162,000 in March, and the unemployment was held at 9.7 percent, the U.S. Bureau of Labor Statistics reported.

The Chartered Institute of Purchase and Supply/Markit construction PMI index jumped from 48.5 to 53.1last month in February. Sarah Ledger economist at Markit said increase in March PMI data indicates the growth of activity within the UK construction sector. This kind of growth in construction sector in March took place for the first time in more than two years. This was supported by rising new orders, as private sector demand increased. After this report the Pound goes down. Cable spun lower after Prime Minister Brown called for a general election on 6 May and Parliament was dissolved.

On Wednesday, the major data was released in regards to the British Pound called Services PMI; the services sector is doing quite well but shows weaker data than expectations–purchasing managers expecting the economic expansion. Previously it was 58.4, the actual was 56.1 (less than forecasted -58.1) .It resulted in some selling pressure on GBP.

 Today there are four major economic indicators going to be published, which are very important for the British Pound. The first data called Halifax HPI, House Price Index data shows it was previously -1.6 percent and actual is 1.1, which is more than forecasted (forecasted 0.6 percent).The second data called Manufacturing Production m/m, last month it was dropped by 1 percent and now it is 1.3 percent which is more than expected (forecast was 0.7 percent).Published data is slightly positive for Great British Pound. Another data called Rate decision (it involves Official Bank Rate, Minimum Bid Rate) was published yesterday. All the rates are published unchanged. Official Bank Rate is 0.50 percent which was same last month. The other rate was called Minimum Bid Rate released yesterday unchanged as 1 percent.(The same as the last month).It shows the economy of Britain is improving which is positive for GBP.

National Institute of Economic and Social Research (NIESR), GDP publishes every quarter. This release will complete the first quarter of 2010 and is expected to show a small rise in GDP. NIESR showed a rise of 0.3 percent last time. On Friday PPI(British Producer Price) will be published. In this indicator the PPI input forecasted rose from 0.1 percent to 1.2 percent.PPI output expected to rise from 0.3 percent to 0.4 percent.

As per the chart showing the support for the GBPUSD is at 1.4789 which is the lowest of 2010.The next support at 1.4539 which was the low of last year (April, 2009).On the other hand the resistance is at 1.5404 which was the strong resistance of the last year (January, 2009).

EUR/USD bounce from 1.3383, reaches 1.3517 sessions high.

The US Dollar finished the last week as the top performing G10 Currency, staging against the Euro. The G10 currency is a listed 10 Euro-based Currency ETCs, (Exchange Traded Commodities),providing long or short exposure to the EUR versus G-10 Currencies. The Euro continued strengthening after the announcement of the ECB to help for Greece. Now a day, euros movement is totally depend on the performance and progress of its weakest member: Greece.


After the European Union agreed to support Greece in the crucial situation. The Greece Raises $6.7 Billion in Bond Sale. The bond, worth $ 6.7 billion, was priced to yield 6 percent .After this news, the EURUSD gone up from 1.3412 to 1.3510 on Monday. But one point to note that the one day‘s advance does not make a sense to decide that now the Euro is at a bullish mode. The ECB’s Lorenzo Bini Maghi commented on the current situation for bailout of Greece. He does not see any good impact in the economy because of giving a bailout package to the Greece. On Monday 29 March 2010, the Euro enjoyed a bounced back rally on short covering for the most of the day. Also, the US February Core PCE stayed unchanged at 0.0 percent, lower than the forecasted 0.1 percent. It was negative for the US Dollar as against the Euro.

On Tuesday, Euro zone economic data was increased more than expected in March. After published this news, the euro was falling sharply against the dollar.

Looking forward to Wednesday, the major important data is called ADP Non-Form Employment. The data dropped unexpectedly in March from the previous month.

According to the data processing firm ADP, this job data was decreased by 23000 from February to March on a seasonally adjusted basis, according to the ADP National Employment Report. Most of the Economist had expected an increase of 40,000 jobs, it failed their expectations. Following to the release of this data, U.S dollar sharply down against the euro, with EURUSD up 0.75 percent, trading at 1.3505.

Currently, the EURUSD having its support at 1.3381and if it breaks this support level with a heavy volume then the next support is at 1.3265.The EURUSD touched these two support level last year in April. On the other hand, the resistance for EURUSD is at 1.35431, which was crossed the same level last year.

Dipak Sharma

sdipak83@sify.com

Indian Stock Market Updates -Nifty

Technical Outlook :


As per the last session, Nifty has given bullish indications despite negative A/D data, with resistance at 5270 & bullish breakout from this level can take Nifty to 5325 & above. On the other hand, close below 5200 will pave way for Nifty to go below 5100 in coming sessions. The negative A/D data for last few days along with negative divergences in momentum oscillators favor caution in long positions as far as short term charts are concerned. On the other hand, bullish breakout inn many midcap stocks will keep the market volatile for days to come. Nifty opened on a positive note although US markets were flat & Asian markets were slightly positive. Nifty remained range bound throughout the day between 5267 & 5293 i.e. just 26 points on alternate bouts of buying & selling & closed almost at the opening levels i.e. 5282, almost 21 points above the previous close.

As far as, extreme short term charts are concerned, Nifty is close to the resistance of 5325 & breakout from where can take Nifty to higher levels of 5450-5500 in coming weeks but as a word of caution it must be kept in mind that A/D data is negative for last many days although Nifty is in uptrend & the momentum oscillators are also exhibiting negative divergences. All these factors can bring down Nifty to 5100 & 5000 in coming weeks.

Happy Trading...

GBP mid term depreciation against USD

Over the past four weeks the Great British Pound rate depreciated more than 4 percent. During the last one year, the GBPUSD advanced around 7 percent. Last week of Friday the Bank of England said that the UK could still going into a recession. After this the Pound fell rapidly against the USD.The British consumer price index came up by 2.9 percent in the year to March from 3.1 percent in the year to February .March rates was lowest since last year.


The report of UK retail sales fell from 23 to 13 in March; it was forecasted at 18. Existing Home Sales in US were down from 5.05 million to 5.02 million, the lowest level in eight months. After releasing the annual budget which was presented to Parliament, the sterling sharply corrected. A steady drop in unemployment figures has been seen since they touched 496K about a month ago. The unemployment claims drop from 452K to 442K.It indicates the sign of recovering the US economy.

Friday was the second day of a two day EU economic summit in Brussels. In this summit the European Central Bank President Jean-Claude Trichet said that without considering the European Union, the International Monetary Fund should not take the responsibility of supporting weaker Euro Region nations. He also mentioned in his comment that IMF bailout would be very bad.

Currently, the GBPUSD remains to its support at $1.4777 because it touched the same level in February and if it breaks then next support is at 1.4350. The resistance stays at $1.5409. If it is crossed then the market will turn to bullish phase.

Weekly Global Market Strategy.

Global Market Strategy - 29 March 2010

Sell EURUSD @1.3440-1.3450 Target -1.3415-1.3405-1.3395-1.3388 SL 1.3491

Buy USDCAD @ 1.0240 Target 1.264-1.288 SL 1.202-1.190.

Sell Gold @ 1107 Target 1100-1095-1088 SL 1123.

Sell Suger @ 16.97-16.99 Target 16.82-16.61-16.44-16.13 SL 17.32

Trade With A Strict Stop Loss.

Thought Of The Week :

" Your strategy has to be flexible enough to change when the environment changes. The mistake most people make is they keep the same strategy all the time. They say, “Damn, the market didn’t behave the way I thought it would.” Why should it? Life and the markets just don’t work that .."

Have a Great Trading Week Ahead.....

Warm Regards,

Dipak Sharma

Euro Broadly Lower On Greece Bailout .

The Euro had a worst week due to another bad development in the Greek crisis. Because Euro was sold off sharply last week on the drama of Greece bailout. Indeed, last week of two sessions sent EURUSD more than 200 pips down. As per the markets experts thought that there is already an agreement reached between Euro zone countries on the way to provide financial support to Greece, Germany came out and said that it’s not a legal to support such kind of plan and called for IMF’s involvement.

The last week data’s are negatively affects on the EURUSD pairs. FED holds rates for “Extended Period”(>0.25).The news came from US producer prices fall as energy costs drop, a key indicator of inflation, Which was positive for USD.Also the another news was from Bank of Japan ( BOJ),held rates at a record low (0.1%) and said that it would double a loan facility available to other banks. The main data was published last week was the Euro zone reported one of its largest monthly current account deficits. The 16.7 billion euro shortfall in January compares with a 9.8billion surplus in December. After this data the euro down by 218 pips by the two sessions that is last Thursday and Friday.

The euro fell against the U.S dollar and yen Monday in Asian market on Japan financial markets on holiday. This week we have main focus on the following data’s for technical analysis :-

Today it will bring only two notable economic reports, beginning with the SNB Quarterly Bulletin (Swiss National Bank) at 4.30 pm.The second data is employment change .It still has some impact on the Euro. On Tuesday, Belgium NBB (National Bank of Belgium) Business Climate published at 8.30 pm. Last month the index remained unchanged at -7 points. This is expected at around -4.1.A negative number means worsening economic conditions. German Ifo (Institutes for Economic Research) Business Climate published on Wednesday at 3.30Pm.Contraary to other European surveys and indicators, this one stable and continues to improve steadily. Previously it was 95.2, now it is expected to increase upto 95.8 points. It will have positive impact on Euro. It is a major market mover. The second data is publishing on Wednesday is Industrial New Orders at 4.30pm. Last month it was at 0.8% forecasted is 2.1% this time, supporting the Euro.

In addition, markets will focus on speeches from number of central bankers. A number of Fed officials will speak too including Bernake, Kohn, Pianalto, Warsh, Bullard and Tarullo.

As per technical point of view, we can see first strong resistance level at 1.3783 and then the second resistance at 1.3855.In downside we can see the first support at 1.3690and second support level at 1.3530.Now the EURUSD breaks the second support level (currently it is trading at 1.3520) so market may touch the third support level at 1.3433.

Nifty advances on the Fed decision.

The Federal Reserve repeated their pledge on Tuesday to keep the interest rates less than 0.25 (From 0% to 0.25%) percent for an “extended period “. After this decision, US markets reacted positively, with the Dow Jones closes 0.41percentage up (Dow Jones at 10685) . This two news positively affected the Dow Jones market and their stocks.
While considering the Indian equity market, India’s Finance Minister expressed hope that the economy would soon return to a high growth trajectory, but he also said that we have to cautious about the high inflation and heavy borrowings. The Wholesale Price India (CPI) based inflation has already touched 9.89 in February. Inflation numbers for March will be announced in mid –April which is expected higher than the previous value.
Yesterday all the Asian markets were in green because of the Tuesday’s news. Now the market is waiting for the Bank of Japan (BOJ) press conference announcement. Some economist expects that BOJ may expand their lending program. Today’s expectations are that OPEC will keep oil output cuts. This is positive news for Indian oil companies like ONGC, BPCL Reliance Industries for the very short period. Advance taxes paid by foreign banks operating in the country have been declining by over 58% in the fourth quarter. It built-up the short position in Bank nifty traded in to the exchange.

As per technical point of view, we can see a strong resistance level of two month high that is5290 if it sustained at this level with a heavy volume then we can see a upward resistance of 5546.In downside we can find a crucial support level at 5110 if it breaks the support level then we can a find a down trend till 5065.

Dipak Sharma

dipak.sharma@xtb.in

www.in.xtb.com

Career Development = Career Advancement

Career Development: A conductor in support of your coming!


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The career development process is the examining of your basic skills, how well you see to stress, your abilities and interests in working with others, and tuition or training with the purpose of you complete to enter the career. Career development is the arrangement you design to assist you in advancing through your career, to be flexible as wanted and to be alert to trends and patterns to help extra advancing your career.


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Canadian Monetary Policy( CAD) & The Dollar {USD/CAD}

At its March 2 Policay meeting, The Bank of Canada (BOC) maintained its benchmark short –term rate at all-time low of 0.25percent, but its comments were a bit more hawkish than at the January meeting. Hawkish means rates are expected to rise, while dovish means they are expected to fall. From April2009, the BOC’s benchmark rate has not been changed and is not expected to change until the end of the second quarter of this year.

This Latest report which was published on March 2 was definitely hawkish, and the BOC is slowly and surely trying to increase in rates as the economy picks up. After publishing this Overnight rate by BOC the USDCAD down rapidly. Also the news is coming from Greeks so overall the pressure is into all the currencies as against the USD.


Today there are four important data’s are going to publish.Teh first two data’s relates with the Canadian dollar. The first is called Building Permits m/m publishes at 7 PM (Indian Time), it’s an excellent gauge of future construction activity because obtaining a permit is among the first steps in constructing a new building. The previous data was 2.4% and forecasted is 1%, this is negative for CAD. The other data is called Ivey PMI (Richard Ivey School of Business); it’s a leading indicator of economic health. If the data is above 50.0 indicates industry expansion, below indicates contraction. Previously it was 50.8and forecasted is 56.

Today’s major data’s are related with the USD, called Unemployment claims (Previously it was 496K and forecasted is 472K) and Pending Home Sales m/m. (Previously it was 1% and forecasted 1.4%) So today’s market is looking very volatile.


Dipak Sharma

sdipak83@sify.com

Fundamental Analysis Chapter-III

Education - Fundamental Analysis Chapter-III

Major currencies :


Currencies are known to societies for ages. Back in the old days, bartering was the first way of payment. Later on, when adventurers discovered new lands, people started trading on a greater scale and economies developed. A more convenient way of paying was introduced – money. In the form of coins and paper bills, money is all around us and we deal with it on an every day basis. Recently, with technological advancements electronic payment was introduced making it easy to pay for products and services. In the world of debit and credit cards, online payments or wire transfers, we physically see our money very seldom. We do not carry cash with us any more! But still we make payments in certain currencies.

Almost every country in the world has its own currency. Of course, there are exceptions like the Euro zone. On the Forex markets we can trade almost any currency available. Some of them are more popular since they are used in the major economies and for interbank transactions. The most important currencies in the world are: the U.S Dollar, the Euro, the Japanese Yen, the British Pound, and the Swiss Franc. These are the most liquid currencies (can be converted or exchanged at almost at any time at the current spot rate) and that is why they are called the “majors”. In the section below, I want to describe each of the listed currencies.

The U.S Dollar
The United States Dollar is the most important currency in the world. Most of the currencies are quoted against the dollar. During times of economic and political disturbances, the U.S Dollar is the safe-heaven currency. It proved its strength especially during the Asian crisis in 1997 and 1998.
The importance of the U.S Dollar began after World War II when in the Bretton Woods Accord* other currencies were virtually pegged to it.

As an interesting fact, the term “Benjamin” refers to the 100 dollar bill with Benjamin Franklin on the bill. Also widely heard “greenback” refers to the color of the American currency paper bills.
The importance of the American currency declined a little when the Euro was introduced in 1999 for the Euro zone.

Abbreviation: USD

The Euro
The Euro was introduced on January 1^st 1999 and was designed to become the most important currency in the world. Currently, 13 European nations use the common currency (there were 11 participating countries when the Euro was introduced. The Euro has strong international presence backed by strong economies of the member countries of the European Monetary Fund. Currently, the Euro strengthened to its all-time high against the U.S Dollar. As an interesting fact, these are the starting conversion rates from start date of the Euro on January 4^th 1999:
1 EUR = 40.3399 BEF                              1 EUR = 1.95583 DEM
1 EUR = 166.386 ESP                              1 EUR = 6.55957 FRF
1 EUR = 0.787564 IEP                             1 EUR = 1936.27 ITL
1 EUR = 40.3399 LUF                              1 EUR = 2.20371 NLG
1 EUR = 13.7603 ATS                              1 EUR = 200.482 PTE
1 EUR = 5.94573

Abbreviation: EUR

The Japanese Yen

The Japanese Yen is the third most traded currency in the world, though some would argue that it is the most traded. What makes the Yen so attractive to investors is the interest rates level in Japan, which currently remains at 0.5%. Such low cost of money allows traders and investors to take advantage of the so called carry trades. In a simple way, carry trading involves borrowing in a currency on low interest rate (like the Yen) and investing in a higher-yielding financial instrument (ex. the U.S Dollar). The yen is very liquid and traded almost around the clock. It is very sensitive to the Japanese stock exchange, the Nikkei.

Abbreviation: JPY

The British Pound

The currency of reference before World War II. It is traded mostly against the U.S Dollar and the Euro. Its nickname, “cable” comes from the telex machine, which was used to trade it at the beginning of the 19^th century. Information about the British Pound’s quotations was sent from London to New York through a telex machine with some delay.
In 1990 the British Pound joined the Exchange Rate Mechanism (ERM) and till 1992 had to follow the Deutsche Mark’s fluctuations. Its withdrawal from the ERM had a good effect on the currency.
Before the introduction of the Euro, the cable was the currency of choice along with the American dollar. Nowadays, the British government is trying to bring UK’s interest rates to the Euro zone level to make the pound more attractive.

Abbreviation: GBP

The Swiss Franc
The Swiss Franc represents the strength and quality of the Swiss economy and finance. Even though the country’s economy is relatively small, its currency has a great impact on global markets. The Swiss Franc does belong neither to the European Monetary Fund nor to the G-7 countries. Despite that, since Switzerland has a close relationship with Germany and the Euro zone, it resembles the patterns of the Euro. The franc is considered a very stable currency but lacks the liquidity of the Euro. That is why in times of higher demand for the franc, it can be much more volatile than the Euro. In times of uncertainty (especially in the Middle East), the Swiss Franc is favored over the Euro. Interest rates being relatively low in Switzerland draw investors to take credits in francs.

Abbreviation: CHF

The presented currencies constitute the “majors”. Most transactions around the world are finalized with one of the mentioned coins. Since most currencies around the world are traded against them, fundamental analysts focus on the major economies of the world. For this reason, macroeconomic information published in the U.S, the Euro zone, Switzerland, and United Kingdom is the most anticipated data by investors from around the world.

*The Bretton Woods Accord was signed in July of 1944 by the United States, Great Britain, and France. In order to make the currency market stable, pegging of currencies was provided and the International Monetary Fund was created. In accordance to the treat, the major trading currencies were pegged to the dollar and could fluctuate only 1% on either side of the rate. When any currency exceeded that limit, the central bank from that country was obliged to intervene buy either buying or selling currency in order to bring it back into the range. At the same time the U.S Dollar was pegged to gold at $35 per troy ounce. The American dollar became the world’s reserve currency.

In 1978 the International Monetary Fund allowed currencies to free-float, meaning that the value of each currency is derived from the demand and supply factors, without any limits to stay within.

Fundamental Analysis Chapter-II

Education - Fundamental Analysis Chapter-II

Introduction to Forex Markets


Currency trading has been known to the world for ages and can be tracked down to the Middle East and Middle Ages. Back then, international merchant bankers prepared documents called bills of exchange. These transferable third-party payments allowed flexibility and growth of currency exchange deals.

The world has changed and the modern currency trading takes place in a different way. Nowadays, the Foreign Exchange Market (FOREX) is the biggest market in the world. Since currencies were allowed to float freely against each other, currency trading experienced an immense growth in volume. Just to picture that, take a look at the following daily turnover data:

Year               Turnover
1977              $5 billion      
1987              $600 billion
1992              $1 trillion
2000              $1.5 trillion
2007              $2.7 trillion
2008              $3.4 trillion
2009              over $4.5 trillion.

Did you know that the daily turnover of currencies in 2009 is three times larger than the stocks and bonds market put together!

Forex is an Over The Counter (OTC) market which does not have a specified place of trading - i.e. "Floor" of any stock exchange. The market is made of banks, brokerage houses and other systems interconnected by computer and communication networks, mostly the Internet. The lack of a specified physical location for the FOREX market allows it to work 24 hours a day, 5 days a week. All the developed countries in the world contribute to its existence. The main centers of FOREX transactions are London, New York and Tokyo.
Major market participants groups are:

Hedgers – typically medium and large export and/or import companies or dealing other ways with foreign currencies, seeking to limit their currency risks. Due to an increase in private individual debt, individual investors can also be included in this group. Hedging techniques minimize currency risk.

Speculators – these are companies but mostly individual investors that seek to gain profits from changes in the price of derivative instruments over time.

Arbitragers – investors with significant assets that make transactions on a minimum of two markets simultaneously, using exchange rates differentials to make profits. Market inefficiencies allow to make profits from differences in financial instrument prices.

Market Makers – financial institutions (ex. Brokerage houses) that act as intermediaries in transactions between speculators and hedgers. Market makers provide liquidity of the forex markets.

The great number of participants makes FOREX the most liquid financial market in the world and practically impossible to manipulate even for central banks of the most developed countries. For this reason, traders who are able to properly predict future price movements can achieve significant profits on the market.
In conclusion, foreign exchange is a very specific market that differs from all other financial systems around the world. Those differences can summarized as follows:
-       accessibility to both financial institutions and individual traders in all major currencies.
-       guaranteed quantity and liquidity.
-       sensibility to a large and continuously changing number of factors.
-       24 hour , 5 days a week trading
-       extremely high efficiency relative to other financial markets.

Fundamental Analysis Chapter- I

Education - Fundamental Analysis Chapter-I

What is Fundamental Analysis?

Let me welcome You to the world of fundamental analysis. Have you ever wondered why the American dollar is weakening or gaining in value? Or why the price of gold or oil fluctuates so much? Fundamental analysis explains how economic information from all around the world affects the prices of financial instruments. I hope to show You the beauty of analyzing macroeconomic information and what benefits it gives.

According to J.C Ritchie (in his Fundamental Analysis) “the goal of fundamental analysis is monitoring and classifying financial assets according to their investment quality (as estimated risk valuation) and expected rate of return”.

Fundamental analysts try to price a financial instrument (equities, currencies, commodities, indices etc.) and to define its intrinsic value. Afterwards, comparing the valuation with the market price, they forecast the future turn of events and the possible rate of return. If analysts recognize that the financial instrument is valued lower by the market than its intrinsic value (the financial instrument is undervalued), they will recommend buying it. In the case when calculations show that market price is too high (the financial instrument is overvalued), they will recommend their clients to sell it.

Opposite to technical analysis, fundamental analysis investigates the reasons, not the effects. The main difference though is that technical analysis helps with the timing of your decision to enter the market while fundamental analysis explains why certain things happened. Pricing a financial instrument, analysts take into account many factors like: current and future macroeconomic situation of the region and the country, interest rate levels, possible development of the industry, profits and dividends forecast or cash flows of the company (in case of equities). Recommendations made after fundamental analyses are based on subjective assumptions of analysts; that is why they cannot be treated as 100% precise. Fundamental analysis is comprised of the following stages:

1. Macroeconomic analysis (Currencies, Commodities, Indices).
2. Industry sector analysis (Companies).
3. Situational analysis of the company (Companies).
4. Financial analysis of the company (Companies).
5. Valuation.

The stages described above are used when investors analyze companies and its stocks. On the forex market, one obviously needs to investigate the current global economic situation. To follow that, governments and government agencies publish several economic indicators regarding segments of the industry. Also, central bank’s decisions regarding interest rates are closely watched. All these, and many more contribute to movements of exchange rates. I will describe all the important economic indicators in the near future.

Fundamental analysis is an important step in the decision-making process. At the same time it is not perfect and has its drawbacks. The most often mentioned are:

1. The same macroeconomic information can have different effects for the same currencies – there is no rule of thumb regarding how currencies will behave when a certain set of information is released.
2. Too many economic indicators and macroeconomic data – almost every day governments publish economic reports. Political situation changes abruptly sometime. There are so many events that a fundamentalist might overlook.
3. Fundamental analysis is good only for a long-term period – fundamental analysts can forecast future economic situation but usually for a longer period of time. In the meantime, unexpected corrections or declines cannot be easily foretasted.

When analyzing the economy and future trends it is very important to take into account what information the market has already discounted. If the market expects a fast and dynamic growth or expansion, is this information already discounted by the market?

Opponents of fundamental analysis point out that there is a vast amount of risks that can affect the outcome of the analysis for example changing interest rates, changing housing and labor market trends, inflationary pressures, political risk and others.

Can you think of any other disadvantages of fundamental analysis? Or are you confident that you can completely rely on it?

As I mentioned before, fundamental analysis answers the question: what and why to buy? Whereas, it is also recommended to use technical analysis to tell us when to buy and when to sell. I have to point out that many experienced fundamental analysts, including myself, use both fundamental and technical analysis on the modern capital market with great success.