Equity traders watch currencies, oil traders watch the
dollar and lately everyone watches the price of oil. The relationship between
the price of crude oil and the value of the dollar has been unusually close in
the past year and especially so following the peak crude oil price on July 14th.The inverse correlation has been strict, as
the dollar rose oil fell. Even the dates for the reverses in each market mimic
each other.The dollar reached bottom
against the euro the day after oil reached its apogee. July 15th ,the day of the dollarâ€™s plunge the Dow closed
at 10,962.54.Since then oil has fallen
more than 20%, the dollar has gained 8.5% against the euro and the Dow has
returned 5.3%, (all dated to the Friday close).
The effect of a lower
oil price has been much less pronounced on equities than on the dollar. This is
odd because oil acts on the currency markets and the equities in much the same
manner:through its effects on the US economy.
What insight can we gain from comparing the behavior of the three markets since
the oil bubble was punctured in mid-July?
That oil was in a bubble has been clearly demonstrated by
its behavior since the peak.When
Hurricane Gustav became a potential threat to American oil and natural gas
production in the Gulf of Mexico the price of
crude rose more than seven dollars on world exchanges.When the Federal Government announced that
oil would be released from the Strategic Petroleum Reserve to counter any
shortage created by the storm the price of crude fell back almost to its
starting point.That is a normal
commodity market reaction not a bubble induced lunge.
On July 14th President Bush lifted the executive
order prohibiting drilling on the US continental shelf and challenged
Congress to do the same with its own prohibition.Oil began its long fall that day, the dollar
its month long rise the next.There is
no coincidence in these dates. Oil traders know that 70% of the American
population supports drilling for oil in American territory. The congressional
ban on offshore drilling expires on September 30th.Congress must act to renew the prohibitory
regulation or the ban will lapse. Traders were betting that in an election
year, with a very close presidential race the Democrats will be forced to
permit drilling or risk seriously damaging the fortunes of their nominee Barack
What was obvious then is even more obvious now that the
Republican presidential candidate John McCain has chosen Sarah Palin the
Governor of Alaska as his vice presidential running mate. The Republicans
clearly intend to make energy policy and specifically drilling for oil a major
topic in the election. Sarah Palin is both pro-drilling and well versed in
energy politics. As the campaign progresses, the pressure on oil prices from
the potential for increased supply will intensify.
The dollar has been boosted by several factors: the US
economy out-performed the European Monetary Union (EMU) by a wide margin in the
second quarter; the Fed rate reduction of 325 basis points has given the US
economy the edge on recovery and the ECB has provided no stimulus for the
European economy; the next rate move by the Federal Reserve is likely to be a
hike and the ECB will probably cut;the
belief that the US is ahead in the economic cycle having fallen briefly into
negative growth in the fourth quarter of last year while the EMU did not shrink
until the second quarter of 2008.
US equity markets have several factors leaning against any
prolonged upward move.The residue of
the sub-prime and asset backed securities problems are proving much more of a
threat to the financial system and the resumption of normal credit markets than
many anticipated.The financial system
will be hard pressed to resume normal functioning until the housing market has
stabilized.As long as the underlying
market continues to decline, assets based on valuations from that market will
continue to fall as well.
The best hope for a
sustained US recovery now
rests with the US
consumer.US exports, for many months
the driving force behind GDP growth, will begin to wane as the dollar
rises.Consumer spending as given by
real Personal Consumption Expenditures (PCE) was only 0.7% higher in July over
the previous year.There is little doubt
that rising oil prices -- headline inflation was 5.6% in July -- is one of the
primary stops on US
consumer spending and sentiment.If
lower oil prices can help bolster the US
consumer and transfer some economic growth from exports to domestic
consumption, the US
economy stands a good chance of avoiding a prolonged period of slow or negative
In a very accurate sense the American voter has identified
the one factor that has the greatest chance of preventing a painful decline in
economyâ€”lower oil prices.It is also the
factor that will do the most to press the rise in the dollar.
IMPORTANT NOTICE: These comments are
for information purposes only. Past results are not necessarily indicative of
future results. FX Solutions, LLCÂ® believes that customers should be aware of
the risks associated with over-the-counter, spot Forex. Forex trading is highly
speculative in nature which can mean currency prices may become extremely
volatile. Forex trading is highly leveraged, since low margin deposits normally
are required, an extremely high degree of leverage is obtainable in foreign
exchange trading. A relatively small market movement will have a proportionately
larger impact on the funds you have deposited. You may sustain a total loss of
your funds. Since the possibility of losing your entire cash balance does exist,
speculation in the Forex market should only be conducted with risk capital you
can afford to lose which will not dramatically impact your lifestyle.
To the best of our ability, FX
Solutions believes the information contained herein is accurate and true. We
reserve the right to make corrections and/or update the material when deemed
necessary. Therefore, FX Solutions assumes no responsibility for errors,
inaccuracies or omissions in these materials.
Distributed by: FX
Solutions, LLC., Saddle River Executive Centre, One Route 17 South, Suite 260,
Saddle River, NJ 07458
Forex Trading News
Daily Forex Market News Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Forex News Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.