AUDIO - Financial Matters with Sam Seiden
The mastermind behind the Online Trading Academy’s Patented trading methodology, Sam Seiden
joins Merlin to take a look at the new financial education program
being rolled out. Sam points out why there is such a need for mass
education in many areas of our lives, areas where big corporations have
been teaching us to do the wrong thing! The duo also takes a look at
Crude Oil and market timing principles.
Forex Weekly Outlook February 9-13 (based on forexcrunch article)
Glenn Stevens’ speech, Australian employment data, Mark Carney’s
speech, BOE Inflation Report, US retail sales, Unemployment Claims and
Prelim UoM Consumer Sentiment are the major market movers for this week.
Here is an outlook on the highlights coming our way.
Last week Non-Farm Payrolls release exceeded forecasts with a 257,000
jobs gain in January, following 329,000 addition in the previous month.
Economists expected a gain of 236,000 positions. However, the
unemployment rate edged higher to 5.7% from 5.6% in December. Full-time
positions edged up 777,000, reaching more than 120 million for the first
time since July 2008. The strong job gain together with a smaller than
expected rise in the number of jobless claims indicate solid economic
recovery. Will this trend continue?
US Dollar Fundamentals (based on dailyfx article)
The Dollar came dangerously close to starting a speculative landslide
this past week. Yet, once again fundamentals have stepped in keep the
record-breaking seven-month bull trend intact. While the bull trend
stands heading into the second week of February, there is relatively
little conviction to launch forward with Monday. This past week’s NFPs
have revived Fed rate expectations and deteriorating conditions in the
Eurozone leverage a liquidity appeal for the Greenback. However, the
policy contrast has likely reached its near-term limit and an anti-Euro
haven may not provide the necessary degree of motivation to keep this
Had it not been for the favorable outcome from the January employment
figures this past week, the US Dollar may have very well dove into a
correction. The headline data looked mixed – the net payrolls beat
expectations by a modest 29,000 jobs while the unemployment rate
unexpectedly ticked higher to 5.7 percent. Neither of these developments
significantly alters the trend of improvement lauded by the Fed
officials. The real surprise was in the underlying figures that the FOMC
considered more ‘qualitative’. The participantion rate picked up from a
near four-decade low, but it was the the 0.5 percent jump in wages
(the biggest in seven years) and 2.2 percent pace that jump started the
flagging rate speculation.
What the wage data represents is the potential genesis for inflation –
the missing ingredient for hawkish conviction at the Fed. After the data
was processed by the market, 2-year Treasury yields surged 24 percent
(to 0.6435 percent) – the biggest move since December 7, 2010. Following
suit, Fed Funds futures pricing the rate forecast through December
added another 11 bps of expected tightening and the probability of a July hike rose to 52 percent.
As we move closer the mid-year policy meetings (June 17 and July 29),
speculation will intensify as data paths become clearer and time runs
short. However, we are still four months out, and this week’s docket is
light for data that is capable policy fodder. So while, the Dollar can maintain its advantage well enough; it will struggle to press it.
The burden facing the Dollar is largely a speculative one. Looking to
speculative futures positioning in the COT report, we find this segment
of the market is already long in record numbers (over half a
million contracts). One-sided bets are prone to corrections from profit
taking to de-levering. What’s more, the same strength that the currency
has enjoyed for its favorable yield forecast can also turn it into a
risk prone currency in the event of a broader risk aversion effort.
Short-term FX positions looking to ride the yield disparity would be as
motivated to unwind as those that were long traditional carry or
equities. And, while the Dollar would eventually regain its footing
should selling turn to pure liquidation; there is a large gap between
speculative shakeout and liquidity scrambling.
Perhaps the Dollar’s most promising fundamental backer heading into the
new trading week is a worsening of global confiditions that can hasten
the demand for liquidity. This is especially true of the Euro where Greece’s debt standoff has found the country with one less important liquidity line and an accelerated time line
issued by an unaccommodating European community. Another possible
source of strength for the reserve currency is further fallout from
global stimulus. We’ve already seen Switzerland’s central bank falter
under the ECB’s efforts, and many others were already struggling before
that. Cracks in the façade of complacency can quickly expose more
systemic issues – such as asset bubbles.
USDJPY Fundamentals (based on dailyfx article)
The Japanese Yen finished the week noticeably lower versus all major
counterpart and pushed the US Dollar/JPY exchange rate through key
resistance. Could this be the start of a larger USDJPY breakout? The
interest rate-sensitive JPY was among the biggest losers as the US
Dollar surged on a strong US Nonfarm Payrolls report. Yet a noteworthy
drop in FX volatility prices suggests that relatively few expect
similarly large moves ahead. Indeed, limited economic event risk ahead
may keep US Dollar pairs in tight trading ranges—limiting our enthusiasm
on fresh USDJPY-long positions.
Any substantial surprises out of upcoming Japan Trade Balance results,
Industrial survey data, or Producer Price Index inflation numbers could
force a Yen reaction. Yet traders have proven relatively indifferent to
Japanese economic data, and sharp post-event moves seem relatively
A strong correlation between the USDJPY and US Treasury Yields will thus
keep us mostly focused on US economic data. To that end we’ll watch the
upcoming US Advance Retail Sales report for potentially meaningful
reactions from yields and the USDJPY. It thus far looks as though it
will be a quiet week for the Japanese Yen.
And despite its substantial post-NFPs rally, the USDJPY remains in a
broad consolidative range dating back to December highs. Only a break of
significant resistance near January’s peak of ¥121 and eventually
8-year highs near ¥122 would change that. We subsequently remain
somewhat bearish the USDJPY (bullish the Japanese Yen) through the
GBPUSD Fundamentals (based on dailyfx article)
The Bank of England interest rate decision produced no changes in policy
last week, leaving the British Pound without guidance on where Governor
Mark Carney and company intend to steer going forward. The markets will
look to dispel this uncertainty in the week ahead as the central bank
publishes its quarterly Inflation Report. Officials have used the
document and its accompanying press conference as the primary vehicle
for announcing policy and outlook changes over recent years.
As we discussed in our first-quarter forecast, sinking Eurozone economic
growth expectations have weighed heavily on BOE interest rate hike
expectations since mid-2014. This is not surprising. The Eurozone is the
UK’s largest trading partner: the share of total exports headed for
markets on the Continent has been on the rise and is now hovering near a
two-year high of 48 percent. That means that even as the UK economy has
recovered from the 2008-09 recession, its sensitivity to headwinds from
the Eurozone has increased.
With this in mind, it is no wonder that Mr Carney has recently remarked
that policy normalization may come slower than previously expected. That
much is likely to be reflected in the BOE’s updated forecasts for
growth and inflation, both of which will probably edge lower. The larger
question is whether this is likely to weigh on the British Pound.
The currency has been trending firmly lower alongside fading tightening
bets for months, so much of the negativity to be expressed in the
Inflation Report may be priced in already. Indeed, backing out priced-in
expectations from Sterling interest-rate futures reveals traders don’t
envision a hike sooner than the fourth quarter. OIS-based indications
are even more pessimistic, pointing to no tightening until at least the
beginning of 2016.
On balance, this suggests the British Pound may be disproportionately
more sensitive to a hawkish surprise in the central bank’s rhetoric than
a dovish one. The currency may not suffer too badly if the markets’
unwinding of rate hike bets is validated. If policymakers firmly remind
investors that the BOE does not intend to join the increasingly
wide-spread lurch toward stimulus expansion and maintain the next policy
change will be to reduce accommodation, the UK unit may rise.
GOLD Fundamentals (based on dailyfx article)
Gold prices plummeted this week with the precious metal off more than 4%
to trade at $1231 ahead of the New York close on Friday. The losses
come on the back of a stellar US employment report with shifts in
interest rate expectations propping up the greenback at the expense of
the yellow metal. Gold now looks to test a key support structure with
the technicals suggesting that shorts are at risk near-term.
The November Non-farm Payroll report released on Friday showed the US
economy adding 257K jobs last month, far surpassing the expectation for a
print 228K. The move was accompanied by a massive upward revision to
the previous month’s data from 252K to 329K with average hourly earnings
topping expectations across the board. Although the unemployment rate
did unexpectedly rise to 5.7%, the move comes alongside a 0.2% increase
in the labor force participation rate, which was off its lowest levels
since the late 1970s.
From a technical standpoint gold broke below the 200-day moving average
on Friday for the first time since January 15th with the decline taking
prices into the lower median line parallel of a pitchfork formation
dating back to the November low. This trendline also converges on a
median line off the July 2013 highs and could offer some near-term
support. We’ll reserve this threshold as our medium-term bullish
invalidation level with a break below targeting support objectives at
$1206 & $1197. That’s said, shorts are at risk here with interim
resistance seen at $1248/52 and $1268. We’ll be looking for a low early
next week with our basic near-term focus higher while within the
confines of the November median-line structure.
Nikkei forecast for the week of February 9, 201 find, Technical Analysis
The Nikkei as you can see initially fell during the course of the week
but turned back around below the ¥17,500 level to form a hammer. The
hammer of course is very bullish sign, and as a result we believe
ultimately this market will form enough bullish pressure to break above
the ¥18,000 level. With that, we are bullish and have no interest
whatsoever in selling. We believe that the level below should continue
to offer buyers, and that this market will ultimately break out and head
to the ¥20,000 level.
DAX forecast for the week of February 9, 2015, Technical Analysis
The DAX as you can see broke higher during the course of the week,
testing the €11,000 level. Ultimately pulling back though, and forming a
shooting star of sorts. This is the second week in a row that we formed
a shooting star, so a pullback from here makes a lot of sense. What
frankly, we think that there is a lot of support below and it’s very
likely that we will see the market test for support and find a
supportive candle in order to start buying. On the other hand, if we
break the top of the shooting star and clear the €11,000 level, this
market should then go much higher.
NASDAQ forecast for the week of February 9, 2015, Technical Analysis
The NASDAQ broke higher during the course of the week, testing the 4800
level as you can see. With that, the market should continue to go higher
we can break that level, as we should then head to the 5000 handle.
With that being the case, the market looks as if it is ready to test
that area and perhaps even go higher than that. We are most certainly in
an uptrend, and as a result we are “buy only” at this point in time. We
believe that the 4600 level below is in fact supportive.
S&P 500 forecast for the week of February 9, 2015, Technical Analysis
The S&P 500 as you can see broke higher during the course of the
week, but struggled to get above the 2060 handle. Because of this, looks
like we’re ready to continue consolidating, but we believe that
ultimately the market will break higher. In the meantime, expect a lot
of sideways action as far as long-term trades are concerned and as a
result we have no interest whatsoever in placing a longer-term trade
into we break out to a fresh new high. Any trading in this market
probably going to be off of shorter-term charts.