FX Island

After holding onto its gains for the past week, the US dollar finally came under pressure today, It fell against the Euro, the Japanese Yen, the Australian, New Zealand and Canadian dollars. The only currency it did not drop against was the Japanese Yen, which benefitted from overall carry trade demand. Does this mean that the rally in the dollar over? Probably not. Despite the rebound in the EUR/USD today, the currency pair still remains within its 1.43 to 1.45 trading range. Even the AUD/USD and NZD/USD are capped below resistance. Next week, trading should be exceptionally quiet which means that a break of these resistance levels is unlikely.

According to the latest reports from the Commerce Department, the US consumer spent more than they had made during the month of November, with personal spending rising by 1.1 percent and personal income rising by only 0.4 percent. This caused personal savings to dip into negative territory for the first time in 15 months as disposable income fell to -0.5 percent. Lowered savings and increased spending is not a promising recovery strategy for a country which already has huge government deficits, but the Commerce Department stated that the increase in spending was a much-needed boost for the dragging economy. US consumers are on a spending frenzy with the savings rate hitting its lowest level since Hurricane Katrina in August of 2005. The core inflation rate is also growing by 2.2 percent year-over-year, which is well above the Fed’s target rate of 1 to 2 percent.

Meanwhile the US stock market has shown signs of recovery as the DJIA hit new highs for the week with the S&P 500 showing advances as well. Out of the 30 Dow’s components, 29 of them traded higher, giving greater support to blue chip firms. Oracle Corp. and Research In Motion Inc. also reported higher than expected quarterly earnings which led advances in tech stocks. Merrill Lynch & Co., Inc helped to restore confidence in financial stocks as they announced the possibility of a capital infusion from Temasek Holdings in Singapore.

US treasuries have faltered as the equities markets made advances, with the Federal Reserve conducting biweekly auctions of short-term funds as a measure to suppress the repercussions from the credit crisis. The Fed sold off $20B of 35 day credits at a rate between 4.65% and 4.67%, saying that they will continue to hold these auctions “as long as necessary.” The ECB, BOE, and the SNB stated that they will join in the efforts of improving and restoring confidence in the credit market, and announced that they will collaborate with one another in holding special auctions of treasuries as well. Bond yields are up across the board with the 10 year Treasury rate rising to 4.168 percent.

Source: DailyFx.com

“Just do it.” – Nike.

Everyone’s heard it, everyone’s see it, and many of you wear it on those big dogs you call your feet.

But how many of you practice what the slogan preaches?

Do you ever doubt your decisions, particularly when opening or closing a trade?

Maybe you spend too much time analyzing everything possible and end up missing a major move in the market?

Do you hesitate at a significant point in your trading and miss a potential entry window?

Or maybe the data overflow has caused you to become one with your chair, and you can’t move anything except your eye lids, blinking in horror as you watch the market do the exact opposite of what you thought it would do?

Answering YES isn’t the end of the world, but it DOES mean you’re the carrier of a virus that’s been targeting novice and professional traders alike… you’re infected with analysis-paralysis! Protect the children!

If you’re anything like me, parting with your hard earned money always takes some self-convincing. And it’s understandable that putting your money on the line to trade can be particularly hard. I mean this is the possibility of losing it!

But many times it’s the attractive alternatives to one trade that cause your indecisiveness. You spend a great deal of time trying to decide which opportunity could become the most profitable that you end up acting too late or not at all. Other times, rather than make a move, some traders actively avoid making decisions because they doubt their talents and chances at being successful traders. So they procrastinate by analyzing and then analyzing some more. To even other traders, this procrastination signals a need to be perfect. The thinking here is that if they can trade perfectly, all insecurity in the market or at least the trade can be removed. But we know there’s always risk involved in trading, and no plan or strategy is 100% safe from failure.

But don’t fret, there are several ways to steer clear of your analysis-paralysis or at least limit its effects. For one, realize that you aren’t perfect and that you don’t have to be perfect to be a successful trader.

We all make mistakes, and that’s part of life and part of trading. Understand this and start taking action. Next, stop being a control freak! It’s not worth it. Every time you think you’ve got the market figured out, it sets you straight by taking your money.

Uncertainty is part of the game, so accept it. You’ll be better for it.

If you can’t make moves forward in your trading, try taking smaller positions and only use money that won’t break your bank if lost. Reducing the hit on your wallet from a loss will help calm you. It will be easier to get moving to the next opportunity knowing that you only lost the absolute minimum to enter the trade.

Finally, if all else fails, observe yourself over-analyzing and then STOP! Pinch yourself in the arm or leg if you have to. If you can’t do this to yourself, there’s more than likely a spouse, boy/girlfriend or roommate willing to take action on your behalf. The shear pain of it all will get you going in the right direction.

Remember that there’s a point where you have to JUST DO IT! You can’t be perfect, and you will make mistakes. But that’s okay! Do what I’ve outline above to fight the paralysis and TAKE ACTION.

Source: Babypips.com

Crude oil closed lower on Monday after another volatile day of trading. Light sweet crude for January delivery moved at $87.86, down 42 cents on the session. Crude climbed as high as $89.80, but began to decline in the mid-morning before leveling off. Traders looked ahead to Tuesday’s FOMC decision and Wednesday’s inventory data, and also continued to mull last week’s OPEC decision.

Oil dropped 43 cents amid extremely choppy trading last week. Investors continued to consider OPEC’s decision to leave production unchanged at its meeting in Abu Dhabi when many experts expected a rise of up to 1 million barrels a day. Prices had been dropping for about 10 days as investors predicted a production increase. Because of high prices, however, the council will meet again in February at a special meeting.

Traders are looking ahead to Wednesday’s inventory report. Last week’s data from the Department of Energy showed a drop of nearly 8 million barrels. Analysts had been expecting a much more modest decrease of about 800,000 barrels. However, figures in Cushing, Okla, moved higher.

Investors are looking ahead to the Federal Open Market Committee meeting, which is planned for Tuesday. Most experts expect to see an interest rate cut for the third straight meeting. The question for many has become whether the Fed will elect to slash rates by either 25 or 50 basis points.

On the economic front on Monday, data revealed that in October, pending home sales rose 0.6 percent, compared to a 0.2 percent increase in September. Analysts had expected a one percent decrease. Other economic news is also expected this week. Wednesday, export and import prices will be made public, along with the U.S. trade balance. On Thursday, data on Retail Sales, business inventories, and the Producer Price index will be released. Friday investors will be given access to the consumer price index, and industrial production.

Source: RTTNews.com

Copper moved higher on Wednesday amid the release of some positive economic data in the U.S. March closed at $3.016, up $1.80 on the session. The industrial metal pared some of its losses from earlier in the week.

The red metal is down about 20 cents this week, after a strong run last week. The metal closed Friday’s session at a two-week high of $3.157 a pound and ended the week up 5%. Before the recent rally, the red metal had been trading near a multi-month low on general economic concerns.

Investors are looking ahead to the Federal Open Market Committee meeting, which is planned for Dec. 11. Most experts expect to see an interest rate cut for the third straight meeting. The question for many has become whether the Fed will elect to slash rates by either 25 or 50 basis points.

On the economic front, Wednesday morning, the Department of Labor released its revised report on labor productivity and unit labor costs in the third quarter, showing that productivity growth in the quarter was revised up more than expected. The report showed that the pace of productivity growth in the third quarter was revised up to 6.3 percent from the previously reported 4.9 percent growth. Economists had expected a more modest upward revision to 5.5 percent growth.

At the same time, the Labor Department said that unit labor costs fell 2.0 percent in the third quarter compared to the 0.2 percent drop previously reported. The drop in unit labor costs had been expected to be revised to a decrease a 1.0 percent.

Meanwhile, Automatic Data Processing, Inc. (ADP) released its report on private sector employment in the month of November, showing job growth for the month that came in well above economists’ expectations. The report showed that non-farm private employment increased by 189,000 jobs in November following an upwardly revised increase of 119,000 jobs in October. Economists had expected a much smaller increase of about 53,000 jobs. ADP said that the better than expected job growth reflected broad based employment strength, with employment in the manufacturing, construction, and financial services showing signs of accelerating following recent downward pressure.

Gold slipped Wednesday, giving back some of its recent gains. February gold traded at $803.50, down $4.10 on the session. The precious metal climbed as high as $813.00 in electronic trading, but moved lower throughout the early part of the session, reaching as low as $797.60 before bouncing back.

The drop came as the U.S. dollar saw strength. The greenback rallied against the euro to reached its highest level in nearly three weeks. The greenback also moved higher against the Swiss franc and British pound in morning transactions.

Crude oil finished a volatile session lower on Wednesday amid the release two key announcements that some experts thought might take prices a lot higher. Light sweet crude oil closed $87.49, down 83 cents on the session. Traders considered OPEC’s decision to leave production unchanged when many experts expected a rise of up to 1 million barrels a day. Later, crude oil weekly inventory data showed a drop of nearly 8 million barrels.

Oil climbed to as high as $90.39 after OPEC’s announcement, but gave back most of those gains by the late morning. Crude slipped even further in the afternoon and closed lower for the seventh time in eight sessions.

Source: MoneyForex.com