The forex markets are setting up for some very interesting action to start the new year. I’m not referring to developments out of Europe or anything like that, though certainly those sorts of things can be contributory. In this particular case I’m talking about the technical set up of some of the major currency pairs.
I’ll start off with USD/JPY to provide the first example. Take a look at the daily chart below and notice in particular how narrow the Bollinger Bands are at present.
The lower plot of BWI (Band Width Indicator) tells you just how narrow the Bands have gotten in recent days. The current BWI level – which indicates the width of the Bands relative to the 20-day average – is the lowest it’s been in more than 2 years. That tells us USD/JPY is setting up for some kind of violent move. Notice what happened at the end of October and early November the last time BWI was down around this same area. In that case we saw a fake break down with a very rapid reversal. This time perhaps we see the same, or maybe we get a more unidirectional trend move. Either way, as a market participant you need to be ready for increase volatility.
We can see narrow Bands in other places, like AUD/USD…
… and GBP/USD…
As well as among some of the crosses. The JPY crosses almost uniformly have very narrow Bands, and we can see the same thing in the likes of AUD/NZD, with others heading in a similar direction.
In these additional cases, the BWI levels aren’t quite as extreme as they are in the case of USD/JPY, but they are still low enough (and still falling in some places) that they need to be taken seriously. They’re telling us to be ready for new trends to develop in the new year. Given the mainly range-bound action we’ve been seeing in many places for a while, this can’t be a major surprise. Just how aggressive the markets get, however, could be.
Now is probably a pretty good time to be looking at your trading and/or investing strategies to see how expanded volatility, and potential strong new trends, could impact your performance.
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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
One of Currensee’s newest Trade Leaders, Adantia leads with a smart strategy that puts risk management first. Adantia’s strategy stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators. Their original model was built in 2008, and has seen a wide variety of market conditions since it started to be used for live trading.
The risk management strategy that Adantia has designed is the foundation for their actual trading strategy. They run four versions of the strategy, each with its own defined limitations along three risk measures considering account-wide loss, per position loss, and percentage of margin exposed. A breach of any of these measures results in closing out of positions.
Adantia has built their strategy on the core belief that financial markets are driven by a herd-like dynamic, due to the current-day fluid availability of market information and the balance of traders using similar indicators to respond to the information. After defining the risk measures appropriate to the strategy, Adantia’s team built a mathematical model that was focused on maximizing returns within the constraints of the risk management strategy. Stop-losses and take-profits are calculated based on the current conditions, using a capital-rationing algorithm that is different from the more typical pips-based approaches.
It’s important to point out that 100% of Adantia’s strategy and trading are automated – the software makes all decisions, there are no decisions made by humans. There have been times in the past where the temptation was certainly present, but the decision to rely on the model has been proven time and time again in the team’s experience.
Recently, BarclayHedge ranked Adantia #1 currency trader managing under $10 million and Future’s Magazine listed them as a “Hot New CTA.” A live webinar with Adantia was also recorded to showcase their commitment to risk management and consistent, long-term returns. Adantia’s model also works exceptionally well during times of increased volatility, which seems to be the new norm in today’s market.
Currensee welcomes Adantia to our program.
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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
As the world slipped into holiday celebrations and vacations, news about U.S. consumer spending and the euro zone continued to move faster than Santa Claus could shimmy down the chimney.
Days before Christmas, the Italian government focused on reviving economic growth after passing Prime Minister Mario Monti’s enormous austerity package. Monti said the package, which included hefty tax hikes and deep budget cuts, was essential to restoring international market confidence in the boot-shaped country.
Economic growth also took center stage thousands of miles across the Atlantic and below the equator in South America. Known for samba dancing and excellence in soccer, Brazil now has a new accolade to crow—the world’s sixth-largest economy. The country overtook Britain’s No. 6 spot after it downgraded to seventh place because of the 2008 banking crash and current recession. Brazil, which is the largest country in South America, has boomed on the backs of exports to China and the Far East.
Signs of growth, however, haven’t prevailed in some of Europe’s wealthiest nations. Economists say the Netherlands has now been hit by the euro zone crisis, falling into recession and making budget cuts similar to its neighbors. The Netherlands has been one of the most vibrant economies in the West because of its low unemployment, high savings rates and strong export bases. East of the Netherlands, Poland has been cast in the fiscal shadows, but boasting strengths such as $30 billion International Monetary Fund flexible credit line to weather the storm. As nations seek to squelch the euro zone crisis, and as readers maintain pace with headlines, misconceptions about the crisis can rise, including the notion that countries will go broke when yields rise about 7 percent and Italy is flat-out destitute.
In the U.S., green wasn’t used to just describe Christmas trees. Consumer confidence soared almost 10 points to 64.5 (up from 55.2 in November) and registered the highest level in eight months. Christmas Day online spending spiked 16.4 percent, while mobile sales increased 173 percent. There may be one final present this holiday season—numbers pointing toward record-breaking sales. While Americans shopped, housing figures rose, adding more optimism in the economy and hinting at reduced chances of a double-dipping recession. For hedge funds, December saw leveled redemption rates. According to the GlobeOp Forward Redemption Indicator, hedge fund investors sought to pull 4.58 percent of industry assets in December, compared to 4.59 percent last year. Experts say the month-on-month increase is within normal range of seasonal patterns.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
History has taught investors to expect a sustained advance in stock prices this time of year, as the so-called Santa Claus rally takes effect. Indeed, returns in December have been positive almost three-quarters of the time over the past 100 years and, more than 80 per cent of the time since 1990. However, Father Christmas does not appear to be in a generous mood this year, as all of the world’s major stock market indices languish below their 200-day moving average.
Santa’s tight-fistedness has not just been confined to risk assets, and even gold, a traditional safe haven, has been caught up in the turmoil. Indeed, the precious metal has dropped some $300 or 16 per cent from the all-time high registered in early-September and, dipped below its 200-day moving average last week for the first time since January 2009, which brought to an end the longest ever streak – 732 days – of consecutive closes above the psychologically important level. Not surprisingly, the breakdown has prompted the precious metal’s many detractors to declare that the more than decade-long bull market in gold is over.
pricelessgoldandsilver.com
The many critics, who have been schooled to believe that gold is nothing more than a ‘barbarous relic’ with little if any intrinsic value, have consistently portrayed the precious metal’s price action as dangerous asset bubble, since it bottomed at little more than $250 per troy ounce in the summer of 1999. The misguided thinking fails to explain why gold has been ascribed value by humankind for at least the last 6,000 years and, has never become worthless. Could the long sweep of history truly be wrong?
More than a decade later and the non-believers’ message remains the same, yet investors who heeded such advice have missed the opportunity to reap a near sevenfold increase in capital invested in the precious metal over the period. Of course, past returns are no guarantee of future performance and, it is fair to say that the bull market in gold is closer to an end than it is to the beginning. Nevertheless, the underlying fundamentals suggest that there is still plenty of time for the precious metal to shine.
It is important to note that the precious metal’s stubborn critics are not the only ones to demonstrate a complete lack of understanding of gold’s attributes, as even the occasional bull has advocated investment in gold on the premise that all the ‘money-printing’ by central banks will eventually lead to unacceptably high inflation.
Such thinking is dangerously misguided, as quantitative easing and the associated increase in banking sector deposits held at the central bank will not necessarily lead to a concomitant increase in the money supply. The traditional multiplier model taught in ‘economics 101’ is wrong, since banks do not make loans according to the level of reserves in excess of statutory requirements but, on the basis of adequate levels of capital and the availability of profitable loan opportunities.
The evidence from both Japan and more recently in the US demonstrates that quantitative easing does not work through the lending channel when the banking sector is capital-constrained and the private sector is reluctant to borrow. Simply put, the large increase in consumer prices anticipated by the naïve bulls that view gold as nothing more than an effective inflation hedge, is unlikely to materialise, as deflation remains the clear and present danger and, particularly so in the euro-zone following the latest summit, which hopes to enshrine pro-cyclical fiscal policy.
Fortunately, the historical record demonstrates that gold performs equally well, if not better, in the presence of a destructive debt deflation. The logic is easy to understand. Individuals scramble for liquidity and flee financial assets during deflations, but the deteriorating credit quality of currency issuers and the resulting loss of confidence, mean that gold is typically preferred to paper currency as a hoarding vehicle, simply because the precious metal is no-one’s liability and always pays off. In essence, gold is an effective insurance policy against a black swan event such as debt deflation.
It is important to appreciate that the precious metal does not require a black swan event in order to perform well. The gold market thrives on uncertainty, something that the equity markets abhor and, typically attracts investors during periods of increased risk aversion. It is said that the only thing that rises during bouts of market turbulence is correlations but, the historical record demonstrates that gold’s correlation with stock prices turns decidedly negative when equity markets stumble. In other words, the precious metal acts as an effective portfolio diversifier and helps to mitigate losses in uncertain times.
The precious metal also serves as a viable currency alternative, which means that it competes directly with the world’s major currencies. Since gold is a non-interest bearing asset, its relative attractiveness is determined by the return available on short-term government debt instruments in each of the major currencies. As the real interest rate falls, the opportunity cost of holding gold decreases and consequently its relative appeal rises. Near-zero interest rates across the developed world combined with quantitative easing programmes that place downward pressure on the associated currencies, means that the hurdle for gold has seldom been so low.
The gold price has come under pressure in recent weeks, which has seen the stale bulls declare an end to the precious metal’s spectacular run. A closer examination of the facts however, reveals that gold is likely to glitter in 2012 and beyond. Far-sighted investors should act accordingly.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
Last week the gentlemen from the Trade Leader Adantia did a webinar in which they talked about their approach to the markets. Chances are, most of the folks who were listening in realized that the Adantia strategy isn’t one that can be replicated by the vast majority of investors. It requires considerable amounts of research and technical ability in the area of things like genetic algorithms and massive computing power to run all the modeling calculations. Even still, to my mind there were a couple of different things listeners could take away from the discussion.
Diversification of Approach
I have written before of what I call diversification of approach or methodology. This is the process by which a portion of ones trading or investment funds are traded in one or more different ways than one’s primary funds. I don’t mean stocks vs. bonds, or anything like that, which is diversification across markets or sectors. I mean the system or strategy underlying the trading process is totally different. This is something that can be done within the context of a single market, or across multiple markets for multi-dimensional diversification.
One of the major benefits of the Trade Leader system is the ability to diversify across trading approaches. Since the Trade Leaders use different methods and systems for their trading, many of which are not well correlated with each other (never mind other markets like stocks), there exists the ability to develop a well-diversified portfolio within the group so as to avoid having exposure to just one approach which may suffer from poor performance under certain market conditions.
Diversifying Your Approach
I noted that Adantia’s specific approach to trading is well beyond the ability of most traders and investors to replicate. Their basic philosophy is relatively easy to understand, though. Adantia uses a mean-reversion strategy in which it plays for reversals of market moves rather than continuation of them. It can be thought of as being an over-bought/over-sold strategy as opposed to a trend following one.
Understanding the basic approach of each Trade Leader presents the opportunity for you to exploit the markets in ways that your trading does not. If you are primarily a trend following type of trader, then a Trade Leader like Adantia can add a dimension to your portfolio by taking advantage of non-trending markets. Similarly, if you are a US time frame day trader, then an Asian time frame based Trade Leader would give you exposure to part of the day you can’t trade yourself.
This is the whole point of multi-dimensional diversification and it’s something that could benefit a lot of different types of traders and investors.
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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
News broke Sunday night reporting the death of North Korea’s enigmatic leader, Kim Jong Il, followed swiftly by debate about the impact his successor Kim Jong Un will have on the country’s economy and society – as well as the market’s reaction to his father’s death.
Meanwhile Europe continued to dominate world headlines as it devises next steps after proposing a treaty last week designed to strength fiscal discipline for the European Union. In the United States, the economy continues showing signs of improvement as it eases some minds heading into the highly anticipated holiday week.
In Europe, Italian Prime Minister Mario Monti won a confidence vote from officials to expedite its 30-billion-euro budget crafted to restore the country’s economic confidence and revive its stagnant growth. The passage comes after a week of strikes from Italy’s three biggest labor unions because they say Monti’s package will hurt workers, pensions and the country itself. After passing the House, the measure now moves to the Senate where it’s expected to be actioned by Christmas. While Italy seeks to improve its economy, Poland has been recognized for its robust economy. Experts believe that Poland may have the last healthy economy in Europe as the country’s capital Warsaw received revitalization and the country overall experienced economic growth and increased foreign investments. The question, though, is Poland going to remain as strong as it is now? Because many of its neighbors are suffering in the euro zone, residual effects could spill over the borders to Poland—especially because the country’s main stock index is down 24 percent since April. Unfortunately, some other European countries aren’t in as great shape as Poland. France could see a downgrade of its triple-A rating by Standard & Poor’s. French officials say the speculated credit lowering would be “cataclysmic” to its economy. Germany is still trying to lead through the crisis, opposing euro bonds and lifting bailout cap. In Greece, the nation has abandoned the euro and returned to its drachma currency, and in Britain, Prime Minister David Cameron faced hecklers about vetoing the proposed European Union treaty.
There was good news in the United States last week. Retail sales rose for the sixth straight month, increasing 0.2 percent in November and showing signs that the U.S. economy is growing. Consumer prices also remained steady as the consumer price index went unchanged last month in November. Jobless claims dropped to 366,000, marking a three-year low and signal some recovery to the job market. In the hedge fund world, legendary hedge funder Julian Robertson of Tiger Management Co. is explaining why so many hedge funds are now cropping up. He says the hedge funds business is becoming tougher because more hedge funds are being created as they’re the best way to pay the experienced Wall Street guys.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
Last Wednesday, Currensee hosted a live webinar with new Trade Leader, Andantia. BarclayHedge ranked Adantia the #1 currency trader managing under $10 million. During this webinar you will learn that Adantia managers are not “swinging for the fences,” but instead they are looking for “a quality steady return over a long period of time.” Also, Adantia’s propriety, automated trading algorithm has been through years of testing and live trading. Adantia speaks to how their model has worked exceptionally well through volatile market events including the flash crash, Japan tsunami, and the recession of 2008. Find out how Adantia is searching for uncorrelated returns in every market situation.
Please check out the recorded webinar with Adantia LLC. Below are some questions from the presentation. Feel free to jump directly to the answers:
How will current and future market conditions drive strategy adjustments? (25:27)
How did your strategy do during the times of intense market uncertainty? (27:45)
What do you look for in your back testing? (42:55)
What is your risk per trade? (47:05)
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
The seemingly endless turmoil in the euro-zone virtually ensured that 2011 would prove to be a difficult twelve months for investors in risk assets. Indeed, the increased stress evident in the region’s sovereign debt and bank refunding markets in recent months – alongside growing concern that the single currency might unravel – is the primary reason that the developed world’s major stock market indices failed to stage a meaningful recovery off the cyclical bear lows registered in the autumn.
Stock markets climbed higher during the spring and managed to retain their positive momentum in the face of higher oil prices – precipitated by political unrest in the Middle East & North Africa. However, the heightened appetite for risk struck a speed-bump towards the end of April, as a long string of negative economic surprises in the U.S. – just as the Federal Reserve’s second round of quantitative easing neared an end – caused fears of a double-dip recession in the world’s largest economy to resurface.
Stock prices in the developed world and elsewhere duly registered a bear market decline of more than 20 per cent but, just as investors’ recession fears subsided and the world’s major bourses began to stabilise, attention shifted across the Atlantic to the deteriorating and seemingly hopeless position facing the Greek government, which had seen its economy plunge into a severe downturn on the back of the harsh austerity programme prescribed by the so-called troika.
The Greek crisis and the turmoil precipitated across the euro-zone prompted Europe’s slow-moving leadership into action, who reluctantly announced to the world in September that they had just, “Six weeks to save the euro.” The disturbing rhetoric was duly followed by the fourteenth summit in less than two years and, the third comprehensive attempt this year alone, to quell the rumbling debt crisis that continues to question the viability of the region’s monetary union.
The proposals agreed to at what was dubbed the, “summit to end all summits” were received enthusiastically by investors at first glance but, upon further reflection, the measures were deemed to fall well short of what was required to draw a line under the crisis. A wave of selling followed and, the stress that was once confined to the sovereign debt markets of the miscreants in the monetary union’s periphery steadily moved inward to infect the core, and even a supposedly blemish-free Germany did not manage to escape investors’ wrath.
The tension continued to mount and the growing sense of panic among the international community was palpable as the realisation that a disorderly break-up of the single currency could no longer be considered a trivial probability dawned on observers. Not surprisingly, all eyes were focussed on the latest gathering of the European Union’s political elite in Brussels towards the end of last week.
The latest summit to save the euro appeared not to disappoint and delivered much as expected – with much of the detail well flagged days in advance – and, as a result the financial markets’ initial response was relatively mute but, two days of analysis over the weekend and investors delivered a more considered verdict – the summit had failed to move the euro-zone even one step closer to a successful resolution.
The summit’s proposals reveal that the EU’s political leaders remain in denial or are blind to the true nature of the crisis that afflicts the euro-zone and, until the politicians awake from their slumber, the odds of a successful conclusion to the sorry episode is still not much better than a coin toss.
The EU’s leadership continues to believe that profligate government spending among the euro-zone’s periphery is the central problem and, insist that fiscal austerity is the only path to future stability. With this in mind, the summit proposed that euro-zone members adopt constitutionally-binding debt brakes requiring states to maintain balanced budgets, defined as structural deficits of no more than half a percentage point of GDP.
The idea that the euro-zone’s woes simply reflect fiscal mismanagement is simply not borne out by the facts. Indeed, before the crisis struck, only Greece and Italy showed government debt ratios that were well above the Maastricht limit of 60 per cent, while both Ireland and Spain sported public debt fundamentals that seemed to be comfortably below the danger zone.
The euro-zone’s periphery came unstuck because large private sector deficits led to unsustainable external imbalances that had to be financed in a foreign currency – namely, the euro – since member states had given up their currency sovereignty upon admission to the single currency. This meant that euro-zone countries with persistently large current account deficits and dangerous levels of foreign debt as a result, were vulnerable to a sudden reversal in capital flows.
Put simply, euro member states are users of currency rather than issuers of currency and, as a result, must obtain euros to meet international payments as they fall due. The euros required can be obtained through exports, borrowing or asset sales. However, the euro-zone’s periphery increasingly relied upon the willingness of member states with current account surpluses to finance their deficits.
The music stopped once the global financial crisis struck and, in many cases, the external deficits were effectively nationalised by government in an effort to prevent an economic meltdown. Not surprisingly, fiscal deficits and government debt-to-GDP ratios subsequently exploded.
This fact seems to have gone unnoticed by Europe’s leadership, who continue to pursue the fiscal austerity route. Those of a bullish persuasion will argue that the constitutionally-binding debt brakes are a welcome step on the road to an eventual crisis resolution. However, the measure simply enshrines pro-cyclical fiscal adjustments in the currency union’s struggling member states, without any countervailing transfers from a central fiscal mechanism akin to that which exists in the United States.
Signing up to this deal is nothing short of economic suicide, as member states are effectively being asked to adopt contractionary fiscal policy when a recession strikes. The downward pressure exerted on the economy under such an approach could only be overcome by higher domestic consumption and investment or a trade surplus.
The former would be most unlikely since the private sector is already heavily indebted across the periphery, while the latter was not adequately addressed at the summit. Simply put, the chronic current account deficits in the periphery are the mirror image of the surpluses in the core and, these imbalances must be considered in any attempt to resolve the crisis.
The current approach is designed to make matters worse and all the more so, given that the member states issue debt in a foreign currency and have no credible central bank backstop. The deal to save the euro does the exact opposite and, if implemented, would hasten the single currency’s demise. As a result, financial market stress is virtually certain to continue in 2012.
As Otmar Issing, the prominent German economist once noted, “There is no example in history of a lasting monetary union that was not linked to one State.” Investors take note.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
There’s starting to be an increasing amount of talking in financial markets circles about what’s happening in China and the potential implications it has for the global markets and economy. One of the guys I work with (bond guy, but he trades stock index futures for his own account) has been all over the poor performance in the Shanghai index. His view is that it’s a major negative indication for the global economy in 2012. Let’s take a look.
Here’s a monthly chart of the Shanghai Composite Index going back to 2004.
There has obviously been A LOT of volatility in this market over the last few years. Things have calmed down considerably in the last couple, though. That sets up an interesting situation where the Bollinger Bands have gotten pretty narrow. That’s usually a sign of a market getting ready for the next big directional move. The width of the Bands doesn’t tell us direction, but the fact that they are point lower is a negative.
More significantly is the break of the 2010 lows. We saw a dip below those lows back in October, but with a rebound. Now the market is starting to extend down below there. There isn’t much in the way of support until the index gets down near the 1800 level. That’s a drop of about 20% from current levels.
The thesis of my colleague and others is that as goes China, so goes the global economy, especially the global industrial commodities (copper, oil, etc.) which feeds that country’s development. Therefore, if the Shanghai index is headed for 20% or more in losses over the next few quarters that forecast performance in the Chinese economy, there could be a major decline in those markets. This has implications in the forex markets. It means downward pressure on the so-called commodity currencies (AUD, CAD, etc.), as well as more emerging market currencies, and probably upward pressure on the USD.
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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
The world watched European leaders last week take the next step toward saving the euro, a move that sparked some optimism from bank officials. In the U.S., jobless claims fell to new lows, and confidence abounded from Wall Street women about alternative investments.
Applause sounded after leaders at the European Summit agreed to sign an intergovernmental treaty to enforce stricter fiscal standards in their future budgets. Efforts to get all 27 members of the European Union (EU) failed as Britain and Hungary opted out. Importantly, the 17 euro zone members agreed to the new treaty, a welcoming sign to the European Central Bank (ECB) that said the treaty would be the basis of good financial discipline moving forward. Before the summit, Standard and Poor’s warned of possible credit downgrades of 15 euro zone nations, preparing to place those nations—including the powerhouse of Germany—on credit watch negative. This action normally signals a downgrade within three months. According to S&P, the action was “prompted by [its] belief that systemic stresses in the eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the eurozone as a whole.”
Also in Europe, Greece readied its next step for its bailout. Inspectors for the country’s international lenders and private credits are meeting and preparing for a new 130-billion euro bailout plan and bond swap to keep the country’s economy alive. The EU, International Monetary Fund (IMF) and the ECB—known as the troika—are visiting Athens to start preparing the bailout plan agreed in October as well as assessing the impact of debt swap plan on banks. Earlier last week, Greece approved its 2012 austerity budget as it tried to cut its debt and pull itself out of recession. Responding to the measures, many Greek youths protested, hurling stones, bottles and firebombs at police. The country’s fiscal package included some very tough cuts that will unfortunately keep many Greeks feeling cash strapped. While Greece’s fiscal matters proceeded, Hungary sought a 10-to-15 million euro package from the IMF and EU to help stabilize its economy. The country asked for assistance after its forint currency hit record weakness because of market skepticism about the government’s unconventional policies.
In the U.S., new jobless claims fell to a nine-month low, showing signs that the job market may be improving. The Labor Department said weekly applications declined by 23,000 to 381,000. Some more good news came from women on Wall Street as they planned to seek alternative investments. Nearly 65 percent of the women surveyed said they expected to find attractive investment opportunities, according to a study by the professional services firm Rothstein Kass and the international women’s group 85 Broads. More than half of the women said they planned to start new funds too.
Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.
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