Currency Trading News by DailyFX

Dollar Momentum, Dow Highs Could Be Derailed By ISM Services And NFPs

Wed, 02 May 2007 23:13:06 -0400

ISM Non-Manufacturing (APR) (14:00 GMT)	Nonfarm Payrolls (APR) (Friday 12:30 GMT)
Expected: 53.0	Expected: 100K
Previous: 52.4	Previous: 180K

How Will The Markets React?

After a brief lull in fundamental action from the US economic calendar, event risk will quickly return with Thursday’s ISM non-manufacturing report. The proprietary gauge of service sector activity is expected to improve for the first time in three months and in doing so pull the indicator off of four-year lows. Considering the tepid pace of growth in the first quarter and the steady trend of declines from other areas of the economy, a rebound in the large service sector is needed to revive confidence in the US and its investment vehicles. Looking for clues to support the expected recovery, we only need to go as far as yesterday’s factory report. Though there are big structural and size differences between the two gauges, they follow the same underlying economic trends. As an overall guide, the manufacturing report marked a big rebound in April with a 54.7 print that was the fastest pace of expansion in a year. For better guidance, the components reveal where most of the improvements will likely come from. Breaking Tuesday’s headline number into its individual sub-gauges, it is easy to see that many of the bigger improvements came from the same areas that the service sector has struggled with in recent months. Strong performance from domestic and foreign orders as well as employment numbers read could easily be repeated in the non-manufacturing gauge. Alternatively, other indicators keep the air of doubt in place. Key among them is consumer confidence which slipped to a 14-month low in April as housing woes spread and rising gasoline prices dampens discretionary spending. However the ISM number hits the wires, its influence on the markets may ultimately be hampered by the payrolls report due the following day. The Labor Department’s NFP print is a monthly favorite for traders and its presence will not go unnoticed. At the same time, the ISM’s employment component will certainly contribute to the ever-evolving NFP outlook.

Bonds - Treasury 10-Year Note Futures

The benchmark T-note continues to wedge itself into conflicting technical formations, and it will obviously need to decide on an ultimate direction before too long. This verdict on price action may very well be reconciled tomorrow with the Institute of Supply Managers’ service sector activity survey. On Tuesday, a strong reading in the group’s manufacturing report steered the note lower. Tomorrow’s indicator could very well be more influential, since the service-based companies account for a bulk of the economy. Through technicals, a rising trend channel in the active T-note futures contract places the burden of a break on resistance at 108-15, while a move lower would actually come on support around 107-24. Logically though, a true move will be reserved for Friday’s employment data.

FX - USD/CHF

The US dollar will be on edge over the next two days, as ISM Non-Manufacturing will be released Thursday followed by Non-Farm Payrolls on Friday - both of which are highly market moving indicators. Looking at Thursday, markets will not only pay heed to the headline service sector report, but also the employment and price components. Should all of the figures gain as expected, the US dollar could rally as prospects for both the services sector and labor market would mount, and increasing inflation concerns could stoke speculation that the Federal Reserve will continue to remain slightly hawkish. As a result, USDCHF could break above the 50 day SMA to test the resistance trendline near 1.2200. On the other hand, should the figures come in cooler than forecasted, USDCHF could start to ease towards support in the 1.2000-1.2100 region ahead of the highly volatile NFP report.

Equities - S&P 500 Index

Stocks in the US rallied, sending the S&P 500 Index to a six-year high of 1,495.92 on better-than-expected earnings from MasterCard Inc. and Time Warner Inc. Meanwhile, the Dow Jones Industrial Average gained 0.6 percent, to a record 13,211.88 as a surprisingly strong factory orders report lifted Honeywell International Inc. shares. MasterCard jumped 10 percent to $126.35 after net income rose to $1.57 a share as customers increased use of credit and debit cards. Meanwhile, Time Warner gained 35 cents to $20.94 as the company posted buoyant first-quarter earnings on the back of surging cable-television earnings.

The S&P 500 and Dow will enter risky territory over the next few days, as ISM Non-Manufacturing will be released Thursday followed by Non-Farm Payrolls on Friday - both of which are highly market moving indicators. Focusing on Thursday, markets will not only look at the headline service sector report, but also the employment and price components. Should the headline and employment index gain as expected, US stock indices could gain as prospects for both the services sector and labor market would mount. On the other hand, any weakness in the figures or a jump in prices paid could prevent the S&P 500 from breaching the impervious 1,500.00 level and may lead the Dow lower, as traders would ramp up expectations for a hawkish Fed statement next week.

Euro: A Repeat of December 2004?

Wed, 02 May 2007 21:49:05 -0400

- Euro: A Repeat of December 2004?

- US Labor Market Data Signals Softer Non-Farm Payrolls

- Further Aussie Weakness Contingent Upon RBA Statement

US Labor Market Data Signals Softer Non-Farm Payrolls

Despite softer labor market numbers this morning, the rally in the US dollar suggests that the market is fully focused on tomorrow’s service sector ISM report. The upside surprise in ISM manufacturing yesterday and today’s strong rally in the stock market has everyone banking on stronger service sector growth in the month of April. The low 53.1 forecast will not be hard to beat and there is a decent chance that we could see improvements in the employment and prices paid components as well. With non-farm payrolls due out this Friday, we will be watching the employment component of ISM services very closely. The labor market data released today painted a grim picture for payrolls. Challenger Gray and Christmas reported an 18 percent increase in announced layoffs in the month April and a 44 percent increase in planned layoffs. The ADP national employment report also fell short of expectations, with private sector payrolls rising 64k instead of the 100k expected. Therefore even though corporate earnings have been strong, the softness of GDP last week has many corporations worried that demand could falter in the months to come. As a result, hiring could be limited, which would support the market’s softer payrolls forecast. If job growth is weak, concerns about a soft landing and stagflation could resurface. Meanwhile, the manufacturing sector is continuing to improve after factory orders jumped by 3.1 percent in March. Even though the manufacturing sector could still report job losses in the month of April, the trend should be reversing.

Euro: A Repeat of December 2004?

In yesterday’s Daily Fundamentals, we had pointed out that the peak in the EUR/USD in December 2004 was triggered by a series of disappointing economic data. Today we get a sense of déjà vu as we are beginning to see the same scenario unfold once again. Earlier this week, German retail sales dropped significantly and this morning, we saw German unemployment and Eurozone manufacturing PMI all fall short of expectations. Originally expected to drop by 40k, unemployment instead only dropped by 9k, leaving the unemployment rate unchanged at 9.2 percent. The Eurozone PMI manufacturing survey was also originally expected to increase, but it remained unchanged. Aside from the German retail number, these disappointments are not significant. Nonetheless, it does indicate that the combination of a strong Euro and the value added tax increase is beginning to have a negative impact on the Eurozone economy. We are already looking for more Euro weakness than strength though in the short term, that would be dependent upon US data. However if the mild disappointments start to become serious ones, then we could see a major trend reversal in the EUR/USD. In the meantime, ECB officials remain committed to raising interest rates. ECB member Liebscher said today that the central bank needs to remain vigilant to ensure price stability. Over in Switzerland, even though the Swiss franc is stronger, manufacturing PMI also fell short of expectations.

Strong Housing Data Already Baked In, British Pound Sells Off

Despite multiple indications that UK housing sector growth remains hot, the British pound has eased back over the course of the day to the 1.9900 level. PMI construction unexpectedly surged to 59.8 - the highest level in more than three years - as housing activity and employment growth both picked up. Meanwhile, although mortgage approvals eased back to 113K from a downwardly revised 117K, the figures still remain relatively lofty and signal robust demand for home loans. Other types of borrowing grew as well, as consumer credit kept pace at 0.9 billion pounds, led by a gain in credit card lending. This has all helped contribute to M4 money supply expansion of 12.8 percent for the year, which will likely remain a major concern of the Bank of England. With little in the way of major UK releases over the next few days, GBP/USD price action could continue to be paced by the US dollar.

USD/JPY Rallies Alongside the Dow; Paulson Toughens Stance on China

With no significant data released, we saw mixed performance in the Japanese Yen. The rally in the Dow has helped to send EUR/JPY, CAD/JPY CHF/JPY and USD/JPY higher. The problem is that not all of the high yielders are participating in the move as AUD/JPY and NZD/JPY are both unchanged on the day while GBP/JPY sold off. The divergent price action could be foreshadowing an end to the rally in the stock market, but it is a bit too early to tell. Meanwhile most Japanese traders are still out of the office celebrating the Golden Week holidays. Comments by Treasury Secretary Paulson are worth noting. In a shift away from his usual buddy over bully approach, Paulson warned that there would punitive trade proposals against China if they did not institute some FX and economic reforms immediately. It is clear that the US is taking a very different approach on China and it is only a matter of time before see another major development on the country’s foreign exchange or trade policies, which would have a beneficial impact on the Japanese Yen.

Further Aussie Weakness Contingent upon RBA Statement (AUD, NZD, CAD)

The Australian and New Zealand dollar both ended the day mildly higher against the US dollar, as the Reserve Bank of Australia's decision to leave rates steady at 6.25 percent proved to be a non-event. However, tomorrow evening could be crucial for Aussie trade as the central bank's Monetary Policy Statement is set to be release and will include outlooks for growth and inflation this year, helping to gauge the RBA's bias. The Canadian dollar held up even better against the greenback today, though USDCAD declines stalled near 1.1080 ahead of major event risk Friday when Ivey PMI will hit the tape. Estimates are for a decline following an unexpected surge during the month prior, but nevertheless, the US NFP report will likely dominate USDCAD trade that day.

By Kathy Lien, Chief Strategist of DailyFX.com

USD/JPY Rallies Alongside the Dow

Wed, 02 May 2007 21:46:18 -0400

The divergent price action could be foreshadowing an end to the rally in the stock market, but it is a bit too early to tell. Meanwhile most Japanese traders are still out of the office celebrating the Golden Week holidays. Comments by Treasury Secretary Paulson are worth noting. In a shift away from his usual buddy over bully approach, Paulson warned that there would punitive trade proposals against China if they did not institute some FX and economic reforms immediately. It is clear that the US is taking a very different approach on China and it is only a matter of time before see another major development on the country’s foreign exchange or trade policies, which would have a beneficial impact on the Japanese Yen.

Strong Housing Data Already Baked In, British Pound Sells Off

Wed, 02 May 2007 21:45:19 -0400

Despite multiple indications that

housing sector growth remains hot, the British pound has eased back over the course of the day to the 1.9900 level. PMI construction unexpectedly surged to 59.8 - the highest level in more than three years - as housing activity and employment growth both picked up.

Meanwhile, although mortgage approvals eased back to 113K from a downwardly revised 117K, the figures still remain relatively lofty and signal robust demand for home loans. Other types of borrowing grew as well, as consumer credit kept pace at 0.9 billion pounds, led by a gain in credit card lending. This has all helped contribute to M4 money supply expansion of 12.8 percent for the year, which will likely remain a major concern of the Bank of England. With little in the way of major UK releases over the next few days, GBP/USD price action could continue to be paced by the US dollar.

Euro: A Repeat of December 2004?

Wed, 02 May 2007 21:44:47 -0400

In yesterday’s Daily Fundamentals, we had pointed out that the peak in the EUR/USD in December 2004 was triggered by a series of disappointing economic data. Today we get a sense of déjà vu as we are beginning to see the same scenario unfold once again. Earlier this week, German retail sales dropped significantly and this morning, we saw German unemployment and Eurozone manufacturing PMI all fall short of expectations.

Originally expected to drop by 40k, unemployment instead only dropped by 9k, leaving the unemployment rate unchanged at 9.2 percent. The Eurozone PMI manufacturing survey was also originally expected to increase, but it remained unchanged. Aside from the German retail number, these disappointments are not significant. Nonetheless, it does indicate that the combination of a strong Euro and the value added tax increase is beginning to have a negative impact on the Eurozone economy. We are already looking for more Euro weakness than strength though in the short term, that would be dependent upon US data. However if the mild disappointments start to become serious ones, then we could see a major trend reversal in the EUR/USD. In the meantime, ECB officials remain committed to raising interest rates. ECB member Liebscher said today that the central bank needs to remain vigilant to ensure price stability. Over in Switzerland, even though the Swiss franc is stronger, manufacturing PMI also fell short of expectations.

Further Aussie Weakness Contingent Upon RBA Statement

Wed, 02 May 2007 21:42:05 -0400

However, tomorrow evening could be crucial for Aussie trade as the central bank's Monetary Policy Statement is set to be release and will include outlooks for growth and inflation this year, helping to gauge the RBA's bias. The Canadian dollar held up even better against the greenback today, though USDCAD declines stalled near 1.1080 ahead of major event risk Friday when Ivey PMI will hit the tape. Estimates are for a decline following an unexpected surge during the month prior, but nevertheless, the US NFP report will likely dominate USDCAD trade that day.

Japanese Yen Likely To Range, Along With Canadian Dollar

Wed, 02 May 2007 20:56:15 -0400

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EURUSD

Euro implieds ticked slightly higher in the longer term, but remained relatively lower compared to earlier levels. Previously priced in at 5.45 percent, the longer term component is now trading at 5.6 percent, with the spread slightly wider to the positive side, at 15 basis points. The underlying volatility is surprisingly unaffected as the currency contested the record 1.3665 high over the course of the week, leaving suggestions still in breakout indications. At this point, with the record high still in focus, a modest failure or spontaneous break above would be need in order to spark a revival in the implieds.

GBPUSD

Sterling implieds continued to flatline during the course of the week. Previously priced in at 5.9 percent, the longer term measure has increased slightly to 6 percent, as short term components rebounded during the week. Subsequently, this has brought the short-long differential back to the zero line, compared to last week’s 40 basis point drop. Incidentally, the underlying currency has been consolidating as economic data runs thin, purporting a lower event risk environment. However, with the impending Bank of England decision, a key bounce off of current support at 1.9900 would help to kickstart some activity. The last time such levels were reached on the volatilities, implieds surged ahead quickly as the currency rapidly depreciated last month.

USDJPY

Implieds continued to trickle lower during the course of the week, priced in at 7.05 percent against the 7.25 percent seen last week in the longer term component. Short terms have increased, taking the differential higher to 35 basis points wide, compared with just a mere 15 last week. The wider spread is reflective of the recent action that has been taking place, regardless of the absence of real market attendance and liquidity throughout the week. Subsequently, the 120 figure comes into heavy play, with many expecting a slightly pickup when Asian traders return from the Golden Week holiday.

USDCAD

Canadian Dollar vols jumped to levels not seen in a while last week as technical levels and fundamental impetus took the underlying currency pair lower. Now trading at an incredible 1.1072, consolidation may be the story following the recent runup by the Canadian dollar. Longer terms seem to be paring back after trading as high as 6.5 percent, currently at 6.38 percent. Short term implieds have also taken a back seat, showing only 7 basis points wide compared to last week’s 32.. As a result, with the price action already consolidating, the range environment is likely to remain. However, vols would be reinvigorated following continuation through 1.1050.

AUDUSD

Australian dollar volatilities bounced back slightly to trade at 8.5 percent compared to last week’s 7.7 percent longer term component. With central bank rate risk in the air, short term implieds additionally perked up as the currency pair approached the 0.8250 figure to the downside, lending a boost to the short-long differential. Now, the spread is trading 55 basis points wide compared to 30 in the previous week. Although suggestive of a more neutral and ranging environment, the currency’s implieds may in fact jump once again as the underyling pair’s price action is forming a favorable flag formation. As a result, a noted break above the 0.8300 would set in motion an unsurprising spike back up to 8.6 percent in the longer term component.

Singapore Dollar Weakest In Six Weeks

Wed, 02 May 2007 20:53:53 -0400

The Singapore dollar came under some pressure in the overnight as regional currencies like the Taiwan dollar and South Korean won declined throughout the session. The pressure helped to push the underlying currency to the weakest it has been in six weeks, alleviating some speculation of further advances on the record high hit weeks ago. However, the regional stock market remained resilient in the wake of the depreciation, rising the most in a week. Leading shares higher was stock in the banking sector, notably DBS Group Holdings Ltd. Real estate shares were also bid higher as investors saw opportunity in the recent pullback, picking up shares of Keppel Land Ltd. Shares of the nation’s largest bank, DBS, rose 40 cents to close at S$21.70 as Keppel stock closed higher by 70 cents at S$9.55. As a result, the Straits Times Index was able to surge ahead by 56.52 points or 1.7 percent to 3,417.81.

Hong Kong Stocks Advance First In Three Sessions

Wed, 02 May 2007 20:53:21 -0400

Advancing for the first session in three days, the Hang Seng index was boosted by news that HSBC Holdings PLc was a approached by the Shanghai Stock Exchange in attempts to allow the lender to list its shares on the exchange. Boosting the brand visibility in one of the world’s fastest growing markets, the offer comes as an opportunity to exploit the recent speculative runup in the country. Benchmark stock indexes in the country have more than doubled in the last year as investors seek to retain higher returns on domestic capital. Shares of Europe’s largest bank by market value were runup HK$1.10 to HK$145.40 in the overnight. As a result, the Hang Seng benchmark index added 69.51 points to close at 20,388.49. Notably, China Citic Bank Corp shares lost 5 cents to close at HK$6.52. Holding the world’s biggest initial public offering this year, the lender said it sold blocks totaling 732.8 million in Hong Kong at the offer price of HK$5.86 each.

Paulson Downplays Likely Benefits Of Chinese Yuan On Surplus

Wed, 02 May 2007 20:50:36 -0400

- Paulson Downplays Likely Benefits Of Yuan On Surplus

- Singapore Dollar Weakest In Six Weeks

- Hong Kong Stocks Advance First In Three Sessions

Paulson Downplays Effects Of Yuan

Speaking at an event sponsored by the Peterson Institute for International Economics today in Washington, US Treasury Secretary Henry Paulson stated it would take more than an appreciation in the Chinese yuan to reduce the current trade surplus. Reiterating that the domestic currency is appreciating “very slowly” against the dollar, Paulson noted that there is not a whole lot that policy makers can “do with the currency that would make a big difference.” Recently policy makers, in attempts to curb inflationary pressures and a widening trade surplus, have raised interest rates and reserve requirements held by domestic banks. Unfortunately, the attempts have fallen to the wayside as the economy continues to expand at a torrid 11 percent pace. The conditions have turned the focus to potential revaluation of the currency in order to aggressively quash domestic price increases. Incidentally, Paulson will be hosting a delegation led by Vice Premier Wu Yi in Washington later this month on a number of topics, including further flexibility of the currency regime as well as piracy laws that have come under attack by various nations.

SGD Drops On Regional Currency Declines

Hong Kong Stocks Advance At The Open

Technically Speaking

Singapore Dollar Weakness Prevails - Spiking higher the USDSGD currency pair ran through key resistance in the overnight, taking out the 1.5200 and 1.5250 psychological barriers. Failing to effectively test the 1.5300 psychological figure, the pair has come back a bit, consolidating into the Asian session. Although momentum indicators are indicative of a slightly pullback, preliminary assessments are citing a potential double top prior to the downturn. However, MACD is already showing a downward cross, reflective of the massive divergence in price action. As a result, following another attempt at the 1.5300, sellers will look for breaks below at the 1.5250 and 1.5224 (50 hMA) before making headway into the 1.5200 (100 hMA). However, should the 1.5300 ceiling fail to hold, bulls are set to target the 1.5350 with ease.

Dollar Advance Stalls As NFP Optimism Cools

Wed, 02 May 2007 17:45:51 -0400

Proving its weighty influence on the dollar fully two days ahead its release, speculation over Friday’s non farm payrolls depressed greenback as a couple of second-tier employment numbers cut into bullish convictions with disappointing prints.

By mid-day trade in New York, EURUSD had already put a floor in around 1.3560 before rebounding 50 points to meet yesterday’s close. For USDCHF, the dollar run didn’t end before the pair tagged a new three-week high at 1.2190. After marking the level though, the pair promptly retraced 75 points to seek out support. Acting as a barometer for the carry trade, USDJPY was finally cleared solid resistance in the overnight. After overtaking 120 though, the Japanese yen pushed back for a 70-point drop before pulling right back up to its new highs. Finally, the stall in the greenback helped curb a precipitous, overnight fall in the British pound. From yesterday’s US session fix, GBPUSD had reached all the way down for a 130 point loss before bouncing back above 1.99.

Yesterday’s ISM manufacturing report had more follow through than most dollar bears were expecting. However, the bullish sentiment couldn’t last forever - especially not in the face of another wave of economic releases. The end of the dollar’s steady advance could be traced back to this morning’s employment data. Though the Challenger and ADP reports released this morning have diverged considerable from the later-released NFP numbers in the past and are inherently second-class due to their proprietary nature, they still play a big part in coloring projections for Friday’s Labor Department numbers. The Challenger Job Cuts indicator reported an 18.4 percent increase in announcements from April 2006 last month. From the survey’s breakdown, the leading industry for firings was the financial sector by a large margin. Led by a Citigroup’s plans to trim 17,000 people from the firms payrolls, a total of 33,789 positions were cut last month. The sometimes unreliable ADP report further muddled the outlook for Friday’s report. Economists assigned a 100,000 consensus to the private payrolls indicator - the same as the NFP’s outlook - so when the ADP number printed a 64,000-person increase to its nationwide payrolls, it clearly boded poorly for the coming data. Officially, the April reading was the lowest in nearly four years; but realistically it wasn’t much lower than the dips in previous months.

Turning away from the employment data, the market was also given an update on the dubious housing and manufacturing sectors. Housing numbers were updated through the MBA mortgage applications for the week ending April 27th. While the overall sector is clearly still hurting, the leading home loan report is providing for the argument that a bottom could still be found soon. Applications rose for the second week in a row followed by the longest period of declines in years. Even more promising from the component numbers, mortgages for purchases actually hit a three year high despite stiffer regulations. For the manufacturing sector, March factory orders was a lagging support to yesterday’s ISM survey. Bookings grew the most in a year at 3.1 percent, suggesting corporate spending is on the rebound after a period of cost cutting and inventory reduction.

Equities shot higher on the open Wednesday morning as earnings and deal announcements carried the benchmark indices towards record highs. The NASDAQ was pacing the crowd with a sizable 0.86 percent rally to 2,553.19 by 16:00 GMT. Elsewhere, the S&P 500 was just below the psychological 1,500 level even after gaining 0.6 percent while the Dow pushed to new record highs on a 0.52 percent run to 13,204.72. From the ranks of the top movers list, restaurant franchise Chipotle Mexican Grill was pulling down a top spot. Shares of Chipotle rallied 16.1 percent or $10.64 to $74.90 after reporting earnings that beat the Street’s official consensus. In other news, as politicos and analysts weigh in on Rupert Murdoch’s bid for the Wall Street Journal, a bid for Cablevision systems joined the media fray. The wealthy Dolan family was reportedly offering $10.5 billion for the media firm which helped push Cablevision’s shares 8 percent higher to $35.28.

Traders in the electronic treasuries market reserved their labor trend positions for Friday’s key NFP report. By 16:00 GMT, the benchmark T-Note was only 1/32nds off its open at 99-27 as its yield grew a basis point to 4.642. Longer-termed bonds slipped 2/32nds to 98-28 as its yields edged a basis point higher to 4.820.

EUR/GBP - 0.6800/0.6835 Looks Like a Clear Range to Hedge

Wed, 02 May 2007 17:28:15 -0400

Hedging Strategy of the Week

§ Currency Pair: EUR/GBP

§ Entry Zone: Go both long and short at the market if the price is at any level within the 0.6800-0.6835 range

§ Protective Stop: Long stop below 0.6771 and short stop above 0.6867

§ Profit Target: Long Target at 0.6835 and Short Target at 0.6800

§ Profit Potential: 35 pips (excluding transaction costs and slippage)

The most effective way to capitalize on currencies pairs that are trapped in tight ranges is through the use of hedging. The hedging feature is currently available on all accounts using FXCM’s No Dealing Desk service. For more information on FXCM hedging strategies please visit http://www.fxcm.com/hedging.jsp

The EUR/GBP is our primary target for hedging in the week ahead, with clear range-bound trade and concrete support and resistance levels. To hedge, go both long and short at the market if price stays within the above Hedging Zone. Take profits at R1 for longs and at S1 for shorts, covering losses above R2 or below S2.

HEDGING RADAR - Find More Hedging Opportunities

Rules for the Hedging Radar

1)       Entry Zone -> Go both long and short at the market if the currency is at any level within the Hedging Zone.

2)       Profit Taking ->Target for the long order is the top of the entry zone, for the short order is the bottom of the entry zone.

3)       Stop Levels are Key Support and Resistance Points -> Place the actual stops a few pips above the higher level and a few pips below the lower level. The break of these levels signals that the ranges have been broken and the hedging strategy should no longer be implemented.

4)       The lower the Average True Range, the Less Risky the Currency is for Hedging.

Low Risk Hedging Opportunities - Currencies that are Ranging

Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range (in Pips)

EURCHF

|||||| 0.35%

1.6367

1.6462

1.6533

1.6628

71 pips

EURGBP

||||||||| 0.46%

0.6771

0.6800

0.6835

0.6867

35 pips

GBPCHF

|||||||||||| 0.50

2.4000

2.4144

2.4305

2.4597

161 pips

EURUSD

|||||||||||| 0.55%

1.3495

1.3585

1.3653

1.3705

68 pips

EURAUD

|||||||||||| 0.65%

1.6350

1.6400

1.6500

1.6550

100 pips

Medium Risk Hedging Opportunities - Currencies that are Volatile

Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range (in Pips)

USDCAD

||||||||||| 0.66%

1.1028

1.1048

1.1133

1.1246

85 pips

GBPUSD

||||||||||||| 0.67%

1.9822

1.9914

2.0060

2.0131

146 pips

AUDUSD

||||||||||||| 0.70%

0.8150

0.8233

0.8337

0.8390

104 pips

CHFJPY

||||||||||||| 0.71%

98.05

98.34

98.82

99.05

48 pips

USDCHF

||||||||||||| 0.72%

1.1875

1.2000

1.2185

1.2281

185 pips

High Risk Hedging Opportunities - Currencies that are Trending

Currency

% ATR Rank

Stop for Long

Hedging Zone

Stop for Short

Profit Range (in Pips)

EURJPY

|||||||||||||| 0.75%

162.40

162.80

163.36

164.05

56 pips

USDJPY

||||||||||||||| 0.77%

117.60

118.26

120.28

122.17

202 pips

GBPJPY

||||||||||||||||| 0.88%

235.96

238.15

240.00

241.39

185 pips

AUDJPY

|||||||||||||||||| 0.91%

96.81

97.42

99.51

100.02

209 pips

NZDUSD

||||||||||||||||||| 0.97%

0.7313

0.7362

0.7435

0.7491

73 pips

NZDJPY

||||||||||||||||||||| 1.22%

86.70

87.40

89.00

89.55

160 pips

**How is the % ATR Rank Calculated?

The average true range is the 90 days moving average of the currency’s true range. The true range is the greatest of: the difference between the current high and the current low; the difference between the current high and the previous close or the difference between the current low and the previous close.

The %ATR is the relative value of the ATR when weighted against the price. For example, if the ATR for the EURGBP is 26 pips then the %ATR is 0.4 percent since 0.0026/0.6602 = 0.4% where 0.6602 is the quoted price of the EURGBP.

For more information on FXCM hedging strategies please visit http://www.fxcm.com/hedging.jsp

EUR/CHF Hits 8 Year High - Beware of a False Breakout

Wed, 02 May 2007 16:53:19 -0400

The EURCHF is at an 8 year high but beware of a false breakout. A price relationship in the separate legs of the rally that began in 2001 suggests that the pair is unlikely to extend much higher.

Low Risk Hedging Opportunities - Currencies that are Ranging
Currency	% ATR Rank	Stop for Long	Hedging Zone		Stop for Short	Profit Range (in Pips)
EURCHF	\|\|\|\|\|\| 0.35%	1.6367	1.6462	1.6533	1.6628	71 pips
EURGBP	\|\|\|\|\|\|\|\|\| 0.46%	0.6771	0.6800	0.6835	0.6867	35 pips
GBPCHF	\|\|\|\|\|\|\|\|\|\|\|\| 0.50	2.4000	2.4144	2.4305	2.4597	161 pips
EURUSD	\|\|\|\|\|\|\|\|\|\|\|\| 0.55%	1.3495	1.3585	1.3653	1.3705	68 pips
EURAUD	\|\|\|\|\|\|\|\|\|\|\|\| 0.65%	1.6350	1.6400	1.6500	1.6550	100 pips

Medium Risk Hedging Opportunities - Currencies that are Volatile
Currency	% ATR Rank	Stop for Long	Hedging Zone		Stop for Short	Profit Range (in Pips)
USDCAD	\|\|\|\|\|\|\|\|\|\|\| 0.66%	1.1028	1.1048	1.1133	1.1246	85 pips
GBPUSD	\|\|\|\|\|\|\|\|\|\|\|\|\| 0.67%	1.9822	1.9914	2.0060	2.0131	146 pips
AUDUSD	\|\|\|\|\|\|\|\|\|\|\|\|\| 0.70%	0.8150	0.8233	0.8337	0.8390	104 pips
CHFJPY	\|\|\|\|\|\|\|\|\|\|\|\|\| 0.71%	98.05	98.34	98.82	99.05	48 pips
USDCHF	\|\|\|\|\|\|\|\|\|\|\|\|\| 0.72%	1.1875	1.2000	1.2185	1.2281	185 pips

High Risk Hedging Opportunities - Currencies that are Trending
Currency	% ATR Rank	Stop for Long	Hedging Zone		Stop for Short	Profit Range (in Pips)
EURJPY	\|\|\|\|\|\|\|\|\|\|\|\|\|\| 0.75%	162.40	162.80	163.36	164.05	56 pips
USDJPY	\|\|\|\|\|\|\|\|\|\|\|\|\|\|\| 0.77%	117.60	118.26	120.28	122.17	202 pips
GBPJPY	\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\| 0.88%	235.96	238.15	240.00	241.39	185 pips
AUDJPY	\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\| 0.91%	96.81	97.42	99.51	100.02	209 pips
NZDUSD	\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\| 0.97%	0.7313	0.7362	0.7435	0.7491	73 pips
NZDJPY	\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\|\| 1.22%	86.70	87.40	89.00	89.55	160 pips