Dollar thrashed after Chicago PMi data, Swiss Riding Higher

Dollar hammered after the way below the expectations on Chicago PMI
Index which came below 50 at 49.9, the expected figure is 54.5. And
now i'll keenly waiting for ISM Manufacturing Index.

Now we're seeing further weakness in Dollar as EUR/USD trading above
the 1.3200 level and more likely it'll will kiss the 1.3500 level in
the near term. Over a period of month or so Dollar lost more than
700 pips against Euro. In the last 5 days USD/JPY trading between the
116.50 and 115.50. GBP/USD hits thru the 1.9600 level. Against Swiss
it was really bad hammering in it as trading below the 1.2000 level.
The most interesting part is there was no Dollar weakness against
CAD absoleutly flat trading. Morely Dollar is holding the CAD above
1.1400 level. And Other commodity currencies are trading stronger
against Dollar like Kiwi and Aussie. As AUD/USD touched the 0.7900
level.

For some time EUR/JPY struck in very tight range trading and a volatile of just 25 pips, currently EUR/JPY holding 153 level very firm.
Even EUR/GBP too struck in tighter trading range within the volatile
of hardly 20-25 pips. EUR/GBP strong support at 0.6740 level.
Swiss Franc gained nearly 50-60 pips against the Euro and trading below 1.5900. The strong support comes at 1.5865 level. Swiss evenly more stronger against Sterling where we're seeing the 75-80 pips of gain on Swiss Franc as GBP/CHF was unable to stay above the 2.3600 level. Yen was stronger by nearly 100 pips against Loonie as CAD/JPY just trading above the 101 level. AUD/CAD really to say that Aussie is getting stronger and stronger against the Loonie. As now we're seeing the level of 0.9000.

Currency Focus

USD - These last couples of days we have seen the USD slide and now
it seems like the dollar focus is fading and market participants
instead turn toward carry trades once again. Currencies like the AUD
and the NZD have among other things been supported by these carry
trades whereas the JPY and CHF have been put a bit under pressure.

EUR - Given the positive growth figures and higher inflation, the ECB has all the arguments it needs to justify the 25 bp rate hike
expected next week.

GBP - As soon as nationwide House Price data came in GBP/UDs pair hits 14 year high at 1.9565. A little of the wind has been taken out of sterling's sails by the unexpected deterioration in November's GfK UK consumer confidence gauge, and November's CBI retail sales balance plunge to an eight-month low.

JPY - Bank of Japan Governor Fukui said today that policy makers need to ensure economic growth and prices are stable. The yen is likely to get out of the current range and have a big rally once the market can see when the Bank of Japan will raise rates.

AUD - The AUD was supported by strength in both retail sales and
private sector data, which suggest that recent rate hikes have not
done that much damage just yet. Capital spending data for Q3 was weak however, but at -6.0% q/q there is a sense that the data could be distorted. There is a risk of some further upside testing for the AUD in the short-term, but this will also depend upon further generalised USD weakness, such is the market focus on the ‘USD story’ at the present time. 0.80 is major resistance which should hold for now.

FX TRADING STRATEGY FOR NOV 30

1. Thursday, November 30th, 2006 (8:30 am New York Time) USA
We have a few U.S. reports coming out. Core PCE Price Index is going to be the one where most of the focus will be in my opinion. It's widely expected to come out at 0.1% versus 0.2% previous month. If it comes out at 0% or lower, I may possibly go long on GBP/USD. If it comes out at 0.3% or higher, I may possibly go short on GBP/USD. Will watch for Personal Spending and Personal Income, and if there are any large conflicts, I'll exit immediately.

2. Thursday, November 30th, 2006 (10:00 am New York Time) USA
We have Chicago PMI coming out. It's expected to come out at 54.5 If it comes out at 51.8, it would signify the lowest reading in over 3 years, and would be bad for the dollar, so I may possibly go long on GBP/USD. If it comes out at 58 or higher, I may either possibly go short on GBP/USD, or I may take advantage of the spike down to get a better entry on the long GBP/USD. This will heavily depend on where the price is at before the report and how the reports at 8:30 am turn out.

3. Thursday, November 30th, 2006 (6:30 pm New York Time) JAPAN
We have Core CPI coming out of Japan. We have so many numbers coming out at the same time. The most important ones are annual Tokyo CPI ex Food & Energy, and National CPI ex Food and Energy. The big challenge is that we have a separate number for x Food, seperarte number for ex Energy, separate for Tokyo, Separate for National. Then we have National SA numbers, and headline numbers, add some month over month numbers to that, and we have about 10 CPI indicators that have some weight. These Japanese are nuts :) I'll be watching all the numbers, and if I see some big deviations from consensus, especially on the annual core numbers out of Tokyo and National, I may possibly go long or short on USD/JPY. Sorry, I can't be too specific about this report, will just have to watch it and play it by ear.

Currency Focus

EUR - The data in Europe has been on the strong side, as a result, it looks like ECB will have to continue on their tightening path.

GBP - Mortgage lending figures are a little stronger than expected, with approvals numbers particularly strong. The figures sugggest that the underlying picture of the housing market remains fairly healthy. The pick up in mortgage approvals to a near three-year high of 128,000 in October suggests that August's interest rate hike failed to have any immediate significant dampening impact on housing market activity, although it could be that some people were seeking to tie up mortgage deals before interest rates moved higher still in November. The striking feature is the strength of the mortgage market in October, with both approvals and net mortgage lending exceeding expectations. The Bank of England will be keeping a watchful eye on this data.

JPY - Data over the last two days weak retail sales followed by strong industrial production are not encouraging for the prospect of a self-sustaining economic recovery. The headline figure was much stronger than the consensus forecast of a drop. The data could scale back speculation that the Bank of Japan will be unable to raise interest rates before the fiscal year-end in March. But this production data alone cannot allow the BOJ to lift interest rates before year-end, as such a policy move would need a pick-up in consumption.

OECD Outlook On Majors

Organization for Economic Cooperation and Development.

OECD >>> OECD made cuts on US Economy growth and made minor adjustments on Euroland and Japan. OECD cuts the growth from 3.6% to 3.3% for 2006 and for 2007 made cuts at 2.4% from 3.1%. And they expect a slight bounce back in 2008.
OECD lowered its forecast for euro zone growth this year to 2.6 pct from 2.7 pct, and raised its projection for 2007 growth to 2.2 pct from 2.1 pct. OECD expects the euro zone to grow 2.3 pct in 2008. OECD forecast for Japan's GDP growth to 2.8 pct from 2.5 pct this year, but cut its projection for 2007 growth to 2.0 pct from 2.2 pct. It also expects growth of 2.0 pct in 2008.
OECD forecasts are near to other forecasts. OECD raised its forecasts for German growth, OECD saying German entered a sustainable recovery and is projected to grow above potential throughout the projection period. German GDP growth this
year to 2.6 pct from 2.2 pct and its forecast for 2007 growth to
1.8 pct from 1.6 pct. It said it expects growth to pick up again to
2.1 pct in 2008.

OECD saying that US Fed is going to maintain the tighter monetary
policy untill the end of 2007. In report they said that if inflation
rises further up then tightening the monetary policy is not ruled out. As per rate setters tehy said that they will be closely watching
the every incoming data before they take some action on December 12
meeting.

OECD saying that BoE hasnt got too much to hang about the rate hike,
coz inflation is expected to ease down at the comfort zone.

OECD said a slowdown in house prices in the advanced economies may
have only a limited negative impact on economic growth. The OECD said the recent deceleration in house price growth in some countries
probably reflects the fact that prices have grown out of line with
fundamentals in several markets, particularly in English-speaking and Nordic countries.

OECD said oil prices are unlikely to fall much further after their
recent correction, but metals prices could decline over the next few
years.

Japan should not raise its short-term policy interest rate again until it achieves a more positive level of inflation and is clearly free from the risk of renewed deflation. In Japan, while headline and median inflation are positive, core inflation excluding fresh food and energy and the year-on-year rate of change of the GDP deflator are still negative. Achieving a clear exit from deflation is taking longer than expected.

Currency Focus

USD - So yesterday wa eventful day for USD one report Durable Goods Orders came below the expectation and otherside of the story Consumner Confience also came in very bad indeed. But Existing Home Sales and Richmond Index came in above the expectations. Fed chairman has generally viewed upside inflation risks as greater than downside risks to growth.

EUR - The ECB will probably regard these strong M3 numbers with high alarm and still be looking to head rates up to 4.0 pct next year to quell future inflation risks.

JPY - BoJ Governor Fukui has more or less spend the last week telling everyone that BoJ will hike the rates gradually to avoid the economic swings that could come from hastily rate hikes. He also stated that it is important to communicate with markets on policy to avoid surprises. So far it seems like we are not going to see any rate hike from Japan in December. Otherwise Fukui would go back on his word almost before it is outspoken.
Japanese retail sales released last night were again softer than expected – down 0.2% m/m after a 1.5% m/m drop in the previous month indicating that consumer spending remains a sore spot for the Japanese economy. Some analysts suggested that sales for clothing were depressed by unnaturally warm weather in October much as sales in the summer were hurt by unseasonable amounts of rain.

CAD - What we see driving the Canadian dollar is fundamental investment in Canada...Canada is on the map for foreign investors.

FX Trading Strategy for Nov 29

1. Wednesday, November 29th, 2006 (8:30 am New York Time) USA
We have U.S. GDP plus a few other reports coming out of the U.S. Last month the 1st estimate for 3rd quarter GDP came out at 1.6%. Right now, it's expected to come out at 1.8%. If the GDP comes out at 1.6% or less, I may possibly go long on GBP/USD. If the GDP comes out at 1.8% or more, I may possibly go short on GBP/USD. 1.7% would be a no trade. I may reconsider, and go short at 1.9% or higher, it all depends on what's happening during the London Session tonight, and where the price is at before the report. But I think if GDP happens to come out even as expected at 1.8%, we'll some temporary dollar strength. I think this report either direction, should give 30-50 pips. Of course, watch out for conflicts from other numbers, but most likely there won't be any, because the other 3 numbers coming out at the same time usually don't move that much.

2. Wednesday, November 29th, 2006 (10:00 am New York Time) USA
We have New Home Sales coming out of the U.S. Expected number is 1049K. If it comes out at 999K or lower, I may possibly go long on GBP/USD. If it comes out at 1075K or higher, I may possibly go short on GBP/USD. 1075K is a significant number, since it was the number that came out last month, same number would mean no decline in housing, and probably is going to be good for the dollar short term. This report can possibly move 30-50 pips, but price levels before the report will be an important factor.

3. Wednesday, November 29th, 2006 (7:30 pm New York Time) AUD
We have Retail Sales coming out of Australia. Expected numbers are somewhere between 0.4% and 0.5%. If the Retail Sales come out at 0.8% or higher, I may possibly go long on AUD/USD. If they come out at 0.2% or lower, I may possibly go short on AUD/USD. I think that AUD/NZD would be a better pair to trade these, but my broker Oanda today widened the spread on Australian report to 25 pips on the AUD/NZD. I am just not too excited to get into a trade with -25 pips right away. So if your broker doesn't hike the spread on that pair, I would trade AUD/NZD, because it will probably have twice bigger range. Personally, I'll probably trade AUD/USD.

FX TRADING STRATEGY FOR NOV 28

Okay, tomorrow, we are having a very busy day with quite a few things going on.

1. Monday, November 27th, 2006 (8:30 am New York Time) USA
We have Durable Goods numbers coming out. We have the headline number and the core number. The core number is the more important one, and that'll be my focus. The core number expectations are all over the place, but most economists expect it to come out with a moderate growth versus last month at around 0 to 0.4%. If the number comes out at -0.5% or more negative, I may possibly go long on GBP/USD. If the number comes out at 1.0% or higher, I may possibly go short on GBP/USD. This move should be good for at least 30 pips, though 50 pips is also possible, especially if the number comes out negative and we go long on GBP/USD.

2. Monday, November 27th, 2006 (10:00 am New York Time) USA
We have U.S. Existing Home Sales and Consumer Confidence coming out. Both numbers are important, and I would definitely stay out if there is a conflict. The biggest focus will be on consumer confidence. It's expected to come out at 106.0, which is slightly higher than previous month's 105.4. If the consumer confidence comes out at 107.0 or higher, I may possibly go short on GBP/USD. If the consumer confidence comes out at 104.9 or lower, I may possibly go long on GBP/USD. Just make sure that housing doesn't conflict. It's expected at 6.14M. If it comes out at 6.20 or higher, and conflicting, I will exit all trades immediately, and stay aside and see what happens. If it comes out at 5.99M or below, and conflicting, I will exit all trades immediately and stay aside as well. This is a tricky report, but could be very profitable.

3. Monday, November, 27th, 2006 (7:30 pm New York Time) AUSTRALIA
We have Trade Balance coming out of Australia. It's expected to come out at around -1,070M. If it comes out at -1,400M or more negative, I may possibly go short on AUD/NZD.
If it comes out at -700 or less negative, I may possibly go long on AUD/NZD. Anything in between would be a no trade. If my trigger gets hit, I am expecting a move of around 40 pips or more on the AUD/NZD pair.

There is also Bernanke speech coming up at 12:30 pm New York Time. where he is going to give speech on US Economy Outllook and see if he says anything crazily good or bad that would affect the dollar.

The Week Ahead - Nov 27- Dec 01

This week will be the busiest week for economy majors...

MONDAY - The week starts with speech in Osaka from BoJ Governor Fukui.Then we have a Retail Sales number from Japan, i'll be looking for themonth on month data coz number are expected to come from negative topositive. And minor data from New Zealand is NBNZ Buisness Confidence.

TUESDAY - The day starts with RBA Richards speaks on Aussie Inflation.Consumer Confidence numbers coming from Germany which is expected tocome slightly better. later of the day the very key data from the USAlike Consumer Confidence and even more important data is Existing HomeSales most of the analysts are expecting some surprise from this data.And the last thing of the day is Fed's Bernanke Speech on US EconomicOutllok in New york.

WEDNESDAY - The day starts with Trade Balance from Aussie which is expectedto come at $1.07 billion from $646 million a reaaly setback for theAussie currency. M4 Money Supply is coming out from UK which is the keyfor Sterling. From Swiss we'll have a KOF Swiss Leading Indicatorhowever it'll come softer. Then we switch to the datas from USA, first is GDP estimates ha consensus saying the 1.8%. The the key data for theday is New Home Sales from USA again here to analysts are expecting suprise. Then the last piece of the day is Fed's Beige Book here i'llbe looking comments on Economic Situation, Housing Mrket and the lastthing i'll be looking in Beiges Book is Car industry.

THURSDAY - Third time in a row that we're starting the day from Aussiedata this time it is Retail Sales which is expected to come stronger.Inflation data from Swiss. Nationwide House Price from UK which is expected to remain at unchanged and Consumer Confidence from UK.Unemployment data from Germany. GDP numbers are coming out of Canada.USI is releasing its Chicago PMI which is expected to come stronger.And the very key data for the day is Infation from worls secondlargest economy Japan.

FRIDAY - This is the day where every forex trader will be lookingfor bcoz ISM Manufacturing Data is coming out from USA do we able tosee below 50 or anything above 52 currently at 51.2. Consensus saying the numbers will come at 51.8. it fell from 57.3 in April. Then we have Purchasing Managers Index from Euroland which is expected to remainat unchaneged, sma edata from UK which is expected to come positive and again same data from Swiss here expected a liitle bit softer. Then we have GDP numbers from SWiss and Unemployment Rate from Canada.

The Week in Rewind

USD - This week is full of empty calendar, thanksgiving day holiday
on thursday and major sell off in Dollar and reached multi months low
against majors. On the economic data side Leading Indicator revised
upwards and yet again we heard the hawkish stance from Fed peoples
mainly by Warsh reiterating that inflation remains uncomfortably
elevated. The one takeaway point from the Fed is that they will not be
adjusting rate anytime soon. Minor datas like Weekly Mortgage
applications dropped by 3.7%. Jobless claims ticked higher at 317k
this number is suggesting that November payrolls numbers will come bit
softer. University of Michigan Index was revised downwards to 92.1
from 92.3 and then White House downgraded the US Economic Growth for
2007. And comments from Chinese authorities are upsetting the Dollar
who is calling for Yuan flexibility.

EUR - ECB President Trichet started this week with hawkish stance and
while Garganas saying that ECB maintains extreme vigilance. Meanwhile
both are saying that it was too early to comment about the rate hike
in December. GDP numbers from France came at very flat for the Q# and
annualized growth came down to 1.8% from 2.6%. Data from Italy really
disappointed us, Industrial Ordersfalling more than expected and Trade
Deficit climbed higher for the month of September. After that data from
France disappointed us, French Consumer Spending came in short of
expectation. Euro Zone industrial orders ropped down less that we
expected. The German IFO index was stronger than expected with a rise
to 106.8 in November from 105.3 the previous month and this boosted
confidence over the Euro-zone economy.

GBP - Rightmove House Price Index reported the strongest growth in the
last 2 years or so, even Consumer Credit also raised with mortgage
lending hitting a record high. Money Supply data came in slightly
softer after hitting 16 year high this tells us that central bank's
downgrade to their inflation. CBI Industrial Trends came in far
stronger than expected, analyst pointed that softer data. Export
order managed to hit a 11 year high. London Stock Exchange rejected
the buyout from Nasdaq. The Bank of England minutes recorded a 7-2
vote for an interest rate increase in November. The majority were
concerned over the risks of rising inflation from capacity constraints
while the minority considered that the labour market was weak enough
to prevent a significant increase in inflation. Inflation risks stands
at higher due to strong growth in stronger labor market, higher money
supply and stronger housing market.

JPY - Started with weak note due to lack of comments on Yen at G20
meeting. Japanese government talking down the Yen and they are not
concerned about unwinding the Yen shorts. Japanese government
downgraded the economy growth in 2007.

CHF - Last week nothing in the calender, but this is reaaly good weak
for the Swiss. Trade balance and PPI were came in stronger than
expected as the Swiss Franc weakness booste the exports.

CAD - Wholesale Sales data disappointed and the numbers came as
biggest fall since mid 2005. We saw the sharp drop in Retail Sales
and slight rise in Leading Indicator. Consumer Price came in slightly
worse than expected, fell for a second time in a row, annualized
growth increased to 0.7% below the the expectation of 0.9% while the
Core CPI hit a 3 1/2 yaar high.

AUD - New Motor Vehicle Sales increased by 2.9% and in the previous
month raised by 3%.

NZD - Visitor Arrival increased for the month of October after a
drop in September. Credit Card spending data decreased to 8.9%
from 9.2%.

USD/CAD trading below 1.1400

Dollar still trading weaker against majors except against the Kiwi.Against Yen still trading below 116, USD/CAD finally its tradingfirm below the 1.1400 level as trading below the level of 1.2100 against Swiss Franc on stronger Swiss Retail Sales and trading flatagainst Kiwi after the very weaker than expected Kiwi Trade Balance. Against Euro and Sterling trading very weak at the level of 1.3090and 1.9320 respectively.

Currency Comments

GBP - UK posted its Q3 GDP numbers at unchanged at 0.7%. If the growth continues at this same pace then by the end of 2006 we'll see at rateof 2.6%. Industrial Production is the 19% part of GDP is revised tothe downwards. Even though they downgraded the manufacturing sector.

EUR - Getting a solid boost from the thursdays German GDP data and better than expected German IFO numbers.

USD - So this week is worst for Dollar and even there wasnt no meaningful economic data. But next week we're going to see some of theheavyweights from Dollar land. Key data like Consumer Confidence, GDP Estimates, Existing and New Home Sales Data and Chicago PMI. Home sector is going to give us one more shock like Existing and NewHome sales data is going to come down further. But Consumer Confidenceand GDP Estimates are expected to come with the upside levels andeven Chicago PMI too. For Dollar Tuesday and as well Wednesday willbe the day for Dollar. The question is will it save the Dollar.

NZD - Kiwis Trade Balance blew out to its highest level in a year orso. Due to stronger currency led the higher imports. This number clearly tells us that the account gap will not close at anytime soon.Analyst expected at NZ$650 million but the number came at whoppingNZ$ 1.167 billion that is double of te expectations.

JPY - Board member of BoJ Fukuma said that central bank will make the cautious decision on interest rate hiking and also he clearly toldthat there will be no predetermined view. Even he said that economy isgrowing at moderate pace and we wont give any advance words on anything about rate hikes. He noted one importat thing that one need tobe very cautious on the economy growth due to sluggish domesticdemand.

FX Trading Strategy for Nov 24

1. Friday, November 24th, 2006 (4:30 am New York Time) UK
We have UK GDP coming out of UK. That's GDP for the 3rd quarter, and it's second preliminary estimate, which means not all the data has been gathered, but it gives everyone the second glimpse. About 75% of the economists are expecting the number to come out same as it was last month at 0.7%. And 25% of economists think, that more data will bring the GDP down to about 0.6%. If the number comes out at 0.8% or more, it would be a pleasant surprise, and I may possibly go long on GBP/USD. Just watch out for that 1.9180 level. It's yearly high, and though I am hoping that this GDP number will break it, it may not happen. If it decisively breaks it, I think it's very possible to see 1.9220. Breaking of that level will heavily depend on where the price is at before the report. If it stays above 1.9150, a break is possible, if it stays below 1.9120, the break is unlikely in my opinion.
If GDP comes out at 0.6% or lower, I may possibly go short on GBP/USD, but it will be a very short term trade...watch out for those bulls bidding at the 1.9100s levels. After taking some profits on initial spike if I have to go short, I may re-enter the trade at the low 1.9100s. But again, all this stuff will depend on where the GBP/USD price level is at before the report.

Don't expect any miraculous deviations out of this report. This time UK government will simply have about 20% more data than they did last month for the same GDP time period, so high fluctuations are not possible mathematically. 0.1% deviation is possible, but unlikely, 0.2% deviation would be a shock, 0.3% deviation or higher, would be on the verge of impossible.

Dollar sell off continues, Euro Trading mixed, Swiss Franc trading stronger

Dollar weakness continues further with the strong breakout in EUR/USD and GBP/USD, on intra basis EUR/USD kissed the level of 1.3086 and in GBP/USD made the high of 1.9335 and USD/JPY trading well below the 116 level. We're seeing more weakness in USD/CHF and currently trading below 1.2200. As the Dollar keeps getting weaker against major economies of the world now finally USD/CAD breaks below the key level of 1.1400. And a slightly strong in Gold related NZD/USD and AUD/USD. As this goes i'm still bullish on Down Under currencies against Dollar.

Euro trading stronger against Dollar and Yen but trading weaker against Swiss Franc and flat trading against Sterling. Sterling trading weaker against Yen and weak against Swiss Franc.

Weak Dollar and Stronger Yen and Swiss Franc

Dollar continues to weaken against majors like Euro, Yen, Sterling,Swiss Franc and Aussie and looking decent against Canadian Dollar andKiwi. I'm more bullish on GBP/USD pair and USD/CAD also lookinggood. EUR/USD currently trading at 1.2960 and might be we can see the breakout level of 1.2978 to kiss the 1.3000 level, short term supportis at 1.2928. USD/JPY is showing threat of breaking the 116 mark,already we seen a fall of little more than 200 pips from the level of118.50. On charts GBP/USD looks very good indeed and Sterling is one ofmy favourite currency. Strong support for this pair is at 1.9130. In the near term we're heading towards 1.9335. USD/CHF is testing the 1.2200 levels and i feel the Swiss will resist at these levels for sometime to come. USD/CAD is just hovering above the critical level of1.1400 levels. Strong resistence is at 1.1425 and support exist at1.1385 levels. NZD/USD at the danger level of 0.6700. AUD/USD on the verge of breakout from the 0.7750 level and the support is at 0.7730.

Yen was trading stronger against Dollar, Euro, Sterling, Canadian Dollar, and Kiwi & Aussie Dollar but trading pretty flat against the Swiss Franc. And Swiss franc trading strong against Dollar, Euro, Sterling and flast against Yen.

FX Trading Strategy for Nov 23

1. Thursday, November 23rd, 2006 (4:45 pm New York Time) NEW ZEALAND
We have New Zealand trade balance coming out. It's expected at around -500 to -600 million. If it comes out at -399 million or more positive, that would be good for new zealand dollar, so I may possibly go short on AUD/NZD. If you like trading NZD/USD, then you can possibly go long. If the trade balance comes out at -800 million or more negative, that would be bad for New Zealand dollar, so I may possibly go long on AUD/NZD. If you like trading NZD/USD, then you can possibly go short.

Dollar Sell Off

Finally we saw the level of 1.2900 in EUR/USD pair. Dollar is weak by nearly 150 pips and now its trading firm above the 1.2900 levels against Euro. Now we need to see the level of 1.2978. If that cracksthen we'll step to 1.3000 levels. USD/JPY trading below 117 level and still getting weaker. Yen wasstrong by nearly 200 pips against Dollar. USD/JPY just hit the levelof 116.36 the levels of the September. GBP/USD trading at the multi-week highs, currently trading at 1.9140.In the last 5 days or so the Sterling killed dollar be nearly 300pips. USD/CHF currently trading at 1.2277 levels, And heading towards the1.2180 levels and seems to be likely. USD/CAD now the 1.1400is under threat and yet again unluck to see theunsustainable level of 1.1400 for Dollar. Just time back it tested thelow of 1.1385. Lets see will it hold the 1.1400 levels.NZD/USD back to the level of 0.6700 levels now we need to see the sustaining power to stay above 0.6700 levels. Short term support is at0.6680.AUD/USD finally i'm seeing the good rally in this pair and moreoverit trading well above the 0.7700 level and now its heading towards0.7800 level.EUR/JPY we're seeing the nice piece of consolidation between 151.70and 150.50. Still Euro is stronger against Yen as long as it holdsthe 150.50 levels.EUR/GBP sligthly heading towards the level of 0.6800. On Daily Chartsit formed Double Top at 0.6792-0.6794...

Currency Comments

USD - White House cutting the growth forecasts used in its budget projections. GDP growth for 2006 was revised down to +3.1% from a +3.6% forecast made in June, while 2007 growth was cut back to +2.9% from +3.3%. some rumors about a revision on the unemployment rate pressuring the dollar a bit. But let's face it, it's an extremely thin market ahead of the holiday, and any rumor could drag the currency.

EUR - Data released this morning showed that growth in the Eurozone remains solid. French consumer spending rose 0.9% in October, which brought the year-over-year growth rate to a very respectable 4.2%, and Italian consumer confidence rebounded in November. The news had little noticeable effect on exchange rates, although the euro is stronger against the dollar this morning than it was yesterday.

GBP - It is a surprise that Rachel Lomax joined David Blanchflower ...Blanchflower was clearly always going to be a dissenter, given his belief that there is ample spare capacity in the economy, but we had thought he would be the only one. UK MPC minutes showed two dissenters (Blanchflower & Lomax) against the November 25bp rate hike. This was initially take negatively by GBP, although it soon bounced back. One could argue that this slightly reduces the risk of another rate hike in February, although market rate expectations have pulled back a little in any case in recent weeks. Also, much will depend upon the data and the MPC’s overall inclination to fight inflation suggests that a rate hike will follow in February.

JPY - Yen gains have come despite a downgrade in the government's view of the economy in the cabinet office monthly report, and seem to reflect some concerns of official displeasure with yen weakness.

AUD - With inflation already above the Reserve Bank of Australia's comfort level of 2-3 pct, the leading index is signalling that the bank made prudent decisions to raise rates in August and November.

CAD - The Canadian dollars weakened further today after the release of two weak Canada economic indicators. Canada retail sales surprisingly dropped 1.2% in September, well below the forecast of -0.4% and the previous month's reading of 1.0%. Excluding food and energy sales, core retail sales unexpectedly fell 0.9%, disappointing the market that expected a rise of 0.1%. Canada leading indicators rose 0.2% in October, below the expectation of a 0.4% increase. The Canadian dollar lost its edge since the beginning of this month as Canada announced that it planned to tax income trusts.

CAD - CPI up by 0.9% year on year

Consumer prices rose 0.9 pct in October from a year earlier, up from a 0.7 pct annual percentage rise in September due to rise in mortgage loans and housing prices.

BoE Minutes Of Meeting

BoE MPC voted by 7-2 margin to raise key repo rate to 5.00 pct at Nov 9 meeting, MPC members Blanchflower and Lomax voted to keep the rate unchanged at 4.75%. Most of the analyst expected the vote wouldbe 8-1 Blanchfower leaving the only dove. Blanchflower said the recentspike in inflation was mainly related to large gas and electricity price rises, which were still more than offsetting the recent fallback in petrol prices. Lomax, placed more weight on the downside risks to demand and inflation and noted there were signs of weakness in the output and retail sales data at a time when the August rate rise had yet to be fully felt. The member noted that the rise in unemployment had in part been caused by relatively weak demand for labour, and so was more likely to be associated with downward pressure on wages.

The minutes showed that the majority thought a hike was necessary, given the balance of risks, to bring CPI inflation back towards the target of 2.0 pct. Last week's Inflation Report showed that the BoE expects inflation to rise further in the near-term, but not to 3.0 pct,before easing back towards the target.

The minutes showed that the MPC thought consumer spending appeared to be growing at close to its long-run average and that the buoyant housing market might pose an upside risk to future consumption growth. However the nine-member panel noted that the housing effect may be offset by a rising debt burden and a sharper than anticipated downturn in the US.

FX TRADING STRATEGY FOR NOV 22

Today i'll be sitting and watching for 2 important data one will be
out from UK and another one inflation data from Canada.

1. Wednesday, November 22nd, 2006 (4:30 am New York Time) UK
We have Bank of England minutes coming out. There are three things
that I will be looking for in this report. First is the vote. It's
expected that 8 out of 9 members voted for the BOE rate hike last
month. The only guy that's been opposing the hikes, including the
August one, is Blanchflower. If Blanchflower happens to agree with
the last hike, and the vote is 9:0, then I may possibly go long on
GBP/USD. If there is someone else that happens to share the same
opinion as Blanchflower, and the vote is 7:2, instead of 8:1, then I
may possibly go short on GBP/USD. Second thing that I will be looking for is whether anybody made any suggestions of a 0.50 rate hike. If that's the case, then the GBP/USD will probably stengthen short term. And of course, most importantly, I will be looking for hints of a future rate hike, if the Bank of England gives any hints of such possibility, pound will probably strengthen some more. Most likely though, BOE officials will complain about inflation threats, basically justifying the rate hike that they did, and the biggest trigger for the trade would be that vote. 9:0 is extremely unlikely, and 7:2 is a possibility.

2. Wednesday, November 22nd, 2006 (7:00 am New York Time) CANADA
Tomorrow, we have the biggest report coming out, which is Canadian CPI. We have two numbers, the headline number and the core number.
There are a lot of changes Canada made to the core report recently.
If you remember, it used to be CPI x 8 volatile items. Well...it's
not that anymore. Now, for the first time, it's core number, which
excludes the volatile items, but it also excludes some other tax
related items, so the one to focus on is the annual number, because
it will involve some revisions on previous number. It's expected
at 2.3%. If it comes out at 2.4% or higher, I may possibly go short
on USD/CAD. If it comes out at 2.1% or lower, I may possibly go
long on USD/CAD. Remember, if the headline number comes out
conflicting, we may see some volatilily in the opposite direction
for the first few seconds.

Todays Economic Data Cover

1. AUD > New Motor Vehicle Sales...
October auto sales data come in with pretty flast against the September sales. From January to October new auto sales were up 2.95%.

2. EUR > French Q3 GDP...
French q3 GDP unchanged from the Q2. Data was with inline of the many economists expectations. Insee report says that investment spending and consumer spending was bit disappointed in the Q3 even exports of goods and services also fell marginally which led to the unchanged Q3 GDP. Government spending and Domestic demand were stronger in Q3.

3. CHF > Trade Balance...
Switzerland recorded a trade surplus of 1.58 bln CHF in October, down from September's record high of 1.8 bln, the customs office said.
October's exports rose 17.8 pct year on year to a record 16.624 bln Swiss Franc as imports rose 12.7 pct to 15.048 bln.

4. CHF > Producer Price Index...
Swiss PPI down by 0.1% the data was with in line expectations. Year on year rose to 2.4% due to higher import bill.

5. GBP > CBI Industrial Trends Survey...
Confederation of British Industry, manufacturers recorded best ever export performance in over a decade. It was up by +3 when the october was reading -11. CBI said that all of the sectors are doing well. Overseas demands was boosting up. This was the way better than expectations. This data came strong due to strong recovery in Euro zone economy. After the news Sterling rose to one week high against Euro and Dollar.

6. CAD > Leading Indicator...
Indicator was up by 0.2% in October. The data was below the expectations which was quoted at 0.3%.

Todays Economic Data Cover

1. AUD > New Motor Vehicle Sales...
October auto sales data come in with pretty flast against the September sales. From January to October new auto sales were up 2.95%.

2. EUR > French Q3 GDP...
French q3 GDP unchanged from the Q2. Data was with inline of the many economists expectations. Insee report says that investment spending and consumer spending was bit disappointed in the Q3 even exports of goods and services also fell marginally which led to the unchanged Q3 GDP. Government spending and Domestic demand were stronger in Q3.

3. CHF > Trade Balance...
Switzerland recorded a trade surplus of 1.58 bln CHF in October, down from September's record high of 1.8 bln, the customs office said.
October's exports rose 17.8 pct year on year to a record 16.624 bln Swiss Franc as imports rose 12.7 pct to 15.048 bln.

4. CHF > Producer Price Index...
Swiss PPI down by 0.1% the data was with in line expectations. Year on year rose to 2.4% due to higher import bill.

5. GBP > CBI Industrial Trends Survey...
Confederation of British Industry, manufacturers recorded best ever export performance in over a decade. It was up by +3 when the october was reading -11. CBI said that all of the sectors are doing well. Overseas demands was boosting up. This was the way better than expectations. This data came strong due to strong recovery in Euro zone economy. After the news Sterling rose to one week high against Euro and Dollar.

6. CAD > Leading Indicator...
Indicator was up by 0.2% in October. The data was below the expectations which was quoted at 0.3%.

BoJ Minutes Of Meeting

BoJ Minutes of Meeting, members of the BoJ expressed optimism
about the economic outlook and failed to clear uncertainty over when interest rates will rise again. As usual Fukui said that economy is growing moderately. Outlook is in within the projection of the Central bank. Report also leaked that household sector is performing pretty weak and corporate sector is soaring. Due to weakness in Yen the export will do better. The one thing i couldnt find is that when the BoJ will raise the interest rate to 0.5%. We seen the only rate hike from 0.00% to 0.25% way back in July. Fukui has warned of the risks of leaving interest rates at very low levels for too long but recent weak data has also dampened near-term expectations of a rate rise.

In some of the source said that Japanese is going to downgrade the economy on the 2morrow monthly economy report, and if it so then for time being it'll be really hard to raise the rate hike.

FX Trading Strategy for Nov 21

Well yesterday was bit boring trading day as there was no good economic data to trade where one can make a huge profit like getting 30-40 or even 50 pips. So today i'll be busy with the one and only piece of data that is Retail Sales from Canada.

November 21st, 2006 (8:30 am New York Time) CANADA
We have Canadian Retail Sales coming out. We have two numbers, the headline number and the X autos number, which is considered core. My focus will be on the core number. 70% of economists expect the core number to come out negative. The average opinion is at around -0.3%. A positive number would be somewhat shocking for the market, so if Retail Sales X autos come out not negative, or at 0% or higher, that would be good for the Canadian dollar, so I may possibly go short on USD/CAD. On the other hand, if the number comes out at -0.6% or more negative, that would be the biggest decline in Retail Sales X autos in over a year, so would possibly be bad for the Canadian dollar, so I may possibly go long on USD/CAD.

Currency Comments

USD - The mains story of the week for Dollar is boring sessions. Well on this Dollar will not be going anywhere absolutely nowhere. Now people starting to belive that Fed will not going to raise the rate further. And they are pretty doubtfull about rates reducing plans.

EUR - Trichet generally messaging to the market that ECB will be carry on the rising rate into 2007 and Trichet is really helping the Euro. If so then just watch out for the EUR/GBP and EUR?USD and i mean to say that some more weakness into Yen against Euro. Anyways from here on i believe that ECB is going to hike the rate in December. In G20 Trichet again and again stated the word "vigilance on inflation".

JPY - As i read into the G20 Report i didnt get anything related to the carry trades. Even i dare to bet that Yen will underperform in the near term mainly gainst Euro.

Currency Comments

USD - The mains story of the week for Dollar is boring sessions. Well on this Dollar will not be going anywhere absolutely nowhere. Now people starting to belive that Fed will not going to raise the rate further. And they are pretty doubtfull about rates reducing plans.

EUR - Trichet generally messaging to the market that ECB will be carry on the rising rate into 2007 and Trichet is really helping the Euro. If so then just watch out for the EUR/GBP and EUR?USD and i mean to say that some more weakness into Yen against Euro. Anyways from here on i believe that ECB is going to hike the rate in December. In G20 Trichet again and again stated the word "vigilance on inflation".

JPY - As i read into the G20 Report i didnt get anything related to the carry trades. Even i dare to bet that Yen will underperform in the near term mainly gainst Euro.

ECB Trichet says Inflation is High Risk ; German PPI above Expectation

ECB President Trichet said "The global economy appears set to grow
dynamically next year but oil prices still threatened to fuel
inflation and central bankers must remain vigilant." He also said that one has to take some certain risk if one has to grow very dynamically. He is concerend more on inflation risk.

German Oct PPI is up by 0.3% m-o-m and 4.6% y-o-y, above the
expectations. FSO said that rising cost of tyres, chemicals and
tobacco are the reason to spurt in PPI. Core PPi increased by 0.6%
m-o-m and 3% y-o-y.

Englands M4 Money Supply is up by 0.9%, 14% year on year. A marginal
down in y-o-y data previously reading 14.5%.

The Week Ahead : Nove 20-24

This week is blank week for the USA and Australia, just each of thiscountry will be releasing only one key economic data, USA is releasingthe Leading Indicator on Monday and thereabout its nothing and FromAussie we'll have a New Motor Vehicle Sales on Tuesday and then we'llhave the very important datas like GDP numbers from Germany and UK, Inflation report is coming from Canada and the Trade balance is comingout from Swiss, Kiwi and Minutes Of meeting from the BoJ and BoE thisare all the heavy weights of the economy and powerfull currencymovers data. So lets take the brief tour of the week ahead.

MONDAY - So the week starts from the UK's Rightmove House Price Indexand M4 Money Supply which is expected to come down marginally. PPI and ECB's Trichet Breif Reports is coming out and then last piece of the day and only data of the week from USA is Leading Indicator which isexpected to come out marginall upside. So i'll be keenly trackingthe EUR/GBP pair.

TUESDAY - BoJ Minutes of Meeting but there will be no surprise fromthis outing but still i'll be looking something hawkish tone fromFukui and the clues about December rate hike. Trade Balance is comingout of the Swiss land after the last weeks empty calendar. So here what'll be really looking for the day is CBI November IndustrialSurvey from UK and Retail Sales is comingout from Canada. The last two piece are the very important economicdata and i love to see the data. Here i'll be tracking the GBP/CAD.

WEDNESDAY - For this day only two data that is worth to watch out for.One is BoE Minutes of Meeting and here too i'll be watching the cluesfor the future rates hikes and the Data of the day is Inflation(Headline CPI & Core CPI) is coming out from Canada.So i'll betracking the GBP/CAD pair.

THURSDAY - A holidays from Japan and USA market on Thanksgiving. Butothers wil not sleep and Euro, Swiss and Kiwi will be waking up androaring. GDP and IFO numbers are coming out of Germany, labor datafrom the Swiss and Trade Balance from the Kiwi. Here i'll be trackingthe EUR/CHF pair.

FRIDAY - Last ay of the week and only one economic data is very worth to watch. GDP numbers is coming out from UK which is expected to comeout pretty flat. here i'll be tracking EUR/GBP pair.

So this week is pretty busy for the EUR/GBP coz bot this land are releasing the GDP numbers. USD/CAD is also very vital to watch out forcoz Retail Sales and CPI data will give the direction to the pairand we'll know whether USD/CAD will sustain above the 1.1400 levels.
At the last only two datas that i'll be looking for is Core CPI from canada and Trade Balance from Kiwi.

The Week in Rewind

USD - New week started with frim note as it tries to reover some ofits last week losses. In the recent days we hearing a lot of hawkishcomments from the Federal Reserve officials. This is directingtowards higher inflation risk. First we take the PPI matched the biggest monthly drop while Core PPI fell to the level of 13 ears low.Even Retai Sales too disappointed significantly. This is the double s\smah for the Dollar and raises the question to the Federal Reserve thatFed is being overly aggressive with their interest rate keeping at anearly 5 years high for some time. But Fed is still giving hawkish comments keeping mind on risk of higer inflation espit drop in PPI.We saw the surprising stronger Empire State Manufacturing Index andhawkish FOMC Minutes of Meeting. Empire State index rose to 26.7 from22.9 when the consensus was prediciting the negative reading. But onecant get excited by this read as Philadelphia Fed, Chicago PMI and ISMIndex did not done good. In FOMC Minutes, their view on risk of higerinflation and they said that there are still downside risk to theeconomic activity. And also FOMC reports says that Fed is comfortablewith the growth outlook, mainly as the labor market remain tight.In this week the tarders are concentration on the hawkish commentsfrom Fed officials than US Economic Data.CPI dropped for the secondmonth in a row by larger than expected 0.5%, the annualized growth rate down from 2.1% to 1.3% to the level of 4 years low. Well the pointis that CPI is held far better than PPI. The drops in both the Headline and Core prices give some room to the Fed on more thinkingabout growth than inflation. Industrial Production accelerated weakerthan expecte to 0.2% and Philadelphia Index rose to 5.1% from the -0.7%, Philly Fed not rosed to the levels of what Empire State did.The underlying components of indes was very disappointing. NAHB Housing Mrket Index rose to 33 from 31, this data tells us thathousing market may be finding some support. But on Friday Housing Starts and Building permits disappointed us. Building permits also fell for the eighth straight month, indicating that there are even fewer projects in the pipeline. Everyone is thinking about the bottom of the housing market but it isnt still no support. So in thisweek we saw some hawkish comments from fed officials, falling inflation, trade is worst one, housing market still in doomy, and consumer spending is getting weaker. So for the next week itsnothing in the calendar, i feel rangebound for the Dollar.

EUR - stared this week with fully loaded and heavy weight economicdata from Germany like CPI, GDP and ZEW Survey. First we saw a dropin GDP to 0.6% from 0.7%. German ZEW Survey also dropped from -24.5 to -28.5 a 13 year low. Then we got the call from french Prime Minister Villepin or collaboration on dealing with the euro. As this poses risk to the export oriented countries and Germans opposed it. CPI raised slightly to 0.1% and Core CPI kept unchanged at 1.5%. Despite the softer inflation, weaker GDP and ZEW data theEuro kept cool bcoz ECB have there own game plan for Decemberrate hike. On Friday we got imporved French Current Account and EuroZones Trade balance. French payrolls increased less than expected.

GBP - PPI prices dropped by 0.2 in the month of October, annualizedprice down to 1.7% from 1.8%. Core PPI were firmer which is good.The housing market continues to remain stronger. CPI rosed moest 0.2% keeping the annualized price at unchanged at 2.4% even Core CPI alsoremained at unchanged. Retail Price Index increased to the higestlevel since 1998. The strength of the sousing market keeps consumerhappy and Retail sales jumped by 0.9%. The RICS House price is also increased to 46% to 48% a 4 year high.

JPY - Both Import and Export prices softened in the month of october,bringing the Consumer Goods price to the 6 month low. Fukui is sendinglot of mixed messages and traders gets confused. GDP numbers arevery impressive the third quarter numbers accelearted to 0.5% andannualized numbers pace upto 2%. And this is the seventh straightmonth og hiher GDP numbers. After the GDP numbers BoJ kept the interest rate unchanged at 0.25%. Still short yen carry trades arecontinuing. Fukui said that economy is growing at moderate pace and he said that there were no pre-determined notion and he dosent ruleout the next rate hike in December. Leading Indicator down to 18.2from 20 in the month of September. A rumour is spread accross the FX market as one of the leading Hedge Fund want to liquidate from theirshort carry Yen trade position.

Sterling & Swiss stronger against Dollar : But not Commodity Currencies

Dollar trading weaker against all major currencies after the weaker housing market data.
EUR/USD - Currently trading at 1.2833 after making the high of 1.2845 from the low of 1.2765
thats a gain about 85 pips.
USD/JPY - Currently trading at 117.70 after making the low of 117.50 from the high of 118.45
thats about 95 pips weaker for dollar.
GBP/USD - Sterling is the most strong against the Dollar, Sterling gained about 120 pips from
the low of 1.8850 to the high of 1.8970 and now trading at 1.8944. Right now or
next we need to see wheather the cables will cross the 1.9000 levels.
USD/CHF - In this week the Swiss Franc calender was nill nothing this weak. But now Swiss
Franc gained 110 pips against the dollar from the high of 1.2537 to the low of
1.2420, currently trading at 1.2440.
USD/CAD - Dollar was weaker against all major currency but not that much of weakness in
Canadian Dollar, a weakness of just 40 pips. After releasing the weaker housing
data this pair fell from the high of 1.1475 to 1.1425. Theres not much of Dollar
weakness. The anothe rstrong reason is the weakness of Crude Oil so therez
nothing to expect from this pair. Both are weak.
NZD/USD - Another weaker commodity currency and a partial gain of 30 pips against the
Dollar. Gold is also trading weaker.
AUD/USD - Another commodity currency and gained a partial gain of 40 pips against the
Dollar. Currently trading at 0.7684, gained the initative from the low of 0.7640.

Comments from Policymakers

Mervyn King, Bank of England governorFri, Nov 17 2006, - "Where will interest rates go next? I do not know. And the reason I do not know is that we do not take our decisions in advance, but wait to see how the economy unfolds and hen take our decisions one month at a time."

Central Bank Note : AUD "Stable Currency"

Reserve Bank of Australia see their currency is highly stable, just due to the larger participation from the Headge Funds. Guy Debelle, head of central bank's international brach said "growth has been particularly strong over the past year resulting in a stronger Australian dollar."

Currency Focus

USD - Even though we've had a run of relatively disappointing data the bottom line from the Fed seems to be that until there is a material decline in core inflation they will not feel comfortable signalling a peak in interest rates. The Fed has been so clear in its message that they still see inflation and they have more positive views on the economy than the market. The Fed needs to change its communication if the market is to change its view into a bearish direction. We have a situation where the Fed has stopped raising rates. Market expectations are pretty much in line with the Fed's (thinking). That's a big contributing factor why exchange rates are so rangy.

FX Trading Strategy for Nov 17

Here is what's going on today. Only one possibility of a trade.

1. November 17th, 2006 (8:30 am New York Time) USA
We have housing starts coming out of the U.S. Expected number is at around 1680K, versus 1772K last month. If the number comes out at 1775K or higher, I may possibly go short on GBP/USD, since it'll be good for the dollar, and will show no decline since previous month. If that happens, a drop of 50 pips is very possible...but it will depend on the price level before the report. If on another hand, the number comes out at 1570 or below, that would signify a significant drop of 100K since last month, and we might see some temporary spike up against the trend by probably about 20 to 50 pips, depending on where the price is at before the report. So a long position would definitely be more risky, however could still be profitable.

GBP/USD Struggling to Cross 1.8900

EUR/USD - Struck in the tight range band between 1.2835-1.2800 a just 35 pips of movement.
USD/JPY - Struck in the range between 118.20-117.80 i feel Dollar is still looking stronger
against the Yen
GBP/USD - Struggling to cross the 1.8900 level and the strong bottom is at 1.8950.
NZD/USD - Since yesterday the Kiwi is pulled it socks against the Dollar and gained nearly
80 odd pips now i feel that this pair will reverse some part of its gain. The strong
support for this pair is at 0.6640-0.6635 and a stiff resistence at 0.6665 levels.
AUD/USD - Failed to cross the level of 0.7700 and begin to trade below that level.

On Yen & CAD

JPY - The BoJ left rates unchanged and the monthly report also advanced an unchanged assessment of economic prospects – economy set to expand moderately, consumption in a rising trend and CPI likely to stay in a positive trend. We have to keep in mind that their foreign reserves are expanding to a massive amount. This could be a support for the yen, but at the same time China is not selling dollars (in its reserves). Their dollar position is expanding as well.

CAD -The Canadian dollar slumped on unexpectedly weak manufacturing shipments. The Canadian dollar fell 3.3% in September, well below the forecast for a 1.0% decline and the -0.3% reading in the prior month. The dollar broke 1.14 level versus the Canadian dollar after the release of the disappointing report."

FX Crosses Moments

USD/CAD - Finally it crosses the 1.1400 level after a long time. I just waiting for this level and now it does. The thing i want to know is that will this cross sustain above the 1.1400 levels. Really Dollar is getting stronger and stronger against the CAD.

GBP/USD - Ever since this pair breaks the support of 1.9000 level the Dollar assaulted Sterling very brutally. Now trading at 1.8847 still the Dollar is very stronger.

AUD/NZD - This pair is struggling is to hold above the 1.1600 level. On 240 min charts this pairs made larger spikes but struggling to that levels. Currently trading between 1.1536 and 1.1620 levels.

EUR/GBP - Since start of this month the Euro riding stronger against the Sterling. This pair rallied relentless from the low of 0.6670 to the current level of 0.6787 its about 120 pips. And still theres no sign of retracement.

NZD/JPY - On 4HRS charts this pair formed the Rounding Top and the Strong Double Bottom at 77.40. So here i feel the 70.40 will be the ultimate stop loss for this pair. From here on go long in this pair with the stop loss of 77.39 and cover at 78.70. And if once the 77.40 is takes off then Yen will cut throat against the Kiwi.

BoE Quarterly Inflation Report

In its latest quarterly Inflation Report, the Bank of England said UK inflation will return towards target quicker than it anticipated just three months ago, with the headline rate actually dipping below 2 pct if one more rate rise materialises. In its quarterly economic projections, the central bank also said it thinks that the UK economy will grow by more than it anticipated in the August Inflation Report.

Major FX Crosses Thoughts

USD - The market waits for the Fed minutes. The risk tonight is that increased rate cut speculation will run into rather hawkish minutes in which case you will see the stronger dollar.

EUR - Yesterday the ECB hawks were out in force again with Wellink and Garganas growing headlines. Wellink reportedly said that rates were ‘damn low’. Garganas insisted that liquidity is high, rates remain at low levels and monetary conditions still loose. The implications are obvious, but the market already knows their point of view and is now wondering what this means beyond 2006 for the whole of the ECB. The December rate hike has been a done thing for a longer while, but what to expect from 2007. The euro was unaffected by this latest round of comments.

GBP - After four quarters of faster economic growth consumers are finally starting to regain their confidence in the job market. The improved sentiment will help to support economic growth at an above-trend pace in 2007, and bodes well for the housing market as people are more likely to move.
UK CPI was unchanged at +2.4% y/y, while core CPI was also unchanged at +1.4%. The outcomes were weaker than expected and doubly surprising perhaps after the stronger than expected data seen in the previous two months. There was a real mixed bag of influences, with education and food exerting upside pressure on the CPI y/y rate and fuels and furniture/household goods exerting downward pressure. Although today's news will have come as a surprise to the Bank of England, it is unlikely to be enough of a concern to change the Monetary Policy Committees current stance on interest rates -- which are still likely to rise again early next year.

JPY - The JPY is still treading water after yesterday’s stronger than expected GDP data. EUR-JPY is the one to watch. A close outside the 150.75-151.50 area will most probably define the short-term trading bias. The market will be looking for more hints on policy at tonight’s BoJ rate announcement, although as noted above there may be some apprehension ahead of the G20 meeting. The Japanese Yen is stronger across the board thanks to solid GDP numbers. Growth accelerated by 0.5 percent in the third quarter, bringing the annualized pace up to 2.0 percent. This is the seventh straight month of higher quarterly GDP growth, which suggests that if things continue this way, we could see an interest rate hike by the Bank of Japan early next year.

AUD - Australia's labour market is the tightest it has been in over 30 years, given the three-decade low unemployment rate of 4.6 per cent, yet wages growth has been muted in response. As far as future RBA deliberations are concerned, the data supports the RBA remaining on hold.
It was a welcome fall in wage cost growth and wages are the main variables in the RBA's inflation forecast. So that eases some of the pressure for another rate hike.
The consumer sentiment figures suggests the risk to spending are on the downside. Households are clearly hurting from higher rates, while inflation is eating into incomes.

CNY - The People's Bank of China in its Q3 monetary report published on its website expects China's economic growth to exceed 10% this year with the consumer price index rising about 1.5%.

Central Bankers Words

Q3 growth means interest rate hike
Tue, Nov 14 2006
Economic growth in the third quarter was faster than expected, meaning there is still a chance that the Bank of Japan will increase interest rates this year or early next year,

Australia central bank sees policy settings easing price pressures
Mon, Nov 13 2006,
The Reserve Bank of Australia said it expects inflationary pressures to remain in the economy although it expects its monetary policy to counteract such pressures.

Trichet says financial integration will boost euro zone's resistance to shocks
Mon, Nov 13 2006,
European Central Bank president Jean-Claude Trichet said closer financial integration will increase the euro zone's resilience to external shocks and boost its growth potential.

Bernanke says Fed monitoring money growth
Fri, Nov 10 2006,
Federal Reserve chairman Ben Bernanke said the Fed will continue to monitor and analyse money growth even though the relationship between money and inflation has often been unstable.

what's happening today.

1. Wednesday, November 15th, 2006 (8:30 am New York Time) CAD & USA
We have CAD manufacturing shipments and U.S. Empire Manufacturing coming out. My primary focus will be CAD manufacturing. It's expected to come out at -1.1%. If it comes out at 0 or positive, that should be good for the Canadian dollar, so I may possibly go short on USD/CAD. If it comes out at -2% or more negative, that should be bad for the Canadian dollar, so I may possibly go long on USD/CAD. Anything in between would be a no trade. I'll also have to factor in the U.S. Empire Manufacturing, and make sure that it doesn't conflict too much. It's expected at 15. If the report comes out deviating by less than 10, then I wouldn't consider the conflict too significant, and may take advantage of better price to go along with the Canadian report.

2. Wednesday, November 15th, 2006 (2:00 pm New York Time) USA
We have FOMC meeting minutes coming out of the U.S. Traders are going to scrutinize these minutes for clues about the future interest rate policies. There have been rumors that minutes were more hawkish than what everybody initially thought, and it was partly factored into the recent dollar strength. If minutes signify a pessimistic view on interest rates, saying that inflation has slowed down, and the Fed has to think about rate cuts, that would be a possible good long trade on GBP/USD. On the other hand, if the minutes are particularly hawkish, saying that growth is still strong, and the Fed will not consider any rate cuts for a while, and might even consider another hike, that would be good for the dollar, so I may possibly go short on GBP/USD. This is a very wishy washy report...we don't have a specific number, I'll just have to play it by ear when the minutes come out, and take into consideration the current price levels on GBP/USD.

US PPI & RETAIL SALES DATA DOWN

US headline PPI fell by a massive 1.6 pct in October, marking the biggest fall in five years and much sharper than the 0.5 pct decline analysts had expected. The core PPI rate meanwhile, which strips out energy and food prices, also fell by 0.9 pct, the largest decline in over 13 years and well below the modest 0.1 pct rise expected by analysts.

This couple of figures clearly states that Thursdays Consumer Price Index will also come below the expectation and it'll lead the further Dollar weakness. And dampening the Federal Reserve's fears over rising inflationary pressures and increasing the chances of a US rate cut early next year.

A huge drop in core PPI has got the market thinking that the Fed is done with raising interest rates. Along with this one the Retail Sales data also weighed on the dollar. Although the data showed sales fell by 0.2 pct in October, slightly less than expected, sharp downward revisions to September to give a decline of 0.8 pct mean retail sales may weigh on US GDP, analysts said.

For the euro the news helped offset earlier data showing weaker-than-expected euro zone GDP growth during the third quarter, as well as a disappointing ZEW survey of German economic expectations which fell to a 13-year low in October.

Even we saw the UK's Inflation data below expectation which showed the key annual CPI rate stayed at 2.4 pct in October against expectations for a rise to 2.6 pct -- diminished market expectations that the Bank of England will raise the cost of borrowing again next year. The key event in the UK, however, will come tomorrow when the Bank of England presents its latest forecasts for growth and inflation in its quarterly inflation report.

Around the pairs

GBP/USD cracked the 1.9000 level and currently trading below that level. Dollar is riding higher on Sterling and now it gained nearly 200pips ahead of the heavy US Economic Data.
AUD/USD strong bottom at 0.7615 this will be the short term resistence for the Dollar.
AUD/NZD - Aussie is really pulling up their socks against Kiwi currently trading at 1.1587 and still i'm bullish on this pairs.

On Japanese GDP

This morning we got the GDP numbers out of Japan and they revealed a Japanese economy quite a bit stronger than expected as GDP annualised came out at 2.0 % instead of the expected 1.0 % in the third quarter. At the same time the growth in the second quarter was revised up from 1.0 % y/y to 1.5 % y/y.

FX Trading Strategy for Nov 14

Here is what's going today. Very busy day :)

1. Tuesday, November 14th, 2006 (4:30 am New York Time) UK
We have CPI figure coming out of UK. My focus will be on the core year over year number. It's expected to come out at 1.6%. If it comes out at 1.8% or higher, I may possibly go long on GBP/USD. If it comes out at 1.4% or lower, I may possibly go short on GBP/USD. Watch out for any conflicts on the headline CPI month over month number. If the two conflict, exit immediately.

2. Tuesday, November 14th, 2006 (5:00 am New York Time) Germany
We have ZEW economic sentiment coming out of Germany. I don't want to comment on it at the moment. The way to trade it will depend on where the CPI report takes us. Even though this report will affect EUR/USD mostly, still GBP/USD and EUR/USD usually move in tandem, so what I do on the ZEW will heavily depend on what happens on the CPI.

3. Tuesday, November 14th, 2006 (8:30 am New York Time) USA
We have Retail Sales and PPI numbers coming out of the U.S. We have both headline number and core number on both reports. The most important number is the month over month Core Retail Sales number, which is often referred to as Retail Sales Excluding Autos. This number is expected at -0.2%. If it comes out at 0.3% or higher, it would be good for the dollar, so I may possibly go short on GBP/USD. If it comes out at -0.7% or more negative, it would be bad for the dollar, so I may possibly go long on GBP/USD. These are pretty big deviations that I am looking for. The reason for that is because we have so many other numbers that are coming out that could possibly conflict, like the retail headline numbers, and both core and headline PPI numbers. I may enter into a trade even if the deviation is not that big, but the other numbers would have to be in-line.

4. Tuesday, November 14th, 2006 (4:45 pm New York Time) NEW ZEALAND
We have Retail Sales coming out of New Zealand. We have three numbers coming out. We have the quarterly number, minus inflation, we have the monthly headline number, and we have the monthly number, minus autos. The quarterly number minus inflation is probably where most of the market focus will be. Generally speaking, this number is expected to come out at around 0.6 to 1.0%. If the number comes out at 0 or negative, I may possibly go long on AUD/NZD. If the number comes out at 1.5% or higher, I may possibly go short on AUD/NZD. Anything in between would be a no trade. Now, there are the other two numbers, and if this one doesn't deviate as much, the other two numbers might give a signal if they come out crazy, which is normal for New Zealand reports. I am going to play this report by ear. This definitely isn't the easiest one to trade.

My Thoughts

The comments from Fukui are the most explicit to date on the subject and showed that Japanese policy makers have become worried about the size of short yen positions and the associated risks. We think increased comments about yen weakness and carry trades will help provide more support for the weak currency going forward. And i'll talk about China's foreign reserve diversification is likely to keep supporting the yen.

The AUD failed to garner any significant encouragement from the RBA’s quarterly Monetary Policy Statement. They were hawkish enough about the risks of more tightening, but seemingly tied this to CPI data, so the market is left with the idea that the earliest a rate hike would be on the table is in early February after the late January release of Q4 CPI. This will leave the AUD vulnerable to further short-term corrective pressure – 0.7600-20 a possibility this week

The USD weakened on the broader market throughout all of last week. We are at major support levels in the USD against all majors. The GBP/USD is already through all major resistance and continuing higher. The EUR/USD is approaching major resistance between 1.2900-1.2950. The USD/JPY has minor support around 116.80. The important question is whether the USD sellers will press on Monday before the PPI release on Tuesday. Common sense says no, but that doesn't mean the sell off won't continue throughout Monday's session."

FX Trading Strategy for Nov 13

Now another week gets underway, and I hope we make some decent pips. This week will probably be a very crucial week, especially for the GBP/USD pair, since we have inflationary CPI figures coming out of both UK & U.S. So stay tuned.

Last Friday absolutely nothing happened out of that press conference from Bernanke/Trichet speeches.

Today we have one report coming out that's in my opinion is worth watching and possibly trading.

1. Monday, November 13th, 2006 (4:30 am New York Time) UK
We have UK PPI coming out for the month of October. We have quite a few numbers coming out at the same time, and it may be confusing to you. In my experience and opinion, the most important number is PPI core output. If that number deviates sufficiently, many times it can move the GBP/USD by 50 pips or more. The core output number is expected to come out at 0.1%. If it comes out at -0.1% or more negative, I may possibly go short on GBP/USD. If it comes out at 0.3% or higher, I may possibly go long on GBP/USD. If my trigger gets hit, and there is not too much significan conflict on the other output and input numbers, I believe a move of over 30 pips is probably going to be no problem...we might even see 50 pips...depending on where the price is at before the report.

The Week in Rewind

NZD : inflation indicators still remain very strong in the Kiwi land (on labor market).

AUD : labour market remain very tight in Aussie

Employment fell unexpectedly in October as manufactures shifted operations offshore thru fewer jobs (on Emplyment data)

GBP : manufacturing underperforms but still indicating the strong growth (on industrial & manufacturing data).

Consumer confidence soars higer on improving economy (on nationwide Consumer Confidence)

Fastest export in 9 years amid increased demand from Europe. (on Trade Balance)

Softening leading composite suggests rate hikes taking a toll on growth. (on Leading indicator Index)

CAD : still strong even a despite dip (on Ivey Purchasing managers)

CHF : labor market is tightes in the 3 years after releasing unchanged data (on labor market data)

Consumer climate raised highest in 5 years (on SECO Consumer Climate)

EUR : drop in oil import price bill on falling crude prices has helped improve the Trade Balance (On German Trade Balance).

Abolishment of price limit leads to growth (on German Wholesale Price Index)

JPY : Japanese machine orders fell unexpectedley, signalling economic growth may stagnate and prevent the BoJ from raising the interest rate hikes, even Nikkei takes the toll. (on Machine Orders)

This are the things that happend in this week...

Yen trading mix against Majors

Yen trading stronger against the US Dollar. after hitting 118.59 against dollar now its trading at the 117.40 a 110 pips, and there not too much weakness against Euro but trading little bit lower after hitting 151.47 and now trading at just above the 151 mark. And against Sterling in earlier it was very weak when it was riding against the Dollar. Yen takes the strong support at 225 level and now it eased a little bit at 224.50. And against the CAD it gained nearly 100 pips from the high of 104.75 to the current low of 103.72. Yen is trading pretty flat against the CHF and yen got the strong resistence at 94.80. If that takes off then Yen will ride against the Swiss Franc. As i observed the Yen against the Kiwi for the last 3 days or so the Yen was trading very stronger against the Kiwi, in those 3 days or so Yen gained nearly 125 pips. And even same story with the Aussie gaining nearly 125 pips over the last 3-4 days or so.

FX TRADING STRATEGY FOR NOV 10

Today, we have a pretty simple set up. We have only one speech that I will be watching and possibly trading. It's Ben Bernanke and Trichet speaking.

1. Friday, November 9th, 2006 (8:45 am New York Time) USA
We have the speech coming out, where both Ben Bernanke and Trichet will be discussing interest rate policies. This may be a tricky one to trade. If you don't have experience trading speeches, you may want to just observe it. I will be looking for clear indications of future interest rate policies. It can get confusing if both of them are hinting on more rate hikes. It would be nice if one of them was hawkish and the other was dovish. A good situation would be if Trichet will hint towards another rate hike in 1st quarter of 2006, and Bernanke will kind of be on the side line. Or if Bernanke says something that another rate hike may be needed, and Trichet will stick to his "vigilant" comments. Remember, the market is already pricing in another rate hike out of Euro zone in December.

And keep eye on French GDP data...

FX TRADING STRATEGY FOR NOV 09

Here is what's going on tomorrow. Very busy day tomorrow :)

1. Thursday, November 9th, 2006 (4:30 am New York Time) UK
We have UK trade balance coming out. Expected number is -6.5 Billion. If it comes out at -7 billion or more negative, I may possibly go short on GBP/USD. If it comes out at -5.99 Billion or less negative, I may possibly go long on GBP/USD.

2. Thursday, November 9th, 2006 (7:00 am New York Time) UK
Then we have UK interest rate statement. It's expected that UK will lift rates to 5%. If the interest rate is left unchanged at 4.75%, I may possibly go short on GBP/USD. If the interest rate is lifted to 5.25%, I may possibly go long on GBP/USD. Though, the following scenarios are not very realistic. Most likely, UK will do as everyone expects and raise the rates to 5%.

3. Thursday, November 9th, 2006 (8:30 am New York Time) USA
Then we have U.S. Trade Balance coming out, which is expected at -66 Billion. If the number comes out at -70 billion or more negative, I may possibly go long on GBP/USD. If it comes out at -63 billion or less negative, I may possibly go short on GBP/USD. I may readjust my triggers on this one based on what happens after the UK interest rate statement.

FX MY VIEWS

Yesterday morning BoJ Governor Fukui has been speaking and it sounds like he has toughened his language. It is notable that for the first time Fukui has explicitly given a time horizon for normalising monetary policy and even though the five year horizon he indicates is a long time, the signal he sends is worth noting. This morning the JPY has strengthened against both the EUR and the USD on the comments from Fukui. Fukui seems to be signalling a bias to hike sooner rather than later.
The prospects of the Bank of England raising rates at the end of the week would certainly be dollar negative across the board, not just against the sterling.
The comments (Moskow) helped to keep the euro from making any real gains today against the dollar. But they were insufficient to provide any catalyst for further dollar gains.

FX TRADING STRATEGY FOR NOV 08

you must be wondering about what's going on tomorrow...well we are again flat for tomorrow for the U.S. and Europe, but we will have Australian Employment report coming out.

1. Wednesday, November 7th, 2006 (7:30 pm New York Time) AUSTRALIA
We have employment numbers coming out of Australia. They have more significance than usual. Australian dollar is very expensive right now, and it doesn't seem that there is a whole lot of room to go higher on interest rates in the next few months, so in my opinion, everyone is looking for reasons to short the Aussie. So there has to be a very big deviation in order for me to go long on AUD/NZD. And much smaller deviation if I have to go short. So the expected employment number is at 7.5K. If it comes out negative, I may possibly go short on AUD/NZD. It if comes out at 35K or higher, I may possibly go long on AUD/NZD. If you don't have AUD/NZD pair on your platform, u are welcome to possibly try to do a trade on AUD/USD. Just watch out for that 1.7775 level.

FX TRADING STRATEGY FOR NOV 07

Here's what happening Today

1. Tuesday, November 7th, 2006 (5:30 pm New York Time) AUSTRALIA
We have Interest Rate statement released out of Australia tomorrow. It's pretty unanimously expected that Australia will hike the rate from current 6% to 6.25%. If that happens, it's already expected and priced in, so that would be a no trade. However, if Australia keeps the rate unchanged at 6%, I may possibly go short on AUD/NZD. If Australia for some reason hikes the rate to 6.50%, I may possibly go long on AUD/NZD. In either scenario, I am expecting a possibly move of at least 100 pips either direction, in case Australia does either no hike or a hike by half a point as opposed to quarter point which is priced in and expected.

I'll also be watching for comments that are made together with the interest rate statement. If Australia will hike the rate to 6.25% and makes certain comments that will hint on further rate hikes this year, I may possibly go long on AUD/NZD. If their comments signify that this will probably be the last rate hike for a while, then I may possibly go short on AUD/NZD.

FX TRADING STRATEGY FOR NOV 06

Here is what's going on today.

1. Monday, November 6th, 2006 (4:30 am New York Time) UK
We have Industrial and Manufacturing Production report coming out of the UK. UK is probably the country that cares about their industrial production report more than any other country out of the 6 majors. Industrial Production report will be my main focus. It's expected somewhere between 0.3% and 0.4%. If it comes out at 0.6% or higher, I may possibly go long on GBP/USD. If it comes out at 0.1% or lower, I may possibly go short on GBP/USD. Expectations would be from 30 to 50 pips, we'll have to see how the pair behaves throughout London Session today before the report, since it'll be the first session after Non-Farm payroll. If you have your own fast news service, you may possibly go long or short according to my triggers or your own triggers. Just make sure the manufacturing production doesn't conflict too much. If it does, exit the trade and just see what happens.