Written by Jonathan Granby, DailyFX research team if you want to keep Joel reports in a more appropriate Mode-e-Mail-jskruger@fxcm.com and you will be added to the distribution list. When you visit this or any other subject feel to free our forum page want to discuss.DailyFX provides Forex News on economic reports and political events that influence the currency market.
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By John Kicklighter, Currency Strategist Thu Oct 21 06:42:00 GMT 2010 
Be sure to join DailyFX Analysts in discussing their outlook for the Fed and its impact on the dollar in the DailyFX Forex Forum
The dollar received a shock this past week. With FX traders still speculating on the timing and scope of the Fed’s next monetary policy change, the greenback would put in for its biggest rally since August 11th. Should this be taken to mean that the market is no longer concerned about the potential impact of a second round of stimulus from the policy body? No. After any consistent and aggressive positioning trend (the dollar’s decline in the month through October 15th was anomalous) where there is little in the way of tangible fundamental developments to instigate the move, there will inevitably be a point where the consensus speculative forecast will be priced in. This is likely the case for dollar traders’ effort to benchmark the FOMC’s steps at the November 3rd monetary policy decision. At this point, the deflating impact of expanding the money supply and further dollar-negative impact of encouraging risk-taking has likely run its course. Unless there is a sharp change in expectations, Fed speculation alone will not likely drive the dollar. Instead, risk appetite will fill in. If confidence rises, the promise of the central bank buying up bonds (as a front-running trading opportunity or growth driver) can once again be used as an excuse to leverage risky positioning and sell the dollar. That said, the greater potential for fundamental impact now is growth and earnings expectations. Both seem to support risk taking on their surface; but a closer review reveals the cracks. 
Once again, it is important to look beyond the undue influence of risk appetite in asset prices if you want a true assessment of financial. Therefore, the climb in equities and advance in carry are as far from an impartial assessment of future risk as one can get. In fact, measuring the deviation of the current market price from underlying fundamentals can be the best harbinger of a dramatic correction in the markets. If we consider the S&P 500 and EURUSD’s heights against the outlook for economic activity and need for government support to sustain normal functioning markets; there is an obvious divergence. What can close this gap? Well, economic activity has certainly cooled, emerging markets are trying to cool capital inflows, and trade wars are arising. Yet, risk appetite has yet to give. 
The US economy is expanding at a “modest pace.” This was the assessment the Federal Reserve made in its Beige Book review of the world’s largest economy two weeks before the Board of Governors meet to decide interest rates. Taking a closer look at their commentary, the general tone would offer a slight improvement from the last evaluation; but the concerns surrounding employment and consumption are still overbearing. Investors will likely overlook the Fed’s view and opt for a response to next week’s 3Q GDP reading. Early forecasts have the annualized rate of expansion accelerating from 1.7 to 2.2 percent. That could certainly be treated as a bullish accelerant if the market is looking for a reason to buy. On the other hand, China’s economy has recently slowed; and they are the standard-bearer. 
Concurrent with the dollar’s sharp rally through Tuesday, the equities market would break congestion and slide to its lowest level in a week. However, in this performance, the benchmark for investor sentiment actually held within the confines of a larger, rising trend channel. Market participants are hesitant to let their steady increase in leverage run out of the steam as there is little trading volume to make money under normal market conditions, there is still the opportunity to trade ahead of the Fed and there are few alternatives that investors can readily move their capital to without causing major distortions. In these three concerns, fear and greed can be seen quite distinctly. In greed, few investors would miss the opportunity to be fully invested in the capital markets when the Federal Reserve puts its stimulus to work and enjoy the artificial inflation in prices that results. Alternatively, in fear, the low participation and volume levels of the regular capital markets make unwinding standing treads particularly dangerous as benchmarks can more readily collapse as the orders are being worked through the system. It is a happy period of blissful ignorance. But it will not last. 
Looking across the various assets classes, we can see the influence of government manipulation. In the promise of further stimulus from the Fed and other policy authorities the world over, traders see a free pass to take greater risk as there is a natural safety net. For equities, the rally that began in September is now finding earnings a viable source of volatility; while the reinvestment of Fed permanent market operations funds back into equities ensuring a distinct response to the injection. For Treasuries, the flood of fresh debt into the market is partly offset by the Fed’s buying. And yet, the dollar responds directly to the money supply pump. 
What is a good sign of forthcoming risk? Since the effort is to predict the underlying pricing and that naturally denotes forecasting speculation itself; it is important to keep track of the fundamentals to the capital markets. This does not mean growth or interest rates; but rather participation rates, capital access and positioning imbalances. The receding participation in the ongoing rally in capital assets is particularly concerning. According to the Investment Company Institute’s (ICI) domestic mutual fund flows, investors withdrew capital from this US space for a 24th week to the tune of $81 billion. Where do these funds go? Emerging markets and other risky areas. What happens then when sentiment starts to slip? We will see. DailyFX provides forex news on the economic reports and political events that influence the currency market.
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By John Kicklighter, Currency Strategist Thu Oct 21 06:42:00 GMT 2010 Be sure to join DailyFX Analysts in discussing their outlook for the Fed and its impact on the dollar in the DailyFX Forex Forum
The dollar received a shock this past week. With FX traders still speculating on the timing and scope of the Fed’s next monetary policy change, the greenback would put in for its biggest rally since August 11th. Should this be taken to mean that the market is no longer concerned about the potential impact of a second round of stimulus from the policy body? No. After any consistent and aggressive positioning trend (the dollar’s decline in the month through October 15th was anomalous) where there is little in the way of tangible fundamental developments to instigate the move, there will inevitably be a point where the consensus speculative forecast will be priced in. This is likely the case for dollar traders’ effort to benchmark the FOMC’s steps at the November 3rd monetary policy decision. At this point, the deflating impact of expanding the money supply and further dollar-negative impact of encouraging risk-taking has likely run its course. Unless there is a sharp change in expectations, Fed speculation alone will not likely drive the dollar. Instead, risk appetite will fill in. If confidence rises, the promise of the central bank buying up bonds (as a front-running trading opportunity or growth driver) can once again be used as an excuse to leverage risky positioning and sell the dollar. That said, the greater potential for fundamental impact now is growth and earnings expectations. Both seem to support risk taking on their surface; but a closer review reveals the cracks. A Closer Look at Financial and Consumer Conditions Once again, it is important to look beyond the undue influence of risk appetite in asset prices if you want a true assessment of financial. Therefore, the climb in equities and advance in carry are as far from an impartial assessment of future risk as one can get. In fact, measuring the deviation of the current market price from underlying fundamentals can be the best harbinger of a dramatic correction in the markets. If we consider the S&P 500 and EURUSD’s heights against the outlook for economic activity and need for government support to sustain normal functioning markets; there is an obvious divergence. What can close this gap? Well, economic activity has certainly cooled, emerging markets are trying to cool capital inflows, and trade wars are arising. Yet, risk appetite has yet to give. The US economy is expanding at a “modest pace.” This was the assessment the Federal Reserve made in its Beige Book review of the world’s largest economy two weeks before the Board of Governors meet to decide interest rates. Taking a closer look at their commentary, the general tone would offer a slight improvement from the last evaluation; but the concerns surrounding employment and consumption are still overbearing. Investors will likely overlook the Fed’s view and opt for a response to next week’s 3Q GDP reading. Early forecasts have the annualized rate of expansion accelerating from 1.7 to 2.2 percent. That could certainly be treated as a bullish accelerant if the market is looking for a reason to buy. On the other hand, China’s economy has recently slowed; and they are the standard-bearer. The Financial and Capital Markets Concurrent with the dollar’s sharp rally through Tuesday, the equities market would break congestion and slide to its lowest level in a week. However, in this performance, the benchmark for investor sentiment actually held within the confines of a larger, rising trend channel. Market participants are hesitant to let their steady increase in leverage run out of the steam as there is little trading volume to make money under normal market conditions, there is still the opportunity to trade ahead of the Fed and there are few alternatives that investors can readily move their capital to without causing major distortions. In these three concerns, fear and greed can be seen quite distinctly. In greed, few investors would miss the opportunity to be fully invested in the capital markets when the Federal Reserve puts its stimulus to work and enjoy the artificial inflation in prices that results. Alternatively, in fear, the low participation and volume levels of the regular capital markets make unwinding standing treads particularly dangerous as benchmarks can more readily collapse as the orders are being worked through the system. It is a happy period of blissful ignorance. But it will not last. A Closer Look at Market Conditions Looking across the various assets classes, we can see the influence of government manipulation. In the promise of further stimulus from the Fed and other policy authorities the world over, traders see a free pass to take greater risk as there is a natural safety net. For equities, the rally that began in September is now finding earnings a viable source of volatility; while the reinvestment of Fed permanent market operations funds back into equities ensuring a distinct response to the injection. For Treasuries, the flood of fresh debt into the market is partly offset by the Fed’s buying. And yet, the dollar responds directly to the money supply pump. What is a good sign of forthcoming risk? Since the effort is to predict the underlying pricing and that naturally denotes forecasting speculation itself; it is important to keep track of the fundamentals to the capital markets. This does not mean growth or interest rates; but rather participation rates, capital access and positioning imbalances. The receding participation in the ongoing rally in capital assets is particularly concerning. According to the Investment Company Institute’s (ICI) domestic mutual fund flows, investors withdrew capital from this US space for a 24th week to the tune of $81 billion. Where do these funds go? Emerging markets and other risky areas. What happens then when sentiment starts to slip? We will see. Written by: John Kicklighter, Currency Strategist for DailyFX.com To receive John’s reports via email or to submit Questions or Comments about an article; email jkicklighter@dailyfx.com DailyFX provides forex news on the economic reports and political events that influence the currency market.
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By Michael Wright, Currency Analyst Wed Oct 20 12:00:00 GMT 2010 Talking Points
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By Joel Kruger, technical strategist 21 October 2010 05: 39 GMT after the sell-off in Wednesday trading the US dollar has found some renewed bids in the Thursday and the increased risk from here for more USD appreciation ahead we still see. The current slide in the greenback is corrective and we claim that already did Bock, a carve out material short-term down against most major currencies. Technical studies show plenty of room for additional U.S. dollar gains while foundations even after the latest onslaught of QD a bearish and bullish USD comments by US officials are.
BLOOM mountain looking ahead, Swiss trade balance (1.20B expected) is due 15GMT, followed by Swiss money 7: out at 6: 00GMT. Euro area and German manufacturing and services PMI data (EZ 53,2 and 53 7expected / GE expected 54,6 and 54.9) out at 7: are 30GMT, then with UK mortgage approvals (44 k expected) and retail sales (expected 0.2%) shortly after 8: 30GMT due. The Swiss ZEW then caps things the European calendar at 9: 00GMT. U.S. equity futures and commodity prices are below tracking in the European public.Posted by Joel Kruger, technical currency strategist if in time to get more, Joel reports save add e-Mail jskruger@fxcm.com and to the distribution list you this or any other topic-feel free to visit our forum page want to discuss.DailyFX provides Forex News on economic reports and political events that influence the currency market.
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Written by Jonathan Granby, DailyFX research team if you want to keep Joel reports in a more appropriate Mode-e-Mail-jskruger@fxcm.com and you will be added to the distribution list. When you visit this or any other subject feel to free our forum page want to discuss.DailyFX provides Forex News on economic reports and political events that influence the currency market.
You learn Forex trading with a free practice account and diagrams of FXCM.
By Sumit Roy, Wed Oct 20 23:01:00 GMT 2010 Inventories
This latest report arrested a three week trend in which the total petroleum surplus had been declining. The surplus to the 5-year average now stands at 96.769 million, or 9.3%, up from 9.2% in the prior week. Four weeks ago the surplus peaked at 10.7%. 
Crude oil inventories increased more than is typical. Crude oil inventories have been remarkably stable over the past few months, displaying very little in the way of the seasonal fluctuations that we would typically expect. The surplus to the 5-year average stands at 38.045 million barrels, or 11.8%, up from 11.6% in the prior week. 
Product inventories diverged with gasoline inventories increasing counter-seasonally, while distillate inventories decreased more than normal. In the bigger picture, we have seen product inventories trending lower after rocketing to multi-decade or all-time highs. There remains an overcapacity in the refining sector, however, thus product inventories should remain ample. The gasoline surplus now stands at 9.6% above the 5-year average, while distillate inventories are 22.6% above the 5-year average. 
Demand Demand remains weak and below the levels of last year. Clearly the economic slowdown in the United States is taking its toll on petroleum demand, as over the last four weeks total petroleum demand has been down 0.5% from the year ago period. This is in contrast to much of this year when demand was up year-over-year. Over the same four-week period, gasoline demand is down 1.4%, and distillate demand is up by 9.3%. 
Imports Imports bounced from the depressed levels of last week. Crude oil imports increased by 0.5 million barrels last week. Over the last four weeks, imports have averaged 8.7 million barrels per day, 0.4 million barrels per day below the year ago period. 
Refinery Activity Refinery utilization increased to 82.5% from 81.9% in the prior week. Utilization is slightly above the levels of last year, but below the 5-year average. Gasoline production rose a notable 0.3 million barrels per day last week. 
Miscellaneous U.S. crude oil production was little changed week-over-week. Year-to-date oil output is up 3.8% from the year ago period. 
Inventories at the NYMEX delivery point, Cushing, Oklahoma fell over 1 million barrels last week. Front month calendar spreads are little changed from last week at -0.72. 
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By Michael Wright, MI currency analyst Oct 20 15: 50: 00 GMT 2010 US leading indicators (SEP) Philadelphia Fed Business Outlook
charts created using FXCM's strategy trader EURUSD: the couple has finally below the increasing channel, since early September is broken remained intact. At the same time price action slipped and below the 10-day SMA, closed, during the parabolic a sell signal yesterday showed. Than in recent times the EURUSD struggling to break back above the 20 day moving average. A close below this level today validated further losses back towards 1.3500.Not forgetting crossed the MACD down yesterday, that is characteristic of additional declines. for more technical analysis visit the DailyFX technical page written by Michael Wright, currency analyst to receive future articles via email, please contact is me under mwright@fxcm.com Michael Wright author FX news, Fundamentals vs. technical of intraday trading, Forex trading weekly forecast weekly spotlightDailyFX provides Forex News on economic reports and political events that influence the currency market.
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Raw materials - metals gold climbs on risk reversal gold$ 1342.25 / / $4.00 / / gold maintained its role as anti dollar Wednesday, rising $14.20 or 1.07% 0.30% commentary: one day, in which the greenback declined 1.3% compared to the trade-weighted dollar index. The one-month rolling correlation between US dollar and gold remained therefore strongly to 0.96. But correlations aside, seeks gold regardless of what the dollar from here out not foamy. We have seen periods where gold and the dollar have had a strong negative correlation, as you now have and periods, if you, have had a strong positive correlation such as in August. The point is, must the dollar not sensibly higher form again in order for gold to fall from here useful lower. That being said, is the trend in gold later, until the falling prices put a compelling string. A great day, followed by a day nothing is more than normal fluctuation within an upward trend. Technical Outlook: prices have a flat rest for help with $1332.99, looked at the 23.6% Fibonacci retracement of the advance 7/28-10, 14, with continuing upward trend $1355.65-level staged. In addition lines resistance up to the top of a broken increasing channel, which in place end of September, now at $1370.68 been was. Silver$ 23.73 / / $0,23 / / 0.94% commentary: Silver moved in step with gold, rising $0.59 or 2.5%, as the metal part of the previous day almost 4% decline again. Prices are trading back down in accommodation, however, and we will look to see whether the metal can maintain now lower prices. In the longer term the interest of investors in silver, and the resulting increase in silver ETF should be solidarity farms, prices. Speaking of long-term fundamentals, a Bloomberg report proposed that China can reduce its silver exports by 40%. The perpetrators cancellation increases an export rebate according to the report, domestic demand in expectation of inflation and the 2008. We will see. The gold/silver ratio is now 56,4, close to the lowest level since August 2008. (The ratio measures the relative performance of gold and silver) (A higher number indicates gold outperformance while a lower number indicates silver outperformance). Technical Outlook: prices recover from horizontal support at $23.43, $24.00-to test picture. The resistance at $24.33 exposes a higher breakout the next layer. Alternatively the renewed sale to intersect of a decreasing channel from this month's founded swing high and a rising trend line by end of August in the vicinity of $23.00 goal. 
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BoE interest rate expectations of MPC saw his first vote for additional asset purchases by Adam Posen could keep interest rates expectations suppressed; how the prospect of a rise in interest rates is unlikely is the Central Bank on the edge of the QE f. Overnight indexed swaps are in fact only in 9.3 fps of increase next year pricing. However, the majority of the Committee on the sidelines who leave the effects of the Outlook for revenues have decreased remains towards the broader trends. Upcoming retail sales Sterling direction likely, but domestic fundamentals may be little effect until next week GDP release. Discuss this and handelnideen join the GBP/USD Forum. Credit Suisse (OIS) BoE 
source Bloomberg - prepared by John Rivera FOMC interest rate expectations U.S. yield expectations the restart are almost not existent with the Central Bank on the edge quantitative easing. Fed funds futures prices are only an opportunity of 1.9% increase from January. There is little ahead on the economic docket that until November 3rd meet policy will change the current yield prospects. 
Source Bloomberg - prepared by John Rivera risk equity markets deleted yesterday's losses than strong earnings and the growing prospect of fed QE risk-taking fueled. A range of blue chip names will tomorrow reports that earnings of season could determine the overall success of the third quarter, UPS, McDonalds are watching name, AT & T and Eli Lilly. U.S. first unemployed sentiment is claims and Philly Fed whole weakness fueling QE speculation influence. However, the biggest impact on broader trends from the Chinese basic data with retail sales, GDP, CPI and industrial production can come all crossing the wires. To discuss this and other basic data in the business forum. Dow (daily) 
source Bloomberg - prepared to discuss this report by John Rivera or add the e-Mail list contact John Rivera, currency Analyst: jrivera@fxcm.com