Forex Trading Strategies

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD The Australian dollar suffered after Australia‘s Q1 CPI inflation report came in much weaker than expected. Headline inflation fell sharply to +1.6% y/y (cons. 2.2%, prev. 3.1%). Market expectations had already been lowered by yesterday’s PPI report, but the scale of the miss was still surprising, and AUD promptly dropped 70pips. The rates market had previously priced in a full 25 bp cut from the RBA on May 1, but is now looking for 32bp of easing at the time of writing. Our Australia economists doubt it will come to that – instead they stick to their view that a full 50 bp of easing is indeed on the way, but will be spread evenly between the May and June RBA meetings. ECB policymakers continued to make their voices heard overnight with ...

(Reuters) - Goldman Sachs-linked Capula Investment Management is expanding its $13 billion business into Hong Kong, according to sources, becoming the latest major investor to jump into the region where hedge fund players are a small but growing part of the market. While thousands of hedge funds across the globe manage nearly $2 trillion in assets, relatively few have so far established a large presence in Asia, despite the region's rapid economic growth in the last five years. That is changing fast, with GLG Partners, Soros Fund Management and Paulson & Co among the funds that have set up shop in Hong Kong as a major centre for growth, especially given its proximity to China. The sources, who had direct knowledge of the matter, said Capula would open an office in Hong Kong, which would ...

Forex News and Events: We are clearly in a holiday trading mode, with the last stop being tomorrows NFP. We suspect FX will be range bound as trade wait. Yesterday in the US, the ADP survey indicated that private sector payroll employment increased by 209k vs. 206k exp. in March. This number is consistent without the recent improvements in the labor market and suggests a NFP read above 200k. On the other hand, the ISM non manufacturing index came in below forecasts at 56.0 vs. 57.3 exp. The slight downtick shouldn't be of real concern since the drop only revised abnormally large increases in the past few months. Still supporting the good Friday NFP was the underlying employment index, which rose to 56.7 from 55.7. While the USD continues to benefit from relative growth expectations, we ...

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD AUDUSD dropped 100 pips after China‘s flash PMI estimate for March came in well below February’s final print (48.1 versus previous 49.6). The PMI also added to the kiwi’s troubles, compounding the selloff that began earlier after very weak New Zealand Q4 GDP. There was positive news too overnight – Japan‘s trade balance unexpectedly climbed back into surplus territory in February (on a non-seasonally adjusted basis). Surprisingly, stronger exports were the root cause – and even more surprisingly exports to the US in particular grew sharply. This is yet another piece of evidence that the US economic recovery is gaining momentum. On one hand, a return to a trade surplus is likely to provide some temporary support to the yen, but rising US ...

(Reuters) - Today's coda for investing in the market calls for rapid-fire trading and an eye for the next hot sector. The investing heroes in this world are hedge funds such as Renaissance Technologies, which made founder James Simons a billionaire with its computer-driven, high turnover trading. And yet, an informal study of U.S. mutual funds shows that managers who churn through their portfolios are underperforming those who hold investments for longer periods. The hair-trigger trading strategies used by a number of hedge funds ran into trouble last year, when worries over the U.S. budget, European debt crisis, Japanese tsunami and North Africa unrest whipsawed markets and left investors frustrated over when to get in and out. The mutual fund study, from Thomson Reuters' Lipper Inc, ...

(Reuters) - Big energy companies like Royal Dutch Shell and commodity merchants like Cargill have a simple argument in pushing back against looming new swap market rules: We're not a bank, so don't regulate us like one. But their efforts to avoid being branded a "swap dealer," a designation that brings with it greater scrutiny and onerous new rules, tend to sidestep the fact that, in one small but important way, most of them trade exactly like a bank. For much of the past decade, companies including BP Plc, U.S. conglomerate Koch and Swiss-based trader Vitol have quietly offered their hedging strategies and risk management savvy to other firms, often going head to head with banks like Goldman Sachs and Morgan Stanley to pitch airlines, utilities or producers on ways to hedge prices. Now, ...

(Reuters) - A steady rally in stocks and the euro this year has led to a sharp drop in the main measure of financial market swings - volatility - and many analysts say this could be an ideal time to buy protection against a sudden reversal. A flood of cheap European Central Bank cash in late December, and the promise of more, dampened earlier price swings and pushed shares higher. But the rally has been in low volume, suggesting investors, mindful of the unresolved euro zone debt crisis and still tentative global growth, do not think it will last. "The next volatility spike is coming... Whatever the source, there will likely be a catalyst at some point soon. The real problem is going to be timing that," Simon Carter, European head of options strategy at Deutsche Bank, said. "These ...

(Reuters) - Gold prices rose 1.5 percent on Tuesday for their biggest daily gain in two weeks, as expectations that a Greek rescue deal will be completed drove the dollar down sharply against the euro. Bullion, which had dropped in early trade on nervousness about Greece, rebounded to snap two days of losses as Greece's government was preparing a list of reforms needed to clinch a new financing package. Hopes for a bailout plan that would move Athens closer to avoiding a chaotic debt default boosted gold's inflation-hedge appeal. The metal's rally also sharply outpaced Wall Street's gains. "If the deal falls apart, the ECB (European Central Bank) is going to be even more aggressive in monetizing things and create credit to insulate the banking system from a disorganized default," said ...

Dukascopy Fundamental Analysis EUR " is probably going to retake the topside, but $1.34 is probably where it tops out" - Westpac Banking Corp. (based on WSJ) Despite pair’s recent determined advancement, EUR/USD is expected to remain capped be a key resistance line located at 1.3245/50. USD "Risk appetite is fairly positive at the moment, and this could continue for a couple of weeks. Typical safehaven currencies have taken a step back now" - Rochford Capital (based on Bloomberg) A tough resistance area at 102.55/60 is unlikely to let EUR/JPY rally in the nearest future, pushing the pair down toward 99.00/98.90. GBP "If QE is 25 billion, sterling could stabilise and even rally. If it is 75 billion, sterling may come under pressure" - UBS (based on Reuters) En route to 1.6170/90 (200 ...