It's showing resilience in the face of
slowing global growth and Septembers inflation gauge showed that the cost of
living in the US is rising more than estimates. Inflation for September rose to
an annualised rate of 1.7% which was 0.1% higher than estimates. The US Dollar
gained against its major trading partners with the USDJPY
rising back to its Monday high. Mortgage applications also rose
to a new high in the US.
LTG GoldRock Director Andrew Barnett, reviews the latest Currency News on a daily basis and provides LTG GoldRock members with a daily report with the important information they should know for their Forex Trading.
Do you remember
the earthquake that caused so much devastation in Fukushima in 2011? This quake
has resulted in Japan closing down all its nuclear power facilities and
therefore Japan has had to import more oil and gas to fuel Japan. This has come
at huge expense and there are no plans to re-open these nuclear facilities any
time soon. Therefore if the Yen is weaker import costs to fuel Japan are more
expensive and thus creates more debt for a country that is already weighed down
by decades of financial mismanagement and deflation. Japan is the ultimate
financial basket case.
Everyone thinks
Japan is a big exporter. Wrong. Exports in Japan only account for 15% of
Japan's output. Why? Because over the years Toyota and most other big Japanese
corporations have built factories overseas. As an example it is cheaper and
more efficient to build cars in the USA than to build them in Japan and ship
them over to the US.
This is an excerpt out of Monday the 20th of October LTG GoldRock Insider Report. If you are an LTG GoldRock there is a very detailed trade explanation for you in Today's report. If you haven't yet read it we highly recommend that you read it as soon as possible to maximise your profit potential.
The stock
market continues its correction with another significant fall on US markets
Monday. The Dow Jones was down over 200 points or 1.35% with the S&P 500
down 1.65% and Nasdaq 1.46% respectively. Why are we reporting on the stock
market when we are currency traders? Because there is always a flavour of the
day for financial markets to follow and falling stocks is the flavour of the
day, or if you like flavour of the month right now and this is helping drive
certain currency movements.
The main reason
for the significant and sustained fall is that the US Fed is no longer printing
free money and injecting it into the US economy and it must now survive on its
own with interest rates at close to 0% and the potential for them to rise in
2015. Stock market traders, hedge funds and large speculators are electing to
exit, take what profit they have and are putting the proceeds back into cash.
Adding weight
to the decline is the recent forecast by the IMF of lower growth for the
worldwide economy in 2015 and this also comes on the back of the US Fed Minutes
from last week that showed US Fed officials were concerned that slowing global
growth may also stall the US economic recovery and it may force them to keep
rates lower for longer.
Essentially
stock market traders have their knickers in a knot over the fact that there is
no more free money from the US Fed being injected into the economy, interest
rates may rise in 2015 (regardless of what the US Fed says now) and it all
comes at a time when global growth is expected to remain low. "Sell"
is the safety play in these circumstances and thus stocks are falling and the
traditional safe haven currencies such as the CHF and JPY are rising.
Andrew Barnett and the LTG GoldRock Team run weekly live trading and coaching sessions for investors interested in learning how to trade Forex. Go to www.ltggoldrock.com
The Bank of England is going to rattle the cages of the
Pound today at 10.00pm AEST so be aware if you have any Pound trades
running.
LTG GoldRock are Forex Specialists who help support and mentor over 4,000 everyday investors within Australia and New Zealand. If you need assistance with your investing considering attending one of LTG GoldRock's live Coaching Sessions every Monday & Tuesday at 6pm AEDST. Go to www.ltggoldrock.com
The RBA once
again confirmed that it would be leaving the official cash rate of 2.5% on hold
for the foreseeable future but the AUDUSD has rallied one cent since its low on
Saturday morning after the US unemployment report. Why?
The reason the
AUDUSD has rallied is twofold. Firstly there was an overwhelming number of
traders short on the AUDUSD on Friday and this created an oversold scenario.
Secondly the USD has been bought heavily in the past couple of months and an
overbought position was created. Simply put the AUD has not risen because of
anything the RBA has said or done. The AUD has risen simply because traders who
were short AUD locked in profit and traders that were long USD also locked in
profit. Thus pushing the USD Dollar down and Aussie Dollar up.
The RBA
reiterated that the AUD is still too high. In fact it said the following about
our economy at large which clearly points to a lower AUD longer term and does
not give any indication that the RBA sees the economy picking up in the next 6
to 9 months.
- Resources sector investment spending is starting to
decline significantly, while some other areas of private demand are seeing
expansion, at varying rates.
- Overall, the Bank still expects growth to be a little
below trend for the next several quarters.
- The labour market has a degree of spare capacity and it
will probably be some time yet before unemployment declines consistently.
- Growth in wages has declined noticeably and is expected
to remain relatively modest over the period ahead.
- The exchange rate has declined recently, in large part
reflecting the strengthening US dollar, but remains high by historical
standards, particularly given the further declines in key commodity prices
in recent months. It is offering less assistance than would normally be
expected in achieving balanced growth in the economy.
- On present indications, the most prudent course is
likely to be a period of stability in interest rates.
There is
nothing in this report to give reason to buy the AUD.
When the AUD
dropped after the US unemployment report Friday it reached the previous low of
the 1st September, which also happened to be the 2014 yearly low created on the
24th January. Traders began to exit those short positions and bank profit. We
were some of those traders.
Andrew Barnett is the Senior Trader at LTG GoldRock and provides guidance each day to over 4,000 LTG GoldRock members. To learn more go to www.ltggoldrock.com
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