Unlike the futures and equities markets, the forex market trades actively 24 hours a day with active trading hours following the sun around the globe to each of the major money centers.As the foreign exchange market is an over the counter market where two counterparties can trade with each other whenever they want, technically the market never closes. Most electronic trading platforms however open for trading at around 5 PM Eastern Time on Sunday, which corresponds to the start of Monday’s business hours in Australia and New Zealand. While there are certainly banks in these countries which actively make markets in foreign exchange, there is very little trading done in these countries when compared to other major money centers of the world. The first major money center to open and there fore the start of the first major session in the forex market is the Asian Trading session which corresponds with the start of business hours in Tokyo at 7pm Eastern Time on Sunday. While still considered 1 of the three major money centers, only 7.6% of forex transactions flow through Tokyo trading desks, so the Asian trading session is the least active of the three. While there is active trading in Yen based currency pairs during Asian hours the market for currencies outside of Yen based pairs is relatively thin, making Asian trading hours a time when the larger banks and hedge funds in the market will sometimes try and push the market in their favor. Next in line is the European trading session which begins with the start of London business hours at 2 AM Eastern Standard Time. While New York is considered by most to be the largest financial center in the world, London is still king of the forex market with over 32% of all forex transactions taking place in the city. Before the Euro there were more than a dozen additional currencies in Europe making foreign exchange part of every day life for both individuals and businesses operating in the region. In addition to this, London is situated perfectly from a time zone standpoint with business hours for both the large eastern and western economies taking place during London trading hours. As London is the most active session in the forex market it is also the session with the most volatility for all the currency pairs which we will be studying in this course. Last but not least is the US session which begins with the start of New York business hours at 8 AM Eastern Standard Time. New York is a distant second to London in terms of forex trading volumes with approximately 19% of all forex transactions flowing through New York Dealing Rooms. The most active part of the US Trading session, and the most active time for the forex market in general, is from about 8am to 12pm when both London and New York trading desks are open for business. You can see very large volatility during this time as in addition to both New York and London trading desks being open, most of the major US economic announcements are released during these hours as well. The trading day winds down after 12pm New York time with most electronic platforms closing for business at around 4 PM Eastern Standard Time on Friday.That’s our lesson for today, in our next lesson we will look at the main currencies of the world which we will be learning to trade throughout the rest of this course so we hope to see you in that lesson. As always if you have any questions or comments please leave them in the comments section below, and good luck with your trading!
Saturday, May 23, 2009
EUR/USD: Trading the Euro-Zone Gross Domestic Product (GDP) Report
The 1Q GDP reading for the Euro-Zone is likely to reinforce a weakening outlook for the nation as economists forecast the growth rate to contract 2.0% from the fourth quarter, and fundamental headwinds are likely to weigh on the exchange rate as the region faces its worst economic downturn in over half a century. The jobless rate surged to 8.9% from a revised reading of 8.7% in February, which is the highest since November 2005.
Trading the News: Euro-Zone Gross Domestic ProductWhat’s Expected
Time of release: 05/15/2009 10:00 GMT, 05:00 EST
Primary Pair Impact : EURUSD
Expected: -2.0%
Previous: -1.6%Effect the Euro-Zone Gross Domestic Product report had over EURUSD for the past 2 months
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4Q 2008 Euro-Zone Gross Domestic Product
The advanced GDP reading for the Euro-Zone showed the economy contracted 1.5% in the fourth quarter to mark the biggest downturn since the series began in 1995, while the annual rate of growth slipped 1.2% from the previous year, which is the first full-year drop on record, and conditions are likely to get worse as the International Monetary Fund forecasts economic activity to contract 2.0% in 2009. As the region faces its first recession in over a decade, fears of a deepening downturn may lead policymakers to take further steps to shore up the economy, and the European Central Bank is expected to lower the benchmark interest rate by another 50bp to a record-low of 1.50% as the outlook for growth and inflation falter. Meanwhile, as the overnight rate falls close to zero, the Governing Council may look beyond the interest rate to manage monetary policy, and is likely to adopt unconventional measures to stimulate the economy.
3Q 2008 Euro-Zone Gross Domestic Product
The Euro-Zone slipped into its first recession in 15-years as the advanced GDP reading for the third quarter showed that economy contracted another 0.2% from the previous quarter, which lowered the annual rate of growth to 0.7% from 1.4%. Mounting growth fears paired with the fall in global commodity prices led the European Central Bank to lower the benchmark interest rate by 100bp over the last two-months to 3.25% after hold rates at a seven-year high of 4.25% throughout the third quarter, and the central bank is likely to ease policy further over the coming months as price pressures alleviate. Nevertheless, as global trade conditions falter, economic activity throughout the region is likely to weaken further, and may lead policy makers to step up their efforts in the coming months in order to steer the economy out of a recession.
What To Look For Before The Release
Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on EURUSD ahead of the data release.
Bearish Scenario:If we see substantially deeper available liquidity on the Offer side of the market, this tells us that major price providers in the market are looking to sell the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bearish bias on EURUSD ahead of the data release.
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How To Trade This Event Risk
The 1Q GDP reading for the Euro-Zone is likely to reinforce a weakening outlook for the nation as economists forecast the growth rate to contract 2.0% from the fourth quarter, and fundamental headwinds are likely to weigh on the exchange rate as the region faces its worst economic downturn in over half a century. The jobless rate surged to 8.9% from a revised reading of 8.7% in February, which is the highest since November 2005, while the annual rate of consumption plunged 4.2% from the previous year to mark the biggest drop since recordkeeping began in 1996, and conditions are likely to get worse as firms may continue to scale back on production and employment in an effort to weather the slump in the global economy. A report by the European Union’s statistics office showed industrial outputs fell 20.2% in March from the previous year to mark the biggest downturn since the series began in 1986, while new orders dropped at a record pace as demands slipped 34.5% from last year, and fading demands from home and abroad is likely to weigh on economic activity throughout the year. Meanwhile, a separate report showed exports to the U.S., the Euro-Zone’s second-largest trading partner, slumped at an annual pace of 27% in February, while demands from the U.K. plunged 29% from the previous year, and the data reinforces a dour outlook for future growth as the downturn in the global economy intensifies. As a result, the European Central Bank lowered the benchmark interest rate by 25bp to a record-low of 1.00% earlier this month in an effort to steer the economy out of the worst recession in over half a century, while the Governing Council ‘agreed in principle’ to utilize tools beyond the interest rate to manage monetary policy as the board attempts to put a floor on the interest rate. However, the lack of decisive action by the central bank paired with the dissenting views amongst policymakers have raised speculation that the ECB has done too little too late, and uncertainties surrounding the outlook for future policy could weigh on the exchange rate over the near-term. As a result, expectations for further easing are likely to stoke increased selling pressure for the euro over the remainder of the month as the central bank maintains a dovish stance however, as risk trends continue to drive price action in the foreign exchange market, the rise in market sentiment could drive the single-currency higher as investors increase their appetite for risk.
Trading the given event risk favors a bearish outlook for the single currency as the growth rate is expected to fall further in the first quarter but nevertheless, an enhanced growth reading could set the stage for a long euro trade as market participants move into higher risk/reward investments. Therefore, if economic activity contracts 1.5% or less in the first quarter, we will look for a green, five-minute candle following the release to validate a buy entry on two lots of EUR/USD, and once these conditions are met, we will place our initial stop at the nearby swing low (or reasonable distance taking volatility into account), and this risk will determine our first target. Our second target will be based on discretion, and in an effort to preserve our profits, we will move the stop on the second lot to breakeven once the first trade reaches its target.
In contrast, the downturn in global trade paired with the rise in unemployment is likely to weigh on economic activity, and fears of a deepening recession are likely to weigh on the exchange rate as the economic downturn intensifies. As a result, an in-line print, or a drop of more than 2.0% in the growth rate would lead us to hold a bearish outlook for the single currency, and we will follow the same setup for a short euro-dollar trade as the long position mentioned above, just in reverse.
Trading the News: Euro-Zone Gross Domestic ProductWhat’s Expected
Time of release: 05/15/2009 10:00 GMT, 05:00 EST
Primary Pair Impact : EURUSD
Expected: -2.0%
Previous: -1.6%Effect the Euro-Zone Gross Domestic Product report had over EURUSD for the past 2 months
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4Q 2008 Euro-Zone Gross Domestic Product
The advanced GDP reading for the Euro-Zone showed the economy contracted 1.5% in the fourth quarter to mark the biggest downturn since the series began in 1995, while the annual rate of growth slipped 1.2% from the previous year, which is the first full-year drop on record, and conditions are likely to get worse as the International Monetary Fund forecasts economic activity to contract 2.0% in 2009. As the region faces its first recession in over a decade, fears of a deepening downturn may lead policymakers to take further steps to shore up the economy, and the European Central Bank is expected to lower the benchmark interest rate by another 50bp to a record-low of 1.50% as the outlook for growth and inflation falter. Meanwhile, as the overnight rate falls close to zero, the Governing Council may look beyond the interest rate to manage monetary policy, and is likely to adopt unconventional measures to stimulate the economy.
3Q 2008 Euro-Zone Gross Domestic Product
The Euro-Zone slipped into its first recession in 15-years as the advanced GDP reading for the third quarter showed that economy contracted another 0.2% from the previous quarter, which lowered the annual rate of growth to 0.7% from 1.4%. Mounting growth fears paired with the fall in global commodity prices led the European Central Bank to lower the benchmark interest rate by 100bp over the last two-months to 3.25% after hold rates at a seven-year high of 4.25% throughout the third quarter, and the central bank is likely to ease policy further over the coming months as price pressures alleviate. Nevertheless, as global trade conditions falter, economic activity throughout the region is likely to weaken further, and may lead policy makers to step up their efforts in the coming months in order to steer the economy out of a recession.
What To Look For Before The Release
Bullish Scenario:
If we see substantially deeper available liquidity on the Bid side of the market, this tells us that major price providers in the market are looking to buy the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bullish bias on EURUSD ahead of the data release.
Bearish Scenario:If we see substantially deeper available liquidity on the Offer side of the market, this tells us that major price providers in the market are looking to sell the Euro against the US Dollar. Considering that close to 60% of all FX market volume is cleared through just six top banks, we see it prudent to be on the same side of the trade as major institutions and will favor a bearish bias on EURUSD ahead of the data release.
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How To Trade This Event Risk
The 1Q GDP reading for the Euro-Zone is likely to reinforce a weakening outlook for the nation as economists forecast the growth rate to contract 2.0% from the fourth quarter, and fundamental headwinds are likely to weigh on the exchange rate as the region faces its worst economic downturn in over half a century. The jobless rate surged to 8.9% from a revised reading of 8.7% in February, which is the highest since November 2005, while the annual rate of consumption plunged 4.2% from the previous year to mark the biggest drop since recordkeeping began in 1996, and conditions are likely to get worse as firms may continue to scale back on production and employment in an effort to weather the slump in the global economy. A report by the European Union’s statistics office showed industrial outputs fell 20.2% in March from the previous year to mark the biggest downturn since the series began in 1986, while new orders dropped at a record pace as demands slipped 34.5% from last year, and fading demands from home and abroad is likely to weigh on economic activity throughout the year. Meanwhile, a separate report showed exports to the U.S., the Euro-Zone’s second-largest trading partner, slumped at an annual pace of 27% in February, while demands from the U.K. plunged 29% from the previous year, and the data reinforces a dour outlook for future growth as the downturn in the global economy intensifies. As a result, the European Central Bank lowered the benchmark interest rate by 25bp to a record-low of 1.00% earlier this month in an effort to steer the economy out of the worst recession in over half a century, while the Governing Council ‘agreed in principle’ to utilize tools beyond the interest rate to manage monetary policy as the board attempts to put a floor on the interest rate. However, the lack of decisive action by the central bank paired with the dissenting views amongst policymakers have raised speculation that the ECB has done too little too late, and uncertainties surrounding the outlook for future policy could weigh on the exchange rate over the near-term. As a result, expectations for further easing are likely to stoke increased selling pressure for the euro over the remainder of the month as the central bank maintains a dovish stance however, as risk trends continue to drive price action in the foreign exchange market, the rise in market sentiment could drive the single-currency higher as investors increase their appetite for risk.
Trading the given event risk favors a bearish outlook for the single currency as the growth rate is expected to fall further in the first quarter but nevertheless, an enhanced growth reading could set the stage for a long euro trade as market participants move into higher risk/reward investments. Therefore, if economic activity contracts 1.5% or less in the first quarter, we will look for a green, five-minute candle following the release to validate a buy entry on two lots of EUR/USD, and once these conditions are met, we will place our initial stop at the nearby swing low (or reasonable distance taking volatility into account), and this risk will determine our first target. Our second target will be based on discretion, and in an effort to preserve our profits, we will move the stop on the second lot to breakeven once the first trade reaches its target.
In contrast, the downturn in global trade paired with the rise in unemployment is likely to weigh on economic activity, and fears of a deepening recession are likely to weigh on the exchange rate as the economic downturn intensifies. As a result, an in-line print, or a drop of more than 2.0% in the growth rate would lead us to hold a bearish outlook for the single currency, and we will follow the same setup for a short euro-dollar trade as the long position mentioned above, just in reverse.
Trading on the Dangerous Side of a Head and Shoulders Range
Last week, we were looking at EURGBP for a range trade. The technical interest in this pair followed a pressurized head-and-shoulders formation while fundamentals pointed to a long-term shift in the interest rate and growth bias. Today, we are on the opposite side of the same range; but the situation is very different.
Why Would EURGBP Hold a Range?
· Levels to Watch:
-Range Top: 0.9020 (Trend, Fibs, SMAs)
-Range Bottom: 0.8790 (Range Low, Fib)
· There is back and forth in EURGBP that has yet to be resolved through Fundamentals. The long-term outlook for the UK has long drawn a consensus for the worst performing, industrialized economy. On the other hand, the Euro Zone’s benchmark lending rate (one of the primary catalysts for euro strength) has steadily fallen while recent growth readings from the region reveal a deeper recession than many though. Is the euro more stable than the pound?
· The technical scene for EURGBP is plentiful but somewhat complex. Starting with the long-term view of the market, we have a struggle for a gradual, bearish reversal following the record high set at the end of 2008. And, while this turn has stalled, it has produced a clear line in the sand for a breakout. An extended range and Fib floor around 0.88 is key.
Suggested Strategy
· Short: Half-sized entry orders will be placed at 0.8805 aims to find entry near support.
· Stop: An initial stop of 0.8745 looks only to cover the spike low from May 7th. To secure profit, move the stop on the second lot to breakeven when the first target hits.
· Target: The first objective equals risk (60) at 0.8865 and the second target will be 0.8930.
Trading Tip – Last week, we were looking at EURGBP for a range trade. The technical interest in this pair followed a pressurized head-and-shoulders formation while fundamentals pointed to a long-term shift in the interest rate and growth bias. Today, we are on the opposite side of the same range; but the situation is very different. A cursory look at a daily chart reveals the head-and-shoulders pattern that has been in development since February offers a clear breaking point in its ‘neckline’ around 0.8800/750 for what is looking more and more like a gradual, bearish reversal. A break at this level could potentially signal a major shift in market sentiment; and as such, it would likely take a prominent economic driver to catalyze such a move. Looking at the economic docket, there are more than a few indicators that are noteworthy. On the other hand, few of the releases have the necessary sway to drive such a dramatic change in market direction – a boon for our range setup. Our entry is set below today’s low; but this is necessary to maintain a reasonable risk/reward profile. However, things can still change quickly should momentum develop from an unforeseen event. To account for this threat, we have set the stop just below recent lows to cut risk quickly. We have also cut our position size in half (we are dealing with pound pips) to further lower our risk. If this entry doesn’t trigger by tomorrow’s US session close, we will cancel all pending orders.
Event Risk for Euro Zone and UK
Euro Zone – The euro may have assimilate the most influential round of event risk the currency has seen since the ECB’s rate decision two weeks ago. A sharper than expected, negative revision to first quarter GDP subverts the market’s attempt at calling an early recovery from this economic leader. What’s more, it tips the scales on the argument for further rate cuts and expanding the bank’s unorthodox covered bond plan. This will hold over the market as each day passes without a severe shock to general risk appetite. Looking at the economic docket this week, the euro has a number of indicators that could add to the disappointing outcome of the growth figures. The PMI numbers are the most influential considering they will give a leading measure of growth from the business side of the market. The ZEW survey will offer a sentiment view of things. As investors are the most speculative of economic groups, their outlook on growth and monetary policy will be taken seriously by the market. UK – At one point in the past, each of the scheduled events and indicators on the UK docket was a primary driver for the sterling. Today, however, these indicators hold less tout for the fundamental crowd. While each is important from an economic perspective (they all feed into the medium-term growth and interest rate outlook), each is simply a component of the larger concern about growth and returns in the United Kingdom when everything is said and done. For surprise and market-movement quotient, the preliminary reading for GDP could offer drive. As the first revision, there is no adjustment expected; but given the market’s focus on this front, a shift would be market moving. Potential also rests with the CBI trends report as a leading and long-term gauge for manufacturing health.
Data for May 19 – May 26
Data for May 19 – May 26
Date (GMT)
European Economic Data
Date (GMT)
UK Economic Data
May 19
German ZEW Survey (MAY)
May 19
CPI (APR)
May 21
Euro Zone PMI Composite (MAY A)
May 20
Bank of England Minutes
May 25
German IFO – Business Climate (MAY)
May 20
CBI Industrial Trends Total Orders (MAY)
May 26
Euro Zone Industrial New Orders (MAR)
May 21
GDP (1Q P)
Why Would EURGBP Hold a Range?
· Levels to Watch:
-Range Top: 0.9020 (Trend, Fibs, SMAs)
-Range Bottom: 0.8790 (Range Low, Fib)
· There is back and forth in EURGBP that has yet to be resolved through Fundamentals. The long-term outlook for the UK has long drawn a consensus for the worst performing, industrialized economy. On the other hand, the Euro Zone’s benchmark lending rate (one of the primary catalysts for euro strength) has steadily fallen while recent growth readings from the region reveal a deeper recession than many though. Is the euro more stable than the pound?
· The technical scene for EURGBP is plentiful but somewhat complex. Starting with the long-term view of the market, we have a struggle for a gradual, bearish reversal following the record high set at the end of 2008. And, while this turn has stalled, it has produced a clear line in the sand for a breakout. An extended range and Fib floor around 0.88 is key.
Suggested Strategy
· Short: Half-sized entry orders will be placed at 0.8805 aims to find entry near support.
· Stop: An initial stop of 0.8745 looks only to cover the spike low from May 7th. To secure profit, move the stop on the second lot to breakeven when the first target hits.
· Target: The first objective equals risk (60) at 0.8865 and the second target will be 0.8930.
Trading Tip – Last week, we were looking at EURGBP for a range trade. The technical interest in this pair followed a pressurized head-and-shoulders formation while fundamentals pointed to a long-term shift in the interest rate and growth bias. Today, we are on the opposite side of the same range; but the situation is very different. A cursory look at a daily chart reveals the head-and-shoulders pattern that has been in development since February offers a clear breaking point in its ‘neckline’ around 0.8800/750 for what is looking more and more like a gradual, bearish reversal. A break at this level could potentially signal a major shift in market sentiment; and as such, it would likely take a prominent economic driver to catalyze such a move. Looking at the economic docket, there are more than a few indicators that are noteworthy. On the other hand, few of the releases have the necessary sway to drive such a dramatic change in market direction – a boon for our range setup. Our entry is set below today’s low; but this is necessary to maintain a reasonable risk/reward profile. However, things can still change quickly should momentum develop from an unforeseen event. To account for this threat, we have set the stop just below recent lows to cut risk quickly. We have also cut our position size in half (we are dealing with pound pips) to further lower our risk. If this entry doesn’t trigger by tomorrow’s US session close, we will cancel all pending orders.
Event Risk for Euro Zone and UK
Euro Zone – The euro may have assimilate the most influential round of event risk the currency has seen since the ECB’s rate decision two weeks ago. A sharper than expected, negative revision to first quarter GDP subverts the market’s attempt at calling an early recovery from this economic leader. What’s more, it tips the scales on the argument for further rate cuts and expanding the bank’s unorthodox covered bond plan. This will hold over the market as each day passes without a severe shock to general risk appetite. Looking at the economic docket this week, the euro has a number of indicators that could add to the disappointing outcome of the growth figures. The PMI numbers are the most influential considering they will give a leading measure of growth from the business side of the market. The ZEW survey will offer a sentiment view of things. As investors are the most speculative of economic groups, their outlook on growth and monetary policy will be taken seriously by the market. UK – At one point in the past, each of the scheduled events and indicators on the UK docket was a primary driver for the sterling. Today, however, these indicators hold less tout for the fundamental crowd. While each is important from an economic perspective (they all feed into the medium-term growth and interest rate outlook), each is simply a component of the larger concern about growth and returns in the United Kingdom when everything is said and done. For surprise and market-movement quotient, the preliminary reading for GDP could offer drive. As the first revision, there is no adjustment expected; but given the market’s focus on this front, a shift would be market moving. Potential also rests with the CBI trends report as a leading and long-term gauge for manufacturing health.
Data for May 19 – May 26
Data for May 19 – May 26
Date (GMT)
European Economic Data
Date (GMT)
UK Economic Data
May 19
German ZEW Survey (MAY)
May 19
CPI (APR)
May 21
Euro Zone PMI Composite (MAY A)
May 20
Bank of England Minutes
May 25
German IFO – Business Climate (MAY)
May 20
CBI Industrial Trends Total Orders (MAY)
May 26
Euro Zone Industrial New Orders (MAR)
May 21
GDP (1Q P)
Risk Appetite and Carry Interest Stalled by Long-Term Concerns
Risk appetite is still on shaky ground following the release of the Fed’s Stress Test just a few weeks ago. Since then, another attempt to spark investor optimism was made; but fundamentals are stacking up against a true changing of the guard for the market. Before credit is restored and capital is once again freely invested in risk-laden capital markets, participants will need to reconcile a lack of returns against an ongoing recession, the eventual removal of government aid and the inevitable sale of toxic debt that has been held in escrow with central banks.
• Risk Appetite and Carry Interest Stalled by Long-Term Concerns• When Is It Prudent To Unwind Government Aid?• UK Sovereign Debt Rating Under Watch – What’s At Stake?
Risk appetite is still on shaky ground following the release of the Fed’s Stress Test just a few weeks ago. Since then, another attempt to spark investor optimism was made; but fundamentals are stacking up against a true changing of the guard for the market. Before credit is restored and capital is once again freely invested in risk-laden capital markets, participants will need to reconcile a lack of returns against an ongoing recession, the eventual removal of government aid and the inevitable sale of toxic debt that has been held in escrow with central banks. However, these are long-term and ill-defined themes for the investment community; so how much immediate influence will they have on the capital markets? This past week, we have seen equities fail to hold on to their highest levels this year. The Dow Jones Industrial Average recently been restrained by a channel of congestion between 8,600 and 8,250 whilst volatility (as measured by the VIX) has seen a sharp advance from a recent stumble to eight month lows. The picture is much the same in the currency market. The DailyFX Carry Index has failed to mark a higher high this week; but the general bias towards positive rate differentials is clearly still on pace. As for condition indicators, volatility seemed to have marked a temporary bottom around 13.5 percent – around the same levels the market was at just before the credit crisis grew severe back in late September. On the other hand, interest rate expectations are still inching higher and risk reversals on interest-heavy pairs mark a demand for return. Panic has been exercised from the market’s memory; but the catalysts that aroused such a violent reaction from investors in the first place lingers in the background. How the market progresses from here depends on whether market participants are willing to ruminate on the potential catalysts for another financial crunch (thereby casting the general outlook in pessimism and setting the market on edge) or otherwise place their confidence in policy authorities and keep their capital in the pursuit of market-beating returns. The world’s governments and central banks have been integral to developing the stability that we see today. However, the powers that be are already starting to remind the market that this support will eventually be removed from the market. At this point it is still a gamble to forecast whether we are currently in a sustainable recovery or one manufactured by the government guarantees and lending. Another eventuality is the transfer of toxic debt used as collateral for aid will cycle back out into the market. Either a bullish market will boost these products’ attractiveness or they will clog the lines of liquidity again. With expirations still far off, they will not simply disappear. In the meantime, event the risk-free title assigned to government securities is coming under fiscal strains. The UK is at risk of losing its top rating and speculation is now focusing on the US. Without utter confidence from the market, these threats could leverage fear.
Is Carry Trade a Buy or a Sell? Join the DailyFX Analysts in discussing the viability of the Carry Trade strategy in the DailyFX Forum
Risk Indicators:
Definitions:
What is the DailyFX Volatility Index:
The DailyFX Volatility Index measures the general level of volatility in the currency market. The index is a composite of the implied volatility in options underlying a basket of currencies. Our basket is equally weighed and composed of some of the most liquid currency pairs in the Foreign exchange market.
In reading this graph, whenever the DailyFX Volatility Index rises, it suggests traders expect the currency market to be more active in the coming days and weeks. Since carry trades underperform when volatility is high (due to the threat of capital losses that may overwhelm carry income), a rise in volatility is unfavorable for the strategy.
What are Risk Reversals:Risk reversals are the difference in volatility between similar (in expiration and relative strike levels) FX calls and put options. The measurement is calculated by finding the difference between the implied volatility of a call with a 25 Delta and a put with a 25 Delta. When Risk Reversals are skewed to the downside, it suggests volatility and therefore demand is greater for puts than for calls and traders are expecting the pair to fall; and visa versa.
We use risk reversals on AUDUSD as global interest rates have quickly fallen towards zero and the lines between safe haven and yield provided has become blurred. Australia has a historically high and responsive benchmark, making it more sensitive to current market conditions. When Risk Reversals grow more extreme to the downside, it typically reflects a demand for safety of funds - an unfavorable condition for carry.
How are Rate Expectations calculated:
Forecasting rate decisions is notoriously speculative, yet the market is typically very efficient at predicting rate movements (and many economists and analysts even believe market prices influence policy decisions). To take advantage of the collective wisdom of the market in forecasting rate decisions, we will use a combination of long and short-term, risk-free interest rate assets to determine the cumulative movement the Reserve Bank of Australia (RBA) will make over the coming 12 months. We have chosen the RBA as the Australian dollar is one of few currencies, still considered a high yielders.To read this chart, any positive number represents an expected firming in the Australian benchmark lending rate over the coming year with each point representing one basis point change. When rate expectations rise, the carry differential is expected to increase and carry trades return improves.
Additional Information
What is a Carry TradeAll that is needed to understand the carry trade concept is a basic knowledge of foreign exchange and interest rates differentials. Each currency has a different interest rate attached to it determined partly by policy authorities and partly by market demand. When taking a foreign exchange position a trader holds long position one currency and short position in another. Each day, the trader will collect the interest on the long side of their trade and pay the interest on the short side. If the interest rate on the purchased currency is higher than that of the sold currency, the result is a net inflow of interest. If the sold currency’s interest rate is greater than the purchased currency’s rate, the trader must pay the net interest.
Carry Trade As A StrategyFor many years, money managers and banks have utilized the inflow and outflow of yield to collect consistent income in times of low volatility and high risk appetite. Holding only one or two currency pairs would invite considerable idiosyncratic risk (or risk related to those few pairs held); so traders create portfolios of various carry trade pairs to diversify risk from any single pair and isolate exposure to demand for yield. However, even with risk diversified away from any one pair, a carry basket is still exposed to those conditions that render this yield seeking strategy undesirable, such as: high volatility, small interest rate differentials or a general aversion to risk. Therefore, the carry trade will consistently collect an interest income, but there are still situation when the carry trade can face large drawdowns in certain market conditions. As such, a trader needs to decide when it is time to underweight or overweight their carry trade exposure.
• Risk Appetite and Carry Interest Stalled by Long-Term Concerns• When Is It Prudent To Unwind Government Aid?• UK Sovereign Debt Rating Under Watch – What’s At Stake?
Risk appetite is still on shaky ground following the release of the Fed’s Stress Test just a few weeks ago. Since then, another attempt to spark investor optimism was made; but fundamentals are stacking up against a true changing of the guard for the market. Before credit is restored and capital is once again freely invested in risk-laden capital markets, participants will need to reconcile a lack of returns against an ongoing recession, the eventual removal of government aid and the inevitable sale of toxic debt that has been held in escrow with central banks. However, these are long-term and ill-defined themes for the investment community; so how much immediate influence will they have on the capital markets? This past week, we have seen equities fail to hold on to their highest levels this year. The Dow Jones Industrial Average recently been restrained by a channel of congestion between 8,600 and 8,250 whilst volatility (as measured by the VIX) has seen a sharp advance from a recent stumble to eight month lows. The picture is much the same in the currency market. The DailyFX Carry Index has failed to mark a higher high this week; but the general bias towards positive rate differentials is clearly still on pace. As for condition indicators, volatility seemed to have marked a temporary bottom around 13.5 percent – around the same levels the market was at just before the credit crisis grew severe back in late September. On the other hand, interest rate expectations are still inching higher and risk reversals on interest-heavy pairs mark a demand for return. Panic has been exercised from the market’s memory; but the catalysts that aroused such a violent reaction from investors in the first place lingers in the background. How the market progresses from here depends on whether market participants are willing to ruminate on the potential catalysts for another financial crunch (thereby casting the general outlook in pessimism and setting the market on edge) or otherwise place their confidence in policy authorities and keep their capital in the pursuit of market-beating returns. The world’s governments and central banks have been integral to developing the stability that we see today. However, the powers that be are already starting to remind the market that this support will eventually be removed from the market. At this point it is still a gamble to forecast whether we are currently in a sustainable recovery or one manufactured by the government guarantees and lending. Another eventuality is the transfer of toxic debt used as collateral for aid will cycle back out into the market. Either a bullish market will boost these products’ attractiveness or they will clog the lines of liquidity again. With expirations still far off, they will not simply disappear. In the meantime, event the risk-free title assigned to government securities is coming under fiscal strains. The UK is at risk of losing its top rating and speculation is now focusing on the US. Without utter confidence from the market, these threats could leverage fear.
Is Carry Trade a Buy or a Sell? Join the DailyFX Analysts in discussing the viability of the Carry Trade strategy in the DailyFX Forum
Risk Indicators:
Definitions:
What is the DailyFX Volatility Index:
The DailyFX Volatility Index measures the general level of volatility in the currency market. The index is a composite of the implied volatility in options underlying a basket of currencies. Our basket is equally weighed and composed of some of the most liquid currency pairs in the Foreign exchange market.
In reading this graph, whenever the DailyFX Volatility Index rises, it suggests traders expect the currency market to be more active in the coming days and weeks. Since carry trades underperform when volatility is high (due to the threat of capital losses that may overwhelm carry income), a rise in volatility is unfavorable for the strategy.
What are Risk Reversals:Risk reversals are the difference in volatility between similar (in expiration and relative strike levels) FX calls and put options. The measurement is calculated by finding the difference between the implied volatility of a call with a 25 Delta and a put with a 25 Delta. When Risk Reversals are skewed to the downside, it suggests volatility and therefore demand is greater for puts than for calls and traders are expecting the pair to fall; and visa versa.
We use risk reversals on AUDUSD as global interest rates have quickly fallen towards zero and the lines between safe haven and yield provided has become blurred. Australia has a historically high and responsive benchmark, making it more sensitive to current market conditions. When Risk Reversals grow more extreme to the downside, it typically reflects a demand for safety of funds - an unfavorable condition for carry.
How are Rate Expectations calculated:
Forecasting rate decisions is notoriously speculative, yet the market is typically very efficient at predicting rate movements (and many economists and analysts even believe market prices influence policy decisions). To take advantage of the collective wisdom of the market in forecasting rate decisions, we will use a combination of long and short-term, risk-free interest rate assets to determine the cumulative movement the Reserve Bank of Australia (RBA) will make over the coming 12 months. We have chosen the RBA as the Australian dollar is one of few currencies, still considered a high yielders.To read this chart, any positive number represents an expected firming in the Australian benchmark lending rate over the coming year with each point representing one basis point change. When rate expectations rise, the carry differential is expected to increase and carry trades return improves.
Additional Information
What is a Carry TradeAll that is needed to understand the carry trade concept is a basic knowledge of foreign exchange and interest rates differentials. Each currency has a different interest rate attached to it determined partly by policy authorities and partly by market demand. When taking a foreign exchange position a trader holds long position one currency and short position in another. Each day, the trader will collect the interest on the long side of their trade and pay the interest on the short side. If the interest rate on the purchased currency is higher than that of the sold currency, the result is a net inflow of interest. If the sold currency’s interest rate is greater than the purchased currency’s rate, the trader must pay the net interest.
Carry Trade As A StrategyFor many years, money managers and banks have utilized the inflow and outflow of yield to collect consistent income in times of low volatility and high risk appetite. Holding only one or two currency pairs would invite considerable idiosyncratic risk (or risk related to those few pairs held); so traders create portfolios of various carry trade pairs to diversify risk from any single pair and isolate exposure to demand for yield. However, even with risk diversified away from any one pair, a carry basket is still exposed to those conditions that render this yield seeking strategy undesirable, such as: high volatility, small interest rate differentials or a general aversion to risk. Therefore, the carry trade will consistently collect an interest income, but there are still situation when the carry trade can face large drawdowns in certain market conditions. As such, a trader needs to decide when it is time to underweight or overweight their carry trade exposure.
FX Technical Weekly
The dollar decline is extended. Wave structure at multiple degrees of trend favor in multiple pairs favor a turn towards USD strength. New highs in the EURUSD, AUDUSD, and NZDUSD are divergent with daily RSI. The USDJPY trend remains down below 96.71. The only open trade is the EURCAD long (triggered this week).
EURO / US DOLLAR
Elliott Wave Outlook: The EURUSD rally is stretched and due for at least a pullback and maybe a reversal. Wave structure favors a reversal sooner rather than later. The form of the declines from 1.6000 and 1.4723 and their subsequent rallies are the same. The rally from 1.2886 is in 5 waves and wave 5 has hit and slightly exceeded the 1-3 line. Until there is evidence of one, going short is too risky.
BRITISH POUND / US DOLLAR
Elliott Wave Outlook: There is no change to the bigger picture pattern in which wave 4 within the 5 wave decline from the 2007 high is nearing completion. Cable has tested a former 4th wave extreme at 1.5730... and exceeded it. The pair has touched the top of a parallel channel, which is a possible reversal point. The rally from 1.3500 is taking the structure of a complex (w-x-y) correction.
AUSTRALIAN DOLLAR / US DOLLAR
Elliott Wave Outlook: Despite the new high in the AUDUSD, nothing has changed regarding the long term bearish implications (5 wave decline from 2008 high indicates additional bearish potential and the corrective rally from .6000 confirms as much). Near term, RSI divergence along with a mature wave structure at multiple degrees of trend (3 waves up from .6000, 5 waves up from .6245 and 5 waves up from .6950) suggests that a turn is imminent.
NEW ZEALAND DOLLAR / US DOLLAR
Elliott Wave Outlook: The NZDUSD has soared to a new high. The rally from .5484 is in 5 waves therefore the risk of at least a pullback, potentially to .5829, is high. The advance from below .5000 is most likely an A-B-C (zigzag) and wave C would equal wave A at .6581.
US DOLLAR / JAPANESE YEN
Elliott Wave Outlook: The USDJPY is approaching 93.50…a break below there would completely clear the head and shoulders top that has formed since March. The triangle count that I have presented in recent days is still valid but becoming less probable by the day. At this point, remaining below 96.71 keeps the near term trend pointed down.
US DOLLAR / CANADIAN DOLLAR
Elliott Wave Outlook: RSI divergence at the low along with potential support from a line extended from the 4/16 and 5/8 lows indicates reversal potential. Structurally, the decline from 1.3068 is in 7 waves. This decline could be counted in several ways, but the near term implications are bullish for nearly all counts. The decline could an A-B-C correction that is nearing completion, a double 3 (two flats), or waves 1 through 3 of an impulse. At least a rally back to 1.1820 is expected.
US DOLLAR / SWISS FRANC
Elliott Wave Outlook: The USDCHF has dropped below its March low of 1.1157. In other words, minimum expectations have been met for wave Y. Look for a low.
EURO / JAPANESE YEN
Elliott Wave Outlook: 5 waves down from 137.46 is bearish and suggests that the long term trend is down. However, the decline could be wave C of an expanded flat or part of a triangle. Intraday momentum studies are overbought, which suggests at least a pullback is due. The downside is favored as long as price is below the origin of the 5 wave decline (137.46).
EURO / BRITISH POUND
Elliott Wave Outlook: It is possible that a triangle is unfolding. This would define the near term trend as bullish in wave D of the triangle up towards .9200. A drop below .8634 would warrant a bearish breakout strategy against .9085.
EURO / CANADIAN DOLLAR
Elliott Wave Outlook: The rally from 1.5460 is an impulse (5 waves) so a bullish bias is warranted against that level.
TRADE LIST
*Entry prices for trades that are recommended ‘at market’ are listed as the close price on the date published.
Long-Term Technicals May Offset Unusual EUR/NZD Price Action
We are heading into a period of potentially unusual price action early next week. An extended holiday for US, UK and New Zealand markets will warp liquidity which could lead to untimely breakouts or simply a drop back into congestion bands. This presents significant risk to all range-based strategies; but EURNZD may have a better grounding for holding its congestion.
Why Would EURNZD Hold a Range?
· Levels to Watch:
-Range Top: 0.8935 (Fib, Range High)
-Range Bottom: 0.8785 (Trend, Fibs, SMA)
· Though there has been a break in steady risk trends over the past few weeks; the larger trend is still offering general guidance to the market. This is what makes the EURNZD’s month-and-a-half of congestion so unusual. The kiwi has a clear association to risk appetite and the euro can easily be labeled the comparatively stable one. Should price action disregard broader risk trends, a sizable fundamental risk is removed from the equation.
· Price action for EURNZD has been congestive since early April. Support has played a big role in establishing this recent range. A long-term 38.2% Fib initially put a floor under a very steady, bear trend near 2.25 last month. Since then, the bearish momentum has ebbed, but minor trends have developed; while support has taken more hits.
Suggested Strategy
· Long: Half-sized entry orders will be placed at 2.2525, is above the past weeks’ range of lows.
· Stop: An initial stop of 2.2375 is notionally wide, but technically it doesn’t cover our extremes. To secure profit, move the stop on the second lot to breakeven when the first target hits.
· Target: The first objective equals risk (150) at 2.2675 and the second target will be 2.2850.
Trading Tip – We are heading into a period of potentially unusual price action early next week. An extended holiday for US, UK and New Zealand markets will warp liquidity which could lead to untimely breakouts or simply a drop back into congestion bands. This presents significant risk to all range-based strategies; but EURNZD may have a better grounding for holding its congestion. From a fundamental perspective, we have seen price action for this high-yielding pair deviate from clear trends in risk appetite seen in other corners of the market. And, in the absence of sentiment or event driven volatility, technicals will stand in to hold the market back. Currently, this pair is at the head of two converging trends. In the short-term, the bear wave that was born through March is so far just a retracement in a much larger trend. The dominate drive behind price action comes from the general, bullish drift since the summer of 2007. Consistency was given to this advance last March with a rising trendline that now stands around 2.2330. Our strategy holds with the otherwise solid range of lows and Fib support somewhat higher at 2.2475/500; so the risk of a spike low to test the trendline (like we saw on May 10th and 11th) is a possibility. Regardless, even after cutting our position size in half and the fact that we are trading with kiwi pips, we will still live with this risk to maintain a reasonable risk profile. This setup should play out relatively quickly considering average volatility and the position of our targets; but a breakout also grows more likely with each passing day. Therefore, we will cancel all open orders by the Asian session on Tuesday or should spot hit 2.2350 or 2.29 before we are entered.
Event Risk for Euro Zone and New Zealand
Euro Zone – The euro is straddling the line as a bulwark economy with an attractive yield and a risk laden financial system that could see its interest rates further deflate. Debate will rage on over whether the ECB will further ease rates and take further steps toward outright quantitative easing; and most of the fuel for market driver will come from the high level market movers on the economic docket. The hurdles will be relatively consistent next week. Sentiment readings from the consumer and business sectors will offer a timely benchmark for growth expectations. For less discretionary views of economic health, industrial new orders and German employment numbers are available. Finally, for rate speculators, the leading German and EZ CPI numbers will discount the possibility of another cut. New Zealand – As is obvious amongst its crosses, the kiwi dollar has been, and will remain, linked to risk trends. General market sentiment is a difficult dynamic to benchmark without specific, market-moving economic indicators to speculate on. There are few key readings on the docket that could act as a catalyst for broader sentiment; so vigilance is necessary. As for internal factors, there is plenty of data on the New Zealand calendar; but there is no guarantee that it will be market moving. Trade and inflation expectations have obvious implications to growth and rate cuts; but the annual budget announcement could be the most pressing driver. With a renewed focus on sovereign credit ratings (after the UK outlook was downgraded), New Zealand debt will be brought into focus.
Data for May 24 – May 31
Data for May 24 – May 31
Date (GMT)
European Economic Data
Date (GMT)
New Zealand Economic Data
May 25
German IFO – Business Climate (MAY)
May 25
Trade balance (APR)
May 26
Euro Zone Industrial New Orders (MAR)
May 25
RBNZ 2yr Inflation Expectation (2Q)
May 28
Unemployment Change (MAY)
May 26
NBNZ Business Confidence (MAY)
May 29
Euro Zone Unemployment Rate (APR)
May 27
Annual Budget
Why Would EURNZD Hold a Range?
· Levels to Watch:
-Range Top: 0.8935 (Fib, Range High)
-Range Bottom: 0.8785 (Trend, Fibs, SMA)
· Though there has been a break in steady risk trends over the past few weeks; the larger trend is still offering general guidance to the market. This is what makes the EURNZD’s month-and-a-half of congestion so unusual. The kiwi has a clear association to risk appetite and the euro can easily be labeled the comparatively stable one. Should price action disregard broader risk trends, a sizable fundamental risk is removed from the equation.
· Price action for EURNZD has been congestive since early April. Support has played a big role in establishing this recent range. A long-term 38.2% Fib initially put a floor under a very steady, bear trend near 2.25 last month. Since then, the bearish momentum has ebbed, but minor trends have developed; while support has taken more hits.
Suggested Strategy
· Long: Half-sized entry orders will be placed at 2.2525, is above the past weeks’ range of lows.
· Stop: An initial stop of 2.2375 is notionally wide, but technically it doesn’t cover our extremes. To secure profit, move the stop on the second lot to breakeven when the first target hits.
· Target: The first objective equals risk (150) at 2.2675 and the second target will be 2.2850.
Trading Tip – We are heading into a period of potentially unusual price action early next week. An extended holiday for US, UK and New Zealand markets will warp liquidity which could lead to untimely breakouts or simply a drop back into congestion bands. This presents significant risk to all range-based strategies; but EURNZD may have a better grounding for holding its congestion. From a fundamental perspective, we have seen price action for this high-yielding pair deviate from clear trends in risk appetite seen in other corners of the market. And, in the absence of sentiment or event driven volatility, technicals will stand in to hold the market back. Currently, this pair is at the head of two converging trends. In the short-term, the bear wave that was born through March is so far just a retracement in a much larger trend. The dominate drive behind price action comes from the general, bullish drift since the summer of 2007. Consistency was given to this advance last March with a rising trendline that now stands around 2.2330. Our strategy holds with the otherwise solid range of lows and Fib support somewhat higher at 2.2475/500; so the risk of a spike low to test the trendline (like we saw on May 10th and 11th) is a possibility. Regardless, even after cutting our position size in half and the fact that we are trading with kiwi pips, we will still live with this risk to maintain a reasonable risk profile. This setup should play out relatively quickly considering average volatility and the position of our targets; but a breakout also grows more likely with each passing day. Therefore, we will cancel all open orders by the Asian session on Tuesday or should spot hit 2.2350 or 2.29 before we are entered.
Event Risk for Euro Zone and New Zealand
Euro Zone – The euro is straddling the line as a bulwark economy with an attractive yield and a risk laden financial system that could see its interest rates further deflate. Debate will rage on over whether the ECB will further ease rates and take further steps toward outright quantitative easing; and most of the fuel for market driver will come from the high level market movers on the economic docket. The hurdles will be relatively consistent next week. Sentiment readings from the consumer and business sectors will offer a timely benchmark for growth expectations. For less discretionary views of economic health, industrial new orders and German employment numbers are available. Finally, for rate speculators, the leading German and EZ CPI numbers will discount the possibility of another cut. New Zealand – As is obvious amongst its crosses, the kiwi dollar has been, and will remain, linked to risk trends. General market sentiment is a difficult dynamic to benchmark without specific, market-moving economic indicators to speculate on. There are few key readings on the docket that could act as a catalyst for broader sentiment; so vigilance is necessary. As for internal factors, there is plenty of data on the New Zealand calendar; but there is no guarantee that it will be market moving. Trade and inflation expectations have obvious implications to growth and rate cuts; but the annual budget announcement could be the most pressing driver. With a renewed focus on sovereign credit ratings (after the UK outlook was downgraded), New Zealand debt will be brought into focus.
Data for May 24 – May 31
Data for May 24 – May 31
Date (GMT)
European Economic Data
Date (GMT)
New Zealand Economic Data
May 25
German IFO – Business Climate (MAY)
May 25
Trade balance (APR)
May 26
Euro Zone Industrial New Orders (MAR)
May 25
RBNZ 2yr Inflation Expectation (2Q)
May 28
Unemployment Change (MAY)
May 26
NBNZ Business Confidence (MAY)
May 29
Euro Zone Unemployment Rate (APR)
May 27
Annual Budget
Forex Strategy Outlook: Dollar Breakdown Boosts Strategy Performance
A major breakdown in the US Dollar greatly boosted performance in several of our forex trading strategies, as our Momentum and Breakout systems were heavily long the Euro, Canadian dollar, Swiss Franc, Australian Dollar, and New Zealand dollar against the US currency. A continuation of the dollar downtrend would certainly bolster outlook for these trend-following systems, and the US Dollar Index’s break below a key 10-month trendline and 200-day SMA suggests further losses are likely. Of course, we cannot discount the possibility that the Dollar breakdown may lead to subsequent consolidation.
It remains important to monitor day-to-day price action in key currency pairs. Fresh lows in volatility expectations suggest that few anticipate major price moves through the medium term. Said drop really limits our optimism for Momentum and Breakout trading systems, but we cannot ignore the clear short-term trends in major currency pairs.
Forex Trading Automated Systems Outlook
Our Momentum and Breakout trading systems have had a strong run in the past week or so, with the US Dollar’s breakdown providing solid opportunities in these strategies. Momentum2 had previously shown negative performance in the preceding 60 days of trading, but the recent turn has been enough to lift the strategy into positive territory through time of reporting. Clearly a continuation of the USD downtrend would be beneficial to the Momentum2 and Breakout2 systems. Yet we remain clearly aware of the fact that low volatility figures suggest markets may re-enter large trading ranges through upcoming trade.
It remains critical to monitor US Dollar pairs through the near term and manage our trading biases accordingly. For the moment, we favor Breakout2 and Momentum2 trading signals. Yet we remain mindful that low volatility may in fact invite a turndown in currency movements and a return to trading ranges.
DailyFX+ Forex Market Conditions Outlook
NOTE: Data has once again been changed. Due to the ineffectiveness of the 30-day horizon, we are returning to the original 90-day time horizon.
Definitions
Volatility Percentile – The higher the number, the more likely we are to see strong movements in price. This number tells us where current implied volatility levels stand in relation to the past 30 days of trading. We have found that implied volatilities tend to remain very high or very low for extended periods of time. As such, it is helpful to know where the current implied volatility level stands in relation to its medium-term range.
Trend – This indicator measures trend intensity by telling us where price stands in relation to its 30 trading-day range. A very low number tells us that price is currently at or near monthly lows, while a higher number tells us that we are near the highs. A value at or near 50 percent tells us that we are at the middle of the currency pair’s monthly range.
Range High – 90-day closing high.
Range Low – 90-day closing low.
Last – Current market price.
Strategy – Based on the above criteria, we assign the more likely profitable strategy for any given currency pair. A highly volatile currency pair (Volatility Percentile very high) suggests that we should look to use Breakout strategies. More moderate volatility levels and strong Trend values make Momentum trades more attractive, while the lowest Vol Percentile and Trend indicator figures make Range Trading the more attractive strategy.
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FOREX CAPITAL MARKETS, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FOREX CAPITAL MARKETS, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FOREX CAPITAL MARKETS, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.
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