December 13th, 2006 by Justin
Talk about China’s currency never stops. So much so that most Americans have probably heard enough to develop an opinion on where the Chinese Yuan or Renminbi (RMB) is likely to go next. Trouble is, when they attempt to actually trade based on their view, they quickly realize that speculating is either impossible or only available to a select group of market participants.
December 12th, 2006 by Ian
Euro strength continues, and the loonie is still falling apart. Together this makes for one of the most volatile pairs consisting of G7 currencies. EUR/CAD has gained approximately 1200 pips in about 35 trading days.
December 11th, 2006 by Justin
China dominates headlines when it comes to foreign exchange reserves and global trade imbalances. Every day a new article is posted on one of the major financial news outlets decrying China’s continuing buildup of foreign reserves, and their increasingly large trade surplus with the US. When their reserves moved past the $1 trillion mark in recent weeks, those cries understandably became louder. Likewise, US Treasury Secretary Hank Paulson’s upcoming visit to China has reignited calls for increased flexibility from China regarding their exchange rate. In all of the hubbub about China, traders and media seem to have forgotten that, collectively, the trade surpluses of the world’s emerging market oil producers are more than twice as large as China’s.
December 8th, 2006 by Ian
Crude palm oil futures were supposed to be in the market being traded by the end of the year on the Joint Asian Derivatives Exchange (JADE), but traders will have to wait.
Trading in futures contracts of Indonesian palm oil will now debut in the “early first quarter of 2007,” a CBOT spokeswoman told Reuters.
She gave no reason for the delayed launch.
JADE launched its first contract, rubber, in September in an attempt to capture the vast potential market among Asian hedgers seeking protection against their trades in the cash markets.
The launch of the crude palm oil futures contract was widely awaited as it will be offered on the same electronic platform as the CBOT’s soybean oil futures contract and the Winnipeg Commodity Exchange canola contract, providing market participants additional spreading opportunities.
The JADE crude palm oil contract was expected to compete head-to-head with the Malaysian palm oil futures contract, the world’s benchmark for pricing palm oil.
December 7th, 2006 by Justin
Oil is big news, and these days movements in the US Dollar–known euphemistically as the greenback–are as well. It’s rare, however, that the dollar is at risk of being affected by a meeting of the Organization of the Petroleum Exporting Countries (OPEC). That may change next week.
OPEC has been in the news of late for claiming to cut their oil output substantially, but effectively cheating at those output cuts. This allowed the slide in oil prices (which dropped from over $78/barrel in recent months to 55 recently) to continue unabated. OPEC members are once again discussing output cuts, but the forex-related news is that have also have been hurt by the recent slide in the dollar, and may react to it.
December 5th, 2006 by Ian
EUR/USD and GBP/USD have been slaughtering the dollar recently, but we haven’t seen as much movement in the non-European currencies against the dollar. That may end soon. The width of the Bollinger Bands on the monthly chart are the lowest in over 10 years for the AUD/USD. The pair has tried and failed to break above .8000 three times since 1996. If it does it again, you may want to get your trading finger ready.
December 5th, 2006 by Ian
Not long ago the United States tightened laws against online gambling, immediately crippling and bringing online casinos to their knees. Now the Las Vegas Sands plans to launch their own online platform, starting in the United Kingdom. Their stock price (LVS) is up about 140% in the last twelve months.
December 4th, 2006 by Justin
Nowhere is the move from floor-traded exchanges to electronic trading more obvious than on the NYMEX, the New York Mercantile Exchange. In the past, and especially leading up to that exchange’s recent IPO, seat prices–which gave the owner the right to trade on the exchange’s floor along with voting right and partial ownership–were the best way to track the value of trading on the floor in markets such as crude oil and natural gas.
Rather than purchasing a seat outright, traders will often lease seats from their permanent owners and try their hand at the risky, arm-flailing business of trading in one of the last and largest pits on the planet. Leasing cost $20000 per month in November, but since then a new change has taken place (though overshadowed by the blistering IPO which more than doubled on the first day of trading): the NYMEX introduced electronic trading on the CME’s Globex platform side-by-side with its pit trading.
December 1st, 2006 by Ian
According to the National Association of Realtors (NAR) housing in the United States may be becoming more affordable in 2007, but not by much. In 2004, the Housing Affordability Index was 134, then 122 in 2005, and has fell all the way to 103 for the part two quarters of 2006. The NAR says next year it will get up to 109.
December 1st, 2006 by Justin
Hedge funds recently ticked up above the $2 trillion mark after record monthly inflows. Mutual funds, not to be outdone, themselves passed the $10 trillion mark according to the Wall Street Journal:
Mutual-fund assets surpassed $10 trillion for the first time in October, according the fund industry’s trade group, the Investment Company Institute. Mutual-fund assets increased from September by $286.6 billion, or 2.9%, to $10.01 trillion in October, the ICI said. Long-term stock, bond and hybrid funds — which combine both stocks and bonds — took in $24 billion more than investors pulled out, up from $11.8 billion in September.
Contrarians will scream that this must mean a top for all markets. When retail (read: uninformed) investors start piling in, the markets must have already risen far enough for the big players to get out. And they’d be right, historically. The largest ever inflow of money to the stock market occurred in the first quarter of 2000, at the precise top of the tech bubble. However, retail involvement can often occur near a top, but not necessarily signal a top. In my view, the markets have a bit more steam left in them and new DJIA highs are right around the corner.
The Justinian
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