SECRET OF FOREX

Next week will see important key indicators from the U.S. Markets will be waiting for the Industrial Production figure and Fed Chairman Alan Greenspan's testimony to the Senate on July 16. Leading indicators and the Philadelphia Fed Survey will be released on July 18, followed by Consumer Price Index and International Trade on July 19th. From the Eurozone, indicators include German CPI and HICP, Eurozone HCIP, and Eurozone Industrial Production. The BoJ's monthly meeting will also take place next week, where a discussion of the government's upgrade of economic conditions is likely.

FOREX NEWS

The monday session has begun and the account stands at $100,013.80 with -4.73 in realized , and 52.00 in unrealized, profits; we're up $47.27 from trading returns. OANDA pays interest daily which is why you're seeing interest contributions so frequently. We're carrying the same trades as the end of trading Friday.

Parity Update :

I wouldn't be surprised to see parity before thursday. Talk of EC members overthrowing the stability pact seems overdone and doesn't present a real threat to the union. There's likely something else in the water that's undercutting the Euro. My suspicion is that the market had performed an estimation of the viability of the Euro at parity several weeks ago and found it wanting. The deficit situation is a proxy for this sentiment. What , until recently, has been driving the Euro UP is the weight of the dollar going DOWN, not a sudden appreciation for mediocre growth and marginal improvements in domestic demand. I have limit orders in the high .9990's to short 20,000 units with a target of .9800 , stop 1.0055

CURRENT TRADERS

The dollar has made a mad dash for 116.5 . The 5000 usd/jpy long from 117.01 is being closed ( - $16.29 ) and replaced by a limit order 5000 long @ 116.53 . Also , I'm placing a limit order for 15,000 long @ 116.25 in anticipation of an intervention below 116 . It may not even get to 116.25 if the current pace continues , in which case I'll be 20,000 long ( 35,000 otherwise ). The MOF has recently been signalling that their concern is for an 'orderly' realignment , which emphasises rate of change over the absolute levels achieved. If 116.5 is pierced without a significant retracement and targets 116 by the late evening ( EST ), I think they'll act tonight rather than try to fight from 115.7 tomorrow morning.

more on EU deficits

The importance of Europe's Stability and Growth Pact has been underlined on Wednesday when the euro lost a full cent against the dollar, despite plummeting US stocks in that session. It can also be seen how currency traders are becoming somewhat apprehensive with the euro through the currency's inability to mimic the strength of the pound against the dollar. Since the inception of the euro, the positive correlation between GBP/USD and EUR/USD has averaged above the 0.75 suggesting a strong positive relationship between the two European currencies and how they behave against the greenback. Thus, when one strengthens (declines) against the dollar, the other does the same. Yet, over the past 2 weeks, sterling had been powering ahead to fresh 26-month highs against the dollar, while the euro has shown increased hesitancy since hitting 28-month highs against the dollar.

FOREX

Tonight should prove interesting - will the markets experience buyer's remorse and sell the euro , or will such a robust break above parity inspire Euro bulls to begin climbing for 1.0250 ? I'm watching eur/jpy for a break below 116.5 as an opportunity to short towards 115.

Dollar limit orders

115.79 (10,000) , which had replaced the original usd/jpy Long trades from the low 117.00's , saved the day by returning $534.61when closed shortly after the close of the NY session for 116.21 and 116.23. A 100,000 usd/chf Short from 1.4583 placed at about 11:00 am , that closed at 1.4556 an hour later, provided $185.49 to bring the account from last night's low of 99,514.62 to 99,700 . The remainder of today's profits are entirely attributable to the usd/jpy trades.

Evening Round-up

We're up $268.79 on the account and $241.66 in realized P&L w/ no open trades. We'd gotten walloped on the 200,000 eur/usd limit order long @ .9995 . I had expected a correction from the 1 - 1.0050 range to either the low .9900's or into the .9800's; the trade was stopped @ 1.0055 ( - $121.00 ) . Rather that retrace , the euro proceeded virtually unabated to 1.0090. It's currently at 1.0040 . The Tokyo and London sessions may push this above 1.01 if the dollar resumes its decline.

NEW TIPS FOREX

"The dollar is under pressure from everything from economic problems to asset reallocation away from the U.S. and corporate accounting problems. It's difficult to see any positive factor for the dollar at the moment. The root of the problem is the U.S. current account deficit. If the U.S. doesn't have to attract an enormous amount of foreign capital, people wouldn't have to worry about domestic problems. One solution to this is a weaker dollar."

MORE GOOD NEWS

Tom Fitzpatrick, senior technical analyst at Citibank in New York. Monday, July 15, 2002 "Parity is a psychological, not a technical level...and whether we pause around parity or not, we are likely to see significant further dollar losses...Our initial target is $1.03 to $1.0450. If that level is taken out, it actually casts a question mark against the whole of the dollar's rally of the last seven years, and could open up a full-blown bear market for the dollar."

FOREX WORLD

It appears that trading is relatively thin this evening. Price formation among the majors is characterised by small average range variations in clearing prices at most intervals punctuated by 15 to 20 pip spikes, occuring in either direction, that are quickly returned. The latter is indicative of low liquidity. The usd/chf has recently begun heading towards 1.46 though the dollar has been gradually declining most of the session. The usd/chf seems prone to erratic reversals and occasionally decouples from both dollar and euro movements. I've closed the 70,000 usd/chf short for a 24pip loss an am going to place a limit order to short usd/chf @ 1.46 for 100,000 units. This will be intended as a medium range trade targeting 1.44 w/ a stop @ 1.4715.

DOLLAR FOREX FC

Last night's trades worked well yielding $1,625.59 to bring the account balance up to $101,778.88. The only trade that had failed was a limit order to short 100,000 eur/usd from 1.01 that stopped at 1.0110. The usd/jpy trades closed in the 115.70's and at 115.55. The usd/chf trade took profit at 1.4504

current trades

The 100,000 usd/jpy has been closed 6pips ahead. I'd hoped for a sustained appreciation to 116.40+ but doubt this will happen prior to the session close. The Dow never made it above its open (8,635.31) , and so we've seen a retracement of earlier dollar gains.

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