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China Non-Manufacturing Growth At 6-Month High
The growth in Chinese non-manufacturing sector reached a six-month high in September amid a solid increase in new work, a survey by the China Federation of Logistics and Purchasing, or CFLP, and the National Bureau of Statistics revealed Thursday.
The headline purchasing managers index for the non-manufacturing sector, which includes services and construction industries, rose to a six-month high of 55.4 in September from 53.9 in August.
An reading above 50 indicates expansion of the sector, while a reading below 50 suggests contraction.
The new orders index rose to 53.4 in September from 50.9. New export orders also increased, with the corresponding sub-index advancing to 50.5 from 49.6 in August.
Meanwhile, the business expectations index fell to 60.1 from 62.9 a month earlier. The employment index declined to 51.3 from 52.5. Input prices continued to rise, but the rate of inflation eased from August with the corresponding index falling to 56.7 from 57.1.
An official survey of the country's factory sector revealed Tuesday that business activity at manufacturing firms accelerated modestly in September.
2013-10-03 08:28 GMT (or 10:28 MQ MT5 time| [GBP - Services PMI]
if actual > forecast = good for currency (for GBP in our case)
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U.K. Service Sector Expands Strongly
The U.K. service sector continued to perform strongly in September and thereby round off the best quarterly performance of the sector since the second quarter of 1997, data from Markit Economics showed Thursday.
The headline Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index dropped slightly to 60.3 in September from August's near seven-year high of 60.5.
That signaled another strong rise in activity on a monthly basis, and extended the current run of continuous growth to nine months. The sharp increase in activity was once again supported by incoming new business.
September's survey showed employment growth accelerating to a solid rate that was only fractionally lower than June's near six-year high.
Finally, operating costs continued to increase during the latest survey period. Efforts to pass these higher costs onto clients were generally thwarted by ongoing price competition.
Investor Strategy, Market Crashes
When the stock market decides to take a tumble, how should you react? Should you hold onto your same positions thinking they will come back, or should you sell everything and run for cover? Every great thing must come to an end, and whether it be temporary or long term you have to be ready at all times. There are tons of different strategies for handling a big sell off in the market, and if played right you'll be dancing in the streets while the others lick their wounds.
Predict and ReactThis is so huge when it comes to investing successfully for the average investor that you could literally host a seminar on it and spend all day discussing it. The importance of predict and react is to simply have a plan in place that says, "when x event occurs, than I need to react with x NOW".
Predicting
I don't care how many monitors you have at your trading station and if you boast a $100 million dollar portfolio, you are no future teller with all the answers. Let's be honest, if we could really predict the stock market time after time, day after day, we would all be richer than bill gates. Predicting in the sense of looking into a crystal ball is not predicting at all, but predicting in the sense of using history or events to prepare for potential events is real life.
When it comes to the stock market, there are always signs that come into play, some very obvious and some very hidden that could mean a sell off or price surge is potentially around the corner. With stock market crashes it is about your ability to read the signals, ignore the emotionally driven traders, and follow your own rules. That's prediction.
Reacting
Once you have your strategy in place and the "signs" have shown themselves to predict a potentially catastrophic event, you need to react. Reacting effectively in the stock market does not mean using emotional buying or selling to your ultimate success or failure, it means simply enacting a plan and sticking to it with discipline.
When it comes to market crashes this normally means liquidating a decent size portion of your portfolio, tightening up stops, and either cutting down from new long positions or completely move to shorting. It doesn't have to be all of these things, but after a few big losses you'll understand why they are in place.
Three Heavy Distribution Days, Go AwayThe S & P 500 index excluding today and looking just at Tuedsay through Thursday has lost some 4% in value. Did you know that some traders were already reacting by selling positions and raising stops on Tuesday if not late last week? One of the most effective strategies I have come across and utilized in my own trading comes from CANSLIM trading style, and the way it is used is simply with the thinking that after three consecutive distribution days with no accumulation, you react and put up your defense.
Strategies for ReactingReacting and putting into a action a preset plan is actually a lot of fun, very simple, and unemotional unless you do with it music blaring in a wife beater while smoking a joint and getting high (no I haven't done it before but just imagine the hostility). For the average investor (excluding hedge fund managers, institutions, etc.) there are a few routes you can go which I introduced further up:
Selling Full Positions
Liquidating current positions is a very easy route to go and unless you are trying to hold these stocks to take advantage of long term capital gains, this is an easy call. Using the same 3 distribution days go away strategy from above, on that 3rd day we would have cashed out on positions. How much you cash out is up to you, but some options could be to:
Raising Stops
This is a fantastic way to prepare for any uncertainties when you want to play your cards tight. Stop loss orders are extremely effective when used correctly, and I am a promoter to almost always have stops on your positions regardless. Why? Because you simply never know what to expect especially in some individual stocks effected by things like earnings, news releases, and the like.
When I say raise stops I am implying you already have stops on your positions. So, integrating this strategy you up your insurance policy to get you cashed out faster if a positions decides to head south.
Selling Part of Positions
Similar to selling a position in its entirety, you can instead sell lets say half of the position and hold the other half to see what happens. This is a very common way to take profits off the table while still maintaining control of what you purchased a while back. With money off the table you can afford to take on the extra risk of your stocks falling with the market.
Shorting
Another way to react could be to what is called hedging your positions if you don't want to sell them outright. I will not go into hedging here but basically by buying say an ETF that has the inverse effect of the S & P 500 or the NASDAQ 100 (QID) you can than start making money while the market tumbles. Millionaires were made during the 2002 crash and other crashes in history by simply traders shorting or betting that the market and/or individual stocks were going to go down in value.Strong & Weak: 3 Reasons to Buy Euro Currency Basket :
Talking Points:
This week saw major fundamental news releases such as three central bank interest rate announcements plus a United States government shutdown. Despite the heavy week of fundamental releases, currencies saw little follow through in pricing and minimal change in their relative strength against one another.
Two weeks ago, we highlighted buying Euro strength through a basket of currencies. Unfortunately, the timing of the buy signal was off as the trade stopped out, yet the Euro has still gained strength in general. That is a good reminder for why it is important to trade in conservative amounts.
Therefore, so long as prices are firmly held above the EURJPY support line and so long as the EURGBP holds above .8330, then we can look for continued strength in the Euro. The opportunity can be traded by placing a EUR currency basket buy trade where we buy the Euro against a basket of currencies.
Last week, we focused on selling an Australian Dollar sell basket. We will keep that trade open in case the US government shut down and debt ceiling debacle deteriorate into an anxious market.
2013-10-04 02:49 GMT (or 04:49 MQ MT5 time| [JPY - Interest Rate]
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BoJ Holds Monetary Policy Steady
The Bank of Japan on Friday decided to hold its monetary easing plan unchanged while also maintaining its economic assessment.
At the end of a two-day meeting of the nine-member Policy Board led by Governor Haruhiko Kuroda, the central bank said it will keep the target for the monetary base expansion at an annual pace of JPY 60-70 trillion.
Additionally, with respect to its asset purchase program, the BOJ said it will continue to increase its purchases of Japanese government bonds at an annual pace of about JPY 50 trillion. The average remaining maturity of the bank's JGB buying will be around seven years.
The Board's decision to refrain from any fresh policy moves was in line with expectations.
"Japan's economy is recovering moderately," the central bank said while maintaining its assessment after an upgrade in September. It also noted that the year-on-year change in the core consumer price index is now in the range of 0.5-1 percent.
Meanwhile, the BoJ revised up its view on capital expenditure, saying "business fixed investment has been picking up as corporate profits have improved." Business sentiment has continued to improve, it added.
2013-10-04 14:00 GMT (or 16:00 MQ MT5 time| [CAD - Ivey Purchasing Managers Index]
if actual > forecast = good for currency (for CAD in our case)
==========
Canada Ivey Purchasing Managers Index at 51.9 in September
The Ivey Purchasing Managers Index was at 51.9 on a seasonally adjusted basis in September, indicating that purchasing activity in Canada expanded from August.
The index, which measures changes in economic activity as indicated by a panel of purchasing managers from across Canada, is sponsored by the Richard Ivey School of Business at Western University.
An index greater than 50 indicates an expansion of purchasing activity, while an index below 50 indicates a decline.
The employment index for September was at 53.5, indicating employment was higher than in the previous month.
The inventories index was at 54.2, indicating inventories were higher than in the previous month.
The prices index was at 64 in September, indicating prices were higher than in the previous month.
The supplier deliveries index was at 45.3, indicating supplier deliveries were slower than in the previous month.
All figures above are on a seasonally adjusted basis.
The unadjusted Ivey Purchasing Managers Index was at 59.4 in September.
GBP/USD Reverses from Major Market Level; Know these Levels Now
-USDJPY closed the week below the trendline that originates from the June low. It is possible that a 3 month triangle is complete. This is the working assumption as long as price is below 98.72.
-The decline from July would consist of 2 equal waves at 94.89. This level intersects channel support that originates at the July high AND the channel that originates from the March 2012 high on Wednesday!
-The channels are ‘Elliott’ channels. The short term downward sloping channel is a corrective channel. The long term upward sloping channel is an impulsive channel.
Trading Strategy: Picture is bearish below 98.72 but have to be aware of the mentioned channel confluence as a huge level at 95. What happens there likely determines the next big move (to either 90 or above the May high).
Rupee, other forex manipulations face global regulatory probe
As possible manipulation in worldwide forex markets face a global regulatory probe, trades conducted in Indian rupee along with a host of currencies by such manipulators have come under the scanner.
Those suspected to be involved in possible manipulations include some forex traders, as also certain Swiss banks and other European financial institutions, while it is unlikely as yet that any Indian bank or financial services firm might be directly involved, sources said.
The issues being probed include possible cartelisation among banks, mostly from Switzerland and some other European countries, in manipulating the foreign exchange rates, as also other manipulative practices adopted by the forex traders.
In most likelihood, the possible manipulation in rupee trades might have taken place outside India, although the role of certain executives at Indian branches of suspected European banks might not be completely ruled out, they added.
Globally, the foreign exchange market is of huge size with daily average turnover of $ 5.3 trillion, as per the Bank of International Settlement (BIS).
While rupee trades account for just about 1 per cent of the global market with a daily average turnover of just about $ 53 billion, nearly half of these trades take place outside India and in jurisdictions outside the direct regulatory supervision of regulators like the RBI and the Sebi.
Amid a sharp plunge in rupee value till a few weeks ago, concerns were being raised about large NDF (Non Deliverable Forward) forex market trades in rupee outside India.
Gold Prices Expected To Rise on US Shutdown and Debt Ceiling Fears
Gold prices are set for a rebound next week as the ongoing US government shutdown has boosted the precious metal's safe haven status, according to a survey.
As many as 10 out of 21 analysts polled by the Kitco Gold Survey said they expected gold prices to go up next week, as the markets fretted about the shutdown, which has entered a fourth day, and the looming debt ceiling deadline.
An extended US government shutdown could prop up gold buying, George Gero, vice-president and precious metals strategist with RBC Capital Markets Global Futures, told Kitco News.
"People would start to take a second look at gold as a (safe) haven," Gero said.
Spot gold ended 0.7% lower at $1,308 an ounce on 4 October. Prices had risen 1.2% a week ago on renewed buying interest stirred by US budget fears and the uncertainty surrounding the future pace of the Federal Reserve's monetary stimulus programme.
US gold futures for delivery in December hovered at $1,309.90 an ounce, Reuters data showed. For the week as a whole, US gold futures fell 2.2%.
The world's largest economy will run out of cash to pay its bills on 17 October if the government's borrowing limit is not raised. The country's laws limit its borrowing to $16.7tn (£10.4tn, €12.3tn). The Treasury would not be able to pay its bills if the debt ceiling is not raised.
Chinese Off Market
Gold prices have so far failed to log gains amid the US shutdown. Sean Lusk, director of commercial hedging with Walsh Trading, told Kitco News that the absence of Chinese buying was partly responsible.
Markets in China were closed the entire week for the National Day Golden Week holidays, which meant that gold buyers in the world's second-largest gold market were off counters.
For now, it's likely a "case of selling everything when things look bad [as] even the safe-haven assets like gold are not shining in this environment," Ross Norman, chief executive officer at Sharps Pixley told Marketwatch. "Putting a rationale to that is difficult but that is a feature of the 'Frankenstein' economy - man-made and everything a bit weird.
"We may have another bout of brinkmanship on the debt ceiling which as you may remember, drove gold to an all-time high mid 2011. While we don't expect the same levels, it will certainly put some pressure on those running short positions," Norman added.
The resumption of gold buying in China and continued buying in India, the world's top gold importer, could also support gold prices.
India imported 7.24 tonnes of gold in September, more than double August's purchase of 3.38 tonnes, according to government data.
World Bank Trims Growth Projections For Developing East Asia
The World Bank on Monday cut its growth forecasts for developing East Asia, citing weaker growth in China and the other economies in the region. The bank now projects 7.1 percent growth for developing East Asia in 2013, below the 7.8 percent growth predicted in April. The growth for 2014 is seen at 7.2 percent, which is also weaker than its earlier forecast of 7.6 percent.